By Eric Chen
On September 25, Meng Wanzhou, Chief Financial Officer (CFO) of Chinese telecommunications giant Huawei, arrived in Shenzhen, China on a plane specially chartered by the Chinese government. Meng had just been released after three years of detention in Canada following an arrest related to U.S. charges of bank fraud and wire fraud. Her return immediately precipitated a wave of media punditry regarding the hard-ball tactics that the Chinese government had employed to win her release, as well as the implication of these tactics regarding the deteriorating Sino-US relationship. Little attention has been paid, however, to the real elephant in the room: Huawei’s true identity as a state actor in the field of science and technology.
An apparent public relations coup for Huawei, Meng’s return to China was welcomed with much fanfare, from home-coming slogans to messages emblazoned on employees’ mugs. Her release may lead to trouble in U.S. courtrooms and congressional hearings; however, as the company works to fight a U.S.-led embargo on chip supplies that has caused an estimated 80 percent decline in Huawei’s smartphone sales over the past three years.
As the world’s largest telecommunication equipment maker, Huawei has been trying to penetrate the western markets in the past decade. Its ambitious campaign for global expansions, however, has largely stalled in recent years due to intervention by the U.S. government on suspicion of the company’s close ties to the Chinese government, a charge that Huawei vehemently denies. So far, the most effective defense the company has put up is the claim that it is privately-owned and would not spy for any government. Yet the effort expended by the Chinese government to secure Meng’s release paints a different picture.
The moment Meng was detained in 2018, securing her release became one of the top priorities of China’s diplomatic establishment. The Chinese Embassy in Canada swiftly issued a stern statement demanding that Canada and the U.S. clarify their positions on the matter, and Geng Shuang, the Chinese Foreign Ministry spokesperson, issued a briefing shortly afterward that highlighted the same message. Geng went on to hold a press conference in 2019 in which he emphasized the “clear-cut” and “firm” position of the Chinese government, charging that Meng’s arrest constituted an abuse of the United States’ extradition treaty with Canada.
During 2020, three colleagues of Geng, on three different occasions, called for Meng to be released unconditionally. One of them, Hua Chunying, made an official remark within 24 hours of Meng’s return that the fraud charges against Meng were baseless and her detention was arbitrary. It remains a mystery how the Chinese government can be so sure of a private citizen’s innocence in her overseas business dealings right after her detention when her employer, presumably a private business, claims to operate beyond the orbit of China’s official hierarchy.
The Chinese government’s efforts on Meng’ behalf stands in stark contrast to its historical lack of regard for the personal welfare of its citizens, sometimes in the face of millions of deaths brought on by great famines and atrocious wars. The CCP’s apathy and callousness amidst rioting against overseas ethnic Chinese in Southeastern Asia in the past four decades was also symptomatic of its consistent disregard. The unusual, unprecedented care taken in Meng’s case, however, can only be equaled by the extremist tactics that the CCP used to pressure the Canadian government. Just nine days after Meng’s arrest, two Canadians who were in China at the time, Michael Spavor and Michael Kovrig, were rounded up and charged with espionage. They were kept in custody and only released on the same date when Meng regained her freedom.
Even before Meng’s detention, there was already circumstantial evidence that would cast doubts over Huawei’s claim of independence from the Chinese government. The company, launched in 1987 by Ren Zhengfei, Meng Wanzhou