The Huawei Hostage Crisis Is Not Over – It Has Escalated

The history of official hostage-taking in China goes back three thousand years. It is part of the country’s political culture. 

The Zuo Zhuan (The Commentary of Zuo), an ancient Chinese narrative history covering the 8^th century B.C to the 5^th century B.C., describes, for example, a dispute between two warring states – Chin and Ch’in. The duke of Ch’in had been lucky enough to capture the lord of Chin. But the enemy leader was just one individual. What to do what him, to achieve a larger victory? Executing him would only reinforce the opposing armies’ will to resist. Wise advice was given:

• Send him home but keep his heir here as a hostage. That way you are certain to reach an overall settlement. It is too soon to go for total military victory. 

Sun Tzu – the iconic military strategist from the 6^th century BC– alludes to the use of hostages in passing; his later commentators expanded and debated the concept. By the time of the Han Dynasty (202 BC–220 AD) hostage-taking is being extended from the purely military to the diplomatic sphere.  

• “Taking unilateral hostages was a standard practice for the centralized monarchy to control smaller barbarian states.”

The practice persisted down to modern times: 

• “The use of hostages existed as an institution in China until the middle of the seventeenth century. From the famous exchange of hostages between Chou and Cheng in 720 B.C. to the Korean hostages held by the Manchu rulers between 1637 and 1645, numerous examples can be cited. Chinese dynasties have found the system useful…”

Of course it didn’t stop there. The Communist regime inherited the political culture and many of the habits of the Mandarins, including a penchant for hostage diplomacy.  

• “During the radical phase of the Cultural Revolution in 1967–1969, China’s violation of the diplomatic norms of the international community reached an unprecedented level. Two dozen British diplomats and private citizens on the mainland became de facto hostages of their host government.” 

More recently, China has been accused of kindapping and imprisoning Australian citizens, Swedish citizens and imposing exit bans (i.e., denial of permission to leave the country, a softer form of hostage-ship) on many others, including U.S. citizens, often for trivial or unspecified offenses. The State Department has warned of the capricious and unpredictable nature of these policies.  

• “U.S. citizens only become aware of an exit ban when they attempt to depart the PRC, and there is no reliable mechanism or legal process to find out how long the ban might continue or to contest it in a court of law.” 

The Princess of Huawei 

The latest case has escalated the policy to a new level, and a new context.  

In December 2018, Canadian authorities detained Meng Wanzhou, the Chief Financial Officer and daughter of the founder of Huawei, the Chinese “champion” company that had become the largest supplier of wireless equipment in the world. Huawei has run afoul of U.S. and other countries over alleged national security violations, and the detention of “the Princess of Huawei” was seen as part of a campaign against Huawei. Meng was charged at the request of the American Department of Justice, with bank fraud, lying to investigators, and other crimes, in connection with an attempt to conceal violations of the sanctions against Iran. 

A week later, China arrested two random Canadians, Michael Spavor and Michael Kovrig. It has been clear from the outset that they were taken as hostages. Here is a summary of the case from a lead editorial last March in the Washington Post 

• “The two men are not, and never were, spies: Mr. Kovrig is a former diplomat who worked as a researcher for the International Crisis Group, while Mr. Spavor ran a nonprofit…
• “For the past 27 months, they have been hostages, held by the regime of Xi Jinping as a way of pressuring Canada in the case of a prominent Chinese business executive. A Canadian Court is considering whether to allow the extradition to the United States of Meng Wanzhou, the chief financial officer of the telecom giant Huawei and the daughter of its founder. She may or may not be guilty, as U.S. prosecutors charge, of deceiving banks about a scheme by Huawei to violate sanctions against Iran. But that will be decided by independent courts in Canada, and perhaps eventually, the United States. In the meantime, she is living in a seven-bedroom mansion in Vancouver and is free to receive guests and shop in luxury stores. On Christmas, she dined in a restaurant opened exclusively for her party of 14, in apparent violation of coronavirus lockdown rules.
• “Mr. Spavor and Mr. Kovrig, in contrast, have been confined to prison cells with virtually no access to the outside world. Both have been subjected to harsh interrogations including tactics such as sleep deprivation. Mr. Spavor has been allowed to call his family once in two years; Mr. Kovrig has said his diet has sometimes been limited to rice and boiled vegetables. When they were tried in Beijing and the northeastern city of Dandong, Canadian and other diplomats were excluded from the courtrooms and Western journalists waiting outside were harassed.”  

The official line from China, of course, was denial, laced with umbrage.  

• “China’s ambassador to Canada Cong Peiwu accused Canada of “gross interference” in the Chinese justice system for even suggesting the cases were related. When the Michaels passed their 1,000th day in prison, the Chinese Embassy issued an official statement asserting “the Meng Wanzhou incident is entirely different from the two Canadians.”

Nevertheless, just in case anyone might make the mistake of believing Mr. Cong and the denials – and thus missing the import of the threat – the foreign ministry in Beijing allowed as how “releasing Meng could open up space for resolution to the situation of the two Canadians.”

Of course, the denouement this week — with Meng suddenly cutting a deal, admitting to participating in fraud, and returning in roses and Prada Red to a “triumph” in China – which was followed immediately by the release of the Two Michaels – made clear what everyone knew from the start. 

