“The Huawei case will certainly have a negative impact on political trust between the United States and China,” said Wang Yong, a professor at Peking University’s school of international studies.

Meng Wanzhou, the chief financial officer of Huawei Technologies and the daughter of the company’s founder, was arrested in Vancouver Saturday — the same day that President Trump and his Chinese counterpart, Xi Jinping, agreed to a truce in the trade war.

AD

AD

The United States is seeking to extradite her, apparently in relation to charges that Huawei, the world’s largest maker of telecommunications network equipment, violated American export sanctions on Iran.

The Chinese government has called for her immediate release, while local newspapers have said that the United States is picking on Chinese tech companies because they compete successfully with American rivals.

But analysts do not expect Beijing to let the incident escalate.

“The Chinese side should be careful and should not magnify the issue,” and the Huawei case should not be allowed to scuttle the broader talks, Wang said. “I believe President Trump and U.S. businesses, including American investors in China, hope China and the United States can reach a deal.”

AD

Huawei, the world’s second-largest maker of smartphones, is one of the pillars of the new, high-tech economy championed by Xi. But its very survival could now be in question.

AD

A previous case against ZTE Corp., another Chinese telecommunications giant accused of violating U.S. export sanctions on Iran, brought it to the brink of bankruptcy last year. ZTE was initially blacklisted in the United States, but after Trump’s intervention that was downgraded to an $890 million fine.

Although the United States has not formally announced charges against Huawei, the cases appear similar.

“China has more incentive than the U.S. to stop the escalation,” said Yanmei Xie, an analyst at the Gavekal Dragonomics consultancy in Beijing. “The Chinese priority is to stop the U.S. from launching crippling sanctions against Huawei. If the U.S. does what it did to ZTE, there’s very little China can do to prevent Huawei from collapsing, and that’s not in China’s interest.”

AD

For that reason, China would try not to “provoke” the United States, she said.

AD

Some analysts have voiced fears that China could try to retaliate by arresting an American tech executive. But Foreign Ministry spokesman Geng Shuang said Friday that China would not.

“China always protects the legitimate rights and interests of foreigners in China in accordance with the law, but I believe certainly they should also abide by Chinese laws and regulations,” Geng said.

The arrest of Meng feeds into a broader feeling here that the trade war is not just about imports and exports but is also about the Trump administration’s efforts to contain China and stop its rise.

AD

“The U.S. is trying to do whatever it can to contain Huawei’s expansion in the world simply because the company is the point man for China’s competitive technology companies,” the state-run China Daily said in an editorial Friday.

AD

For the sake of the world — and the American — economy, the United States should “change its mentality toward China,” the paper said.

The People’s Daily, the mouthpiece of the Communist Party, painted the travails of Huawei as part of an epic battle.

“All the slings and arrows didn’t stop it from growing or hinder it from rising into a global telecoms equipment giant,” it said, adding that Chinese companies are instead gaining strength. “No one will be able to stop ‘Made in China’ from bringing benefits to the whole world.”

AD

Wang at Peking University saw a different conspiracy in the Huawei arrest. He said it appeared to be an effort by “China hawks” in the United States to stop a deal from being reached.

“These hard-liners’ goal is to ‘decouple’ the Chinese and American economies,” he said, “or at least bring about a ‘partial decoupling’ in the high-tech area.”

AD

Separately, Japan is set to become the latest country to exclude Huawei and ZTE Corp. from government contracts. The Tokyo government is expected to ban the companies at a meeting on Monday, Japanese newspapers reported. Trump signed a bill in August banning U.S. government agencies from using Huawei and ZTE hardware ranging from smartphones to routers and networking devices.

AD

Three of the other members of the “Five Eyes” intelligence-sharing network — Britain, Australia and New Zealand — have effectively blocked Huawei from their networks on security grounds. Canada is the only member that has not moved against Huawei, although that could change.