Huawei Executive’s Arrest Spooks China’s Rich

Why you should care

Meng Wanzhou’s arrest has sparked worries among Chinese business leaders about traveling to the U.S.

In August, a fu san dai, the Chinese term for “third-generation rich kid,” discovered that his similarly wealthy friends in Beijing were taking a new precaution when traveling to the U.S. They would leave their usual smartphones and laptops behind in the Chinese capital and instead take “clean” replacements.

“They carry a second phone that has nothing on it,” he explains. “They take the precaution of going in [to the U.S.] with a different phone. They leave the phone that they have in China and take a blank phone instead.”

The fu san dai adds that he and his friends did not feel they had anything to hide. But as Sino-U.S. relations rapidly deteriorated over the summer, they heard more and more stories about friends — and friends of friends — being stopped by American “customs and border protection [agents] who would look through their electronic devices and see what was on their Facebook page or WeChat or whatever.”

Four months later, Chinese elites have more to worry about than officious U.S. border agents. On Dec. 1, Meng Wanzhou, the daughter of one of China’s most celebrated entrepreneurs, was detained in Canada at the request of American prosecutors. She is wanted in the U.S. for alleged bank fraud related to evasion of U.S. sanctions against Iran.

All Chinese … need to stick together and raise high the banner of patriotism.

Sima Nan, Chinese nationalist commentator

Ren Zhengfei, Meng’s father, is the founder of privately held Huawei, which over three decades has become one of the world’s largest manufacturers of telecommunications network equipment and smartphones. Meng, who was released on bail by a Vancouver judge last week, is a Huawei deputy chairwoman and also its chief financial officer.

To put the incident’s shock value in an American context, it was as if a daughter of Steve Jobs, who was following him up the corporate ladder at Apple, had been detained in Moscow pending her possible extradition to Beijing.

Ren is a former Chinese military officer who left the People’s Liberation Army in the 1980s to establish Huawei. Because of his background, as well as Huawei’s global reach and an opaque employee-ownership structure, the company has never been able to shake U.S. concerns that its equipment posed a security risk to Western governments.


Ren, while doubted abroad, is adored at home. “Almost all the Chinese entrepreneurs I meet have huge respect for what Huawei has done within China and on the global stage,” says Rupert Hoogewerf, publisher of Hurun Report, the country’s most authoritative rich list. “He’s talked about almost in hushed tones.”

The reverberations from Meng’s legal case are being felt across China. “We always knew Canada is America’s running dog and will block Chinese acquisitions of Canadian tech companies [on national security grounds],” says a senior executive at one of China’s largest state-owned technology groups. “But this came as a total surprise.”

The executive adds that he and his colleagues did not fear suffering the same fate as Meng. Few Chinese companies are as squarely in the U.S. government’s crosshairs as Huawei. But Meng’s arrest has only reinforced a conclusion his company came to in 2017: It is futile to try to buy U.S. or Canadian technology companies. His group now focuses its acquisition efforts almost entirely on European and Israeli targets, usually below what he calls a “political threshold” of $300 million to avoid government and media scrutiny.

Sima Nan, a prominent nationalist commentator, calls the incident “yet another example of U.S. hegemonism and imperialism,” adding that it reminded “all Chinese of the need to stick together and raise high the banner of patriotism.”

A Chinese vice foreign minister had summoned both the Canadian and U.S. ambassadors to express his government’s outrage over Meng’s arrest. But in its public comments, the Chinese government has been careful to train most of its fire at Ottawa rather than Washington.

Angry though Chinese officials may be, their top foreign policy priority is a negotiated end to the trade war with the U.S. They do not want Meng’s case to derail trade talks with the Trump administration.

Within 10 days of Meng’s arrest, Chinese authorities detained at least two Canadian citizens for allegedly “harming China’s national security,” with no confirmed cases of any similar reprisals against U.S. nationals. There has been no official confirmation that the detention of the Canadians — Michael Kovrig and Michael Spavor — and that of Meng are connected.

Most commentators on China’s tightly monitored social media platforms have stuck to the government’s anti-Ottawa script. “China’s countermeasures should not stop,” Han Dongyan told his more than 600,000 followers on Sina Weibo, the country’s equivalent of Twitter. “China should make Canada pay a heavy price for insulting an innocent Chinese national.” In Han’s view, Meng has been “kidnapped.”

The contrast between Meng’s detention and the disappearances of Kovrig and Spavor could not be more stark. Meng has appeared with her lawyer before an independent judge in an open court packed with journalists. She was granted bail and allowed to return to one of her two Vancouver homes, which have a combined value of at least $14 million Canadian dollars ($10.5 million).

Such luxurious bolt-holes — and the overseas educational opportunities they have provided for her three children — might make Meng seem an unlikely national hero. During her bail hearing, her lawyer showed the court photos of Meng’s family enjoying British Columbia’s pristine environment.

Most ordinary Chinese do not appear to begrudge Meng doing what they would do too if they could. Indeed, tens of thousands of well-off mainland Chinese families have done the same. According to Vancouver’s 2016 census, ethnic Chinese residents account for 20 percent of the city’s 2.4 million people.

“I am back with my family,” Meng wrote on her WeChat account after being released on bail. “I am proud of Huawei and I am proud of my motherland. Thank you all for your concern.”

Below her comments she posted a Huawei advertisement depicting a ballerina’s bruised feet with the tagline: “Behind greatness there is suffering.”

Kovrig and Spavor, on the other hand, have disappeared into China’s state security apparatus, where they enjoy none of the legal protections afforded to Meng. Their social media feeds have gone silent.

Additional reporting by Xinning Liu and David Dasilva.

By Tom Mitchell

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