The criminal charges against Chinese firm Huawei mark a sharp escalation in the Trump administration’s fight with China.
The company and Beijing are vowing to fight back and both sides are digging in, setting the stage for a battle that will likely impact upcoming trade talks.
{mosads}The charges come at a critical time. The White House announced that it will host a Chinese delegation in Washington, D.C., on Wednesday and Thursday for trade talks, as it attempts to bring a close to the months-long dispute between the two nations.
Trump officials have insisted the charges against Huawei are separate from the trade talks. White House press secretary Sarah Huckabee Sanders said Monday that the two “are not linked, they’re a totally separate process.” On Tuesday, Treasury Secretary Steven Mnuchin also said they were “separate issues.”
But the charges add another complication to the already contentious talks.
U.S. officials have vowed to make China’s alleged theft of trade secrets a central issue in those discussions.
Lawmakers have widely praised the enforcement action against Huawei — and many have also expressed concerns about the administration using it as a bargaining chip in trade talks.
{mosads}On Tuesday, Sen. Marco Rubio (R-Fla.) said he was worried the president could step in and make a move to alleviate the charges against Huawei.
President Trump previously suggested that he would intervene over Huawei if it meant securing a better trade deal with China, a statement that received criticism from his own party.
“I think we have to have better trade deals on the basis of trade,” Rubio told The Hill. “I think we’re going to have laws, and those laws should be followed and I think they should be enforced.
“If we allow a Chinese-based company to violate our laws without punishment in exchange for favorable terms on a trade deal, or better terms on a trade deal, it sets a terrible precedent,” he continued, urging tough action against Huawei.
U.S. officials, including acting Attorney General Matthew Whitaker, FBI Director Christopher Wray and Homeland Security Secretary Kirstjen Nielsen, announced the pair of indictments against Huawei in a dramatic show of force at a press conference on Monday.
The charges allege that Huawei stole intellectual property from T-Mobile, obstructed justice, committed wire fraud and violated U.S. sanctions.
China has already come out against the charges, calling them an “unreasonable crackdown.”
Canadian authorities arrested Huawei Chief Financial Officer Meng Wanzhou in Vancouver late last year, at the direction of U.S. authorities. The U.S. formally requested her extradition on Tuesday; Meng is also named in one of the newly unsealed indictments.
China has appeared to retaliate in the weeks since Meng’s arrest, detaining a pair of Canadian citizens and resentencing a Canadian man in prison on drug smuggling charges to death. Both the U.S. and Canada have condemned the death penalty case.
The U.S. intelligence community has long raised concerns about the threat from Chinese telecom companies like Huawei and ZTE, claiming that Beijing could use their products to spy on Americans. Those concerns were aired by both lawmakers and intelligence officials Tuesday at a Senate Intelligence Committee hearing on global threats.
“You can raise your hand if you respond yes to my questions. How many of you would use a telecom product made by Huawei and ZTE?” Sen. Tom Cotton (R-Ark.) asked the panel of intelligence leaders, none of whom raised their hands.
However, Director of National Intelligence Dan Coats said that concerns with the companies are not a black-and-white issue and offered to provide more information during a closed classified session with lawmakers.
“While I’ll defer to the closed session, I suspect if I asked a fairer question, which is how many of you would recommend that people who are not heads of intelligence agencies, like your neighbors or church members or high school friends use Huawei and ZTE there would also be six no votes of confidence,” Cotton replied.
In a threat assessment released Tuesday, the intelligence community also pointed to China as a “persistent cyber espionage threat.”
“Beijing will authorize cyber espionage against key US technology sectors when doing so addresses a significant national security or economic goal not achievable through other means,” the report reads.
“We are also concerned about the potential for Chinese intelligence and security services to use Chinese information technology firms as routine and systemic espionage platforms against the United States and allies.”
FBI chief Wray also labeled China as a significant counterintelligence threat for the U.S.
“As I look at the landscape today and over the course of my career … the Chinese counterintelligence threat is more deep, more diverse, more vexing, more challenging, more comprehensive and more concerning than any counterintelligence threat I can think of,” Wray testified before the Senate panel.
Lawmakers and intelligence officials at the hearing grappled with the challenge posed by Huawei and how best to respond.
“It seems to me, they have to decide they’re either going to be a worldwide telecommunications company or an agent of the Chinese government, they can’t be both,” Sen. Angus King (I-Maine) said. “And right now they’re trying to be both, and I think the world’s customers which the Chinese are certainly sensitive to are the best enforcers of that principle.”
Director of Defense Intelligence Agency Robert Ashley replied that he agreed with King’s point. But he pushed back over who has responsibility for the telecommunications firm’s choice to share information with the Chinese government, as national security officials claim it does. And he highlighted the scope of the problem, not just with Huawei but with other Chinese companies.
“That decision doesn’t lie with Huawei,” Ashley said. “It lies with the [Chinese Communist Party], it lies with [President] Xi Jinping and the way that they are starting to centralize greater the management of these businesses.”
“That makes it really problematic for all of those businessmen without providing that information back to Beijing,” he added.