US Slaps 13 Indictments On Huawei Ahead Of China Trade Negotiations

Following a series of indictments unveiled Monday, China denounced U.S. criminal charges against Huawei Technologies Co.

“For some time, the U.S. has been using national power to tarnish and crack down on specific Chinese companies in an attempt to strangle their lawful and legitimate operations," Chinese foreign ministry spokesman Geng Shuang said Tuesday in a statement. “Behind such practices are deep political intentions and manipulations. We strongly urge the U.S. to stop its unreasonable bashing on Chinese companies including Huawei, and treat them objectively and fairly.”

Huawei also denied wrongdoing.

What Happened

The U.S. Justice Department had accused the world’s second-largest smartphone manufacturer of stealing trade secrets from T-Mobile Us Inc TMUS, violating sanctions prohibiting business in Iran, and committing bank and wire fraud. Thirteen total indictments also include conspiracy to obstruct the grand jury.

The charges had been expected. Last month, Canada detained Huawei CFO Wanzhou Meng on behalf of U.S. law enforcement, which had built a criminal case throughout a two-year investigation. Meng is out on $7.6 million bail while she awaits extradition for a Brooklyn trial.

Why It’s Important

The charges reflect one of the U.S.’s top grievances in its trade war with China: intellectual property protection.

U.S. Commerce Secretary Wilbur Ross said the case is “wholly separate” from ongoing trade negotiations, but they will undoubtedly complicate discussions. China has already framed the investigation as an example of anti-competitive policies the U.S. uses to protect its corporations.

While this week's progress in the Huawei case could help some American industries, it could hinder others. MKM Partners cited more than 50-percent odds that regulators ban Huawei from purchasing U.S. components — an advancement that would hurt optical component manufacturers but benefit telecom systems.

What’s Next

U.S. officials are preparing to meet with Chinese trade representatives this week in Washington in an effort to negotiate trade terms. President Donald Trump has threatened to raise tariffs on $200 billion of Chinese imports if the pair fails to strike a deal by March 2.

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Huawei CFO Arrest Fuels US-China Trade Tensions

Photo courtesy of Huawei.