• “Within hours of Meng walking free from a Vancouver courtroom, China suddenly lost all interest in the battery of espionage charges faced by the two Michaels and put them on a jet for Calgary.”

This was just as much a hostage situation as the taking of the American embassy in Iran 40 years ago.

What The Meng Episode Means (1): Is Huawei A Tool of The CCP?

Meng’s release, and injudicious remarks, do not bode well for Huawei.

Huawei has always denied that they are controlled by the Chinese government, or that the equipment they sell comprises any sort of security risk. 

Personally, I tend to believe this is true. What I also believe however, is that Huawei has made its compact with the devil in other ways. They have chosen to “go along” with Beijing, a path different from the one Jack Ma chose – which brought him to great grief (as detailed in several previous columns). I think Huawei accepted that it had to accede to certain of Beijing’s geopolitical goals, and this is what has gotten the company into trouble. 

For example, this thing that tripped up Meng… a few words (presumably) on a Powerpoint slide to a group of bankers. It was so unnecessary, so self-inflicted. Unless it was dictated by a higher power. It is inconceivable to me that a company with a management as smart as Huawei would have risked so much, risked its reputation, its access to important markets, to crucial technologies, risked the good will of the West in general – for the sake of some commercially meaningless business with… Iran? North Korea? The North Korean deal was worth about $600,000, gross. Huawei’s revenue last year was $136 Billion.

There is no convincing rationale for the company’s involvement with these bad actors – except that it somehow aligned with Beijing’s Big Plan. I have tended to see Huawei as a sort of victim. I can even see Meng herself as something of a victim. I don’t think she wrote the script she was asked to deliver. 

Could it be so? I have raised this hypothesis with several Huawei “insiders” — and I’ve never gotten any pushback.  

I also cannot believe that Huawei would sanction hostage diplomacy. They must know how bad it makes them look. But — what could they do? 

In any case, it may not matter now. The Meng episode – her triumphant MacArthur-esque Return, her obsequious thanks to Xi Jinping, and the clear quid pro quo of the Two Michaels’ concurrent release – will only exacerbate the damage to Huawei’s reputation, and its prospects outside China. It makes it all the easier for unsympathetic observers to think the worst. Here is the Washington Post again, from today (September 27): 

• “Huawei, one of the world’s largest telecommunications firms, is nominally private, supposedly owned by its employees and controlled by senior executives and its founder, Ren Zhengfei. Ren has repeatedly claimed he runs an ‘independent business organization.’ He insists Huawei operates entirely independently of the party-state structure.”

But if that is true, how could it even be remotely possible for Kovrig and Spavor to get released at the same time as Meng? There is only one reasonable explanation for that level of coordination: Huawei serves the Chinese Communist Party, and the party helps Huawei.

All the efforts Huawei has put into portraying its image in a positive light… are undone by this. The Post concludes, as many will –

• “The most important lesson is about Huawei itself. The saga proves just how close Huawei is to Beijing.”

What The Meng Episode Means (2): Escalation, Not Resolution 

The real danger here is that China has learned its lesson… Hostage-taking works. 

Worse – they’ve now seen that it works in the new context of economic competition with the West. The dispute here was all about the commercial prospects for Huawei. Meng is a corporate executive, not a diplomat. She is personally guilty, at most, of financial fraud. 

This is a new twist, and a dangerous one. The Huawei episode marks the first time China has taken hostages to achieve a purely economic objective. Originally, hostage-taking was a military measure – and associated with the brutality of war in general. Centuries ago, it was adapted to diplomatic ends. Now – it has come to the commercial sphere. It has become an instrument of China’s industrial policy.

Are Americans at risk? Of course we are. Hostage-taking has already been applied to U.S. citizens in the diplomatic context. The Chinese used Americans held prisoner in China as pawns in the negotiations with Richard Nixon. 

• “Nixon’s February 1972 visit to China and the signing of the Shanghai Communique, [led to] the release of the last US prisoner in the PRC…. Nor have the Chinese forgotten the importance of holding “hostage” US values with the greatest popular appeal (e.g., importance of the individual, hence the emphasis on the return of prisoners).”

Will this now extend to economic and technological rivalries? 

Last year, China openly threatened to take American hostages once again.

• “Chinese government officials are warning their American counterparts they may detain U.S. nationals in China in response to the Justice Department’s prosecution of Chinese military-affiliated scholars, according to people familiar with the matter. The Chinese officials have issued the warnings to U.S. government representatives repeatedly and through multiple channels, the people said, including through the U.S. Embassy in Beijing.The Chinese message, the people said, has been blunt: The U.S. should drop prosecutions of the Chinese scholars in American courts, or Americans in China might find themselves in violation of Chinese law.”

In response, the American government has issued travel warnings to American citizens. 

A Personal Coda

A few weeks ago, I discussed the personal implications of all this, given that I have written pieces like this one, with a very well-informed Chinese friend, not normally an alarmist. They said that I would probably not have to worry too much about the harsher forms of harassment – “because you’re not Chinese-American” – but I should take it as a certainty that my next visa application would be denied. It’s sad to think that one has to have this sort of conversation. But I must assume the risk is real. 

The end of the Meng-Wanzhou/Kovrig/Spavor stand-off feels like it ought to be an end-point, but instead of a sense of relief there is a feeling of uncertainty and apprehension. As the Washington Post put it: “The Huawei case should frighten any Western national living in or traveling to China.”