National security adviser said US had long been concerned about role of Chinese tech companies in theft of technological knowhow

The US national security adviser, John Bolton, has said he knew in advance that a top Chinese telecoms executive would be arrested in Canada to face extradition to the US, in what is escalating into a major diplomatic incident.

Beijing is calling for the release of Meng Wanzhou, the global chief financial officer of the vast Huawei corporation, and demanded Ottawa and Washington provide reasons for her arrest in Vancouver on Saturday.

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Bolton would not give a specific reason for the US request, saying it was a law enforcement matter, but in a radio interview on Thursday he said the US had long been concerned about the role of Huawei and other Chinese tech companies in the theft of US technological knowhow.

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“We’ve had enormous concern for years about … the practice of Chinese firms to use stolen American intellectual property to engage in forced technology transfers and to be used really as arms of the Chinese government’s objectives in terms of information technology in particular,” Bolton told National Public Radio.

“So not respecting this particular arrest, but Huawei is one company we’ve been concerned about, there are others as well,” he said, adding that the issue would be the subject of negotiations between the US and China over the next 90 days, the deadline laid down by Donald Trump at last week’s G20 summit in Argentina for both countries to resolve trade disputes, before he ordered a significant ratcheting up of trade sanctions.

“As the negotiations proceed I think we’re going to see a lot about what Chinese companies have done to steal intellectual property, to hack into the computer systems, not just of the US government, although they’ve done that, but into private companies as well,” the national security adviser said.

Facebook Twitter Pinterest Meng Wanzhou at a VTB Capital Investment Forum session in Moscow, Russia, on 2 October 2014. Photograph: STRINGER/Reuters

Reuters, however, cited people familiar with the investigation as saying the arrest was connected to an alleged scheme to use the global banking system to evade US sanctions against Iran.

The news agency reported that Huawei had been under scrutiny for sanctions-busting since 2016 and that more recently, the investigation has included the company’s use of HSBC Holdings plc to make illegal transactions involving Iran. However, the sources for the report said that HSBC is not under investigation.

Republican senator Marco Rubio said on Twitter on Thursday night that, if found guilty of violating US sanctions, Huawei should be barred from operating in the US and purchasing US technology.

Bolton said he was not sure if Trump knew of the arrest in Canada when the president sat down to a steak dinner with China’s Xi Jinping in Buenos Aires to discuss ways to avert a trade war between the two countries.

“You know, I don’t know the answer to that,” Bolton said. “I knew in advance, but this is something that’s, that we get from the justice department and these kinds of things happen with some frequency. We certainly don’t inform the president on every one of them.”

The Canadian prime minister, Justin Trudeau, said on Thursday he was also made aware of the arrest before it took place.

“The appropriate authorities took the decisions in this case,” he told reporters. “We were advised by them with a few days’ notice that this was in the works but of course there was no engagement or involvement in the political level in this decision because we respect the independence of our judicial processes.”

Canada confirmed Meng’s detention on Wednesday night.

A Chinese foreign ministry spokesman said on Thursday that Beijing had separately called on the US and Canada to “clarify the reasons for the detention” immediately and “immediately release the detained person”.

The spokesman said China had been providing consular assistance to Meng since learning of her arrest.

Meng is one of the vice-chairs on the Chinese technology company’s board and is the daughter of the company’s founder, Ren Zhengfei.

A court hearing has been set for Friday, according to Canada’s department of justice, which confirmed in a statement that Meng had been arrested and was facing extradition.

“As there is a publication ban in effect, we cannot provide any further detail at this time,” it said. “The ban was sought by Ms Meng.”

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US stock futures and Asian shares tumbled after Meng’s arrest. The news came as Washington and Beijing begin three months of negotiations aimed at de-escalating their trade war, which is adding to global investors’ worries over rising US interest rates and other risks to global economic growth.

Fearing that a US-China trade war truce is becoming unattainable, Europe’s main stock indices slumped to their lowest point since December 2016 in morning trading on Thursday. The FTSE 100 fell by 2.5% while benchmark indices in France, Germany and Italy all lost more than 2%.

Norihiro Fujito, the chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo, said: “The US has been telling its allies not to use Huawei products for security reasons and is likely to continue to put pressure on its allies.

“So while there was a brief moment of optimism after the weekend US-China talks … the reality is, it won’t be that easy.”