The daughter of Huawei's founder, a top executive at the Chinese technology giant, was arrested in Canada and faces extradition to the United States, roiling global stock markets as it threatened to inflame Sino-US trade tensions afresh.
The shock arrest of Meng Wanzhou, 46, who is Huawei Technologies Co Ltd's chief financial officer, raises fresh doubts over a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on Saturday - the day she was detained.
Her arrest, revealed late on Wednesday by Canadian authorities, is related to US sanctions, a person familiar with the matter said. Reuters was unable to determine the precise nature of the possible violations.
Sources told Reuters in April that US authorities have been investigating Huawei, the world's largest telecoms equipment maker, since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanctions laws.
US stock market and Asian shares tumbled as news of the arrest heightened the sense a major collision was brewing between the world's two largest economic powers, not just over tariffs but also over technological hegemony.
Huawei is already under intense scrutiny from US and other western governments about its ties to the Chinese government, driven by concerns it could be used by the state for spying. It has been locked out of the United States and some other markets for telecom gear. Huawei has repeatedly insisted Beijing has no influence over it.
Meng was arrested on Dec 1 at the request of US authorities and a court hearing has been set for Friday, a Canadian Justice Department spokesman said. Trump and Xi had dined in Argentina on Dec 1 at the G20 summit.
Chinese foreign ministry spokesman Geng Shuang told a daily briefing yesterday that China had asked Canada and the United States for an explanation of Meng's arrest, but they have “not provided any clarification". On Wednesday, China's embassy in Canada said it resolutely opposed the arrest and called for her immediate release.
Jia Wenshan, a professor at Chapman University in California, said the arrest "runs a huge risk of derailing the US-China trade talks".
While Meng's arrest comes at a delicate time in US-China relations, it was not clear if the timing was coincidental.