OTTAWA—The head of the U.S. China Business Council says he is concerned about China’s “nationalistic response” to the extradition arrest of Huawei executive Meng Wanzhou.

Craig Allen, a former U.S. diplomat and now president of the Washington-based group that promotes bilateral trade with China, said in an interview with the Star that China’s threats against the U.S. and arrests of two Canadians are especially worrying.

“We condemn the abuse of law against individuals for political purposes,” Allen said.

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He said the current legal, political and economic conflicts with China are “multi-layered” and intersect with the question of whether Huawei, China’s tech giant, misled multinational banks to skirt Iran sanctions as the U.S. alleges.

“No one is above the law and if Meng Wanzhou violated the law she should be punished,” said Allen, “but we’ll leave that to the appropriate authorities to determine.”

Allen, who was U.S. ambassador to Brunei and held three U.S. diplomatic postings to China, said part of the problem is the U.S. president is the one who suggested Meng could be a bargaining chip in U.S. efforts to strike a trade deal with China.

“I think President Trump really muddied the waters when he said he’d be willing, essentially, to link the two issues, that is the trade issue and allegations (against Meng) of criminal activity. And I think that was very unfortunate because it opened the door for allegations that this has been done for trade negotiating purposes.”

“And I think it behooves us, really, to keep legal and criminal types of issues separate and divorced from trade policy negotiating issues.”

Trump told Reuters in December he wouldn’t hesitate to intervene with the Justice Department in the Meng case: “Whatever’s good for this country, I would do.” He said, “If I think it’s good for what will be certainly the largest trade deal ever made — which is a very important thing — what’s good for national security — I would certainly intervene if I thought it was necessary.”

As the deadline looms next week for the U.S. to submit its formal request, there is a lot of speculation in U.S. business circles about deep divisions within Trump’s chaotic White House over whether to proceed with the Meng extradition, with some suggestions of a split between administration “hawks” on China and those who want to drop the Meng case in order to secure a trade deal with China. Those rumours have reached industry circles in Canada as well, according to a source who spoke to the Star on condition of anonymity.

Allen told the Star he too has heard talk of differences of opinion within the Administration but had no direct knowledge of any discussions.

Nonetheless, the U.S. justice department through a spokesman said Tuesday publicly what it has conveyed privately to its Canadian counterpart, as the Star reported last week: it is going to press ahead with charges against Meng and will file necessary documents to support its extradition request with Canada’s justice department before the Jan. 30 deadline.

Foreign Affairs Minister Chrystia Freeland told a Bloomberg interviewer on Tuesday the Canadian government has not and will not ask the U.S. to drop its extradition request, saying it would be “absolutely wrong” to politicize the case.

Yet in Beijing, the Chinese government made clear Tuesday there would be an impact on the high-stakes U.S.-China trade talks if the extradition were to proceed.

“This case is a serious mistake and we urge the U.S. to immediately correct its mistake,” Chinese foreign ministry spokeswoman Hua Chunying told reporters.

“What the U.S. has done, with its egregious nature, severely infringes upon the legal and legitimate rights and interests of Chinese citizens. China is firmly opposed to that. We urge the U.S. side to take seriously the solemn position of the Chinese side, take measures to correct its wrongdoings and withdraw its arrest order for the Chinese citizen. China will make further response in view of the actions taken by the U.S.”

Allen said many American businesses are concerned about the latest developments including China’s detention of Canadian diplomat Michael Kovrig and businessman Michael Spavor on unspecified allegations of violating national security laws.

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“We’re waiting and watching to see what happens with Meng Wanzhou because there is absolutely a connection here. You’d have to be deliberately blind not to notice that,” he said.

The Trudeau government has protested Kovrig’s and Spavor’s arrests as “arbitrary” — the same word it used to describe a Chinese court’s ruling last week that converted a Canadian man’s 15-year jail term into a death sentence.

Beijing rejected Canada’s call for clemency, saying it will not interfere with “judicial sovereignty.”

“We’re thinking and praying for our Canadian friends who are in a difficult circumstance in China,” Allen said.

It has all made U.S. businesses, especially tech company employees who work in China, nervous about travel and determined to “scrupulously” follow local laws and regulations, he said.

A U.S. China Business Council survey of its members in 2018 showed American companies are worried about the “increasingly rocky” U.S.-China relationship.

The survey found 73 per cent reported their business is affected by bilateral trade tensions, with “political risk” in the bilateral relationship cited as the top concern. “And their political risk has risen as a result of the confrontational attitude between the two countries, and the threat of additional tariffs being imposed on March 2 if no accommodation is reached is a real threat,” said Allen.

Washington and Beijing have set a deadline to reach a trade agreement of March 1 but the two governments are at loggerheads over what the other regards as protectionist measures, especially when it comes to intellectual property, and forced technology transfers.

Both countries have imposed significant tariffs on the other, and Trump has threatened to double rates on Chinese exports if no deal is reached.

“I believe that could happen,” said Allen. “We all believe that that could happen and it would have quite large implications on bilateral trade and it would have negative implications on economic growth in the United States and probably China too, not to mention regional and global supply chains.”

“Business hates uncertainty,” he said.

So does Canadian Finance Minister Bill Morneau.

Morneau told the Star the day before Beijing stepped up its criticism of the U.S. that while the Canadian economy is doing well overall, the uncertainty created by U.S.-China trade tensions is “the bigger unknown” that could have an impact on global growth.

“The Canadian discussions, the diplomatic challenge we’re having with China, of course there will be impacts,” Morneau said Monday. “Our sense is that those impacts for some businesses could be something they’re considering, but more broadly for the economy they’re not the first thing we’re worried about, we’re looking more at the global trading situation as a bigger challenge.”

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