The United States has agreed to release an executive at the center of an espionage investigation, the Chinese government says

The United States on Thursday agreed to release a Chinese executive at the center of an espionage investigation whose arrest strained ties between Washington and Beijing and triggered a fierce diplomatic dispute. A joint statement …

The United States on Thursday agreed to release a Chinese executive at the center of an espionage investigation whose arrest strained ties between Washington and Beijing and triggered a fierce diplomatic dispute.

A joint statement said that Meng Wanzhou, chief financial officer of telecommunications giant Huawei, will be released on bail at the request of Canada’s government.

The terms of her release, however, still required that she live outside Canada with electronic monitoring, wear an ankle bracelet and submit to home visits from U.S. agents, the release papers showed. It was not immediately clear if she will be able to leave the country with that arrangement.

Under the conditions of the release, Meng faces two charges of fraud related to trying to evade U.S. trade curbs on Iran. The prosecutors who indicted her, however, made clear that her case was not about trying to cover up transactions with Iran.

“The indictment does not allege that Huawei violated U.S. sanctions against Iran,” the statement said.

Some analysts in the United States suggested that Meng could have been pushed by Chinese authorities to cooperate in this case. “The case against Meng Wanzhou may be the most directly politicized in memory,” Shaun Rein, managing director of China Market Research Group, wrote in a blog.

The Huawei executive, who lives in Vancouver, was arrested on Dec. 1 in connection with a business dispute, and has been held in a Vancouver jail. She was ordered held without bail for two weeks and is barred from leaving Canada, as her case dealt with a legal wrangle over how to handle it.

The case has attracted widespread attention in Washington in a world where countries compete for markets in the technology sector, ranging from communications equipment to cars and airplanes.

U.S. officials have sought to label Huawei a national security threat and have been seeking to cut ties with its technology, a top supplier of telecommunications systems.

The United States and its allies blocked the use of Huawei equipment earlier this year for the U.S. 5G network. The telecom firms in China have been given dispensation to continue to use the firm’s components in the plans, but only for certain projects.

China arrested several Canadians in recent months for alleged violations of the country’s trade sanctions against Iran, but issued a different set of terms for Meng’s release: She would stay in Vancouver and submit to 24-hour surveillance.

The Ministry of Commerce, which is China’s top trade negotiator, said on Thursday that the two countries had made substantive progress in conversations following the Huawei executive’s arrest, but that there was still work to be done on clarifying details.

In a statement, the ministry said it had reviewed details of the United States’ extradition request, and that it accepted Meng’s extradition request.

“We also appreciate that the U.S. side made it clear that the reasons for this are related to China’s lawful and legitimate rights and interests,” the ministry said in a statement posted on its website.

The United States and China had made progress in the talks, the ministry said, in terms of resolving the threat of IP theft, resolving cyber threats, improving rules for the country’s telecommunications industry and curbing the cross-border movement of lithium batteries, which is highly refined and is used in electric car batteries.

“Through a candid and close communication, we have already made considerable progress with the intention to make more substantial progress in the following days,” the ministry said in the statement.

It added that the United States agreed to provide “some benefits” for China to obtain a Temporary Import Permit for the transfer of lithium batteries from the United States.

U.S. Ambassador Terry Branstad met with Meng’s father, founder Ren Zhengfei, on Thursday in Beijing, the China News Service reported. On Wednesday, Wang Shouwen, spokesman for the embassy, declined to comment on whether the Canadian and Chinese officials had discussed Meng’s case.

Reporters from Bloomberg and the Wall Street Journal and ABC News reported at the time of Meng’s arrest that they were told by U.S. officials that the case related to an alleged fraud committed by Huawei.

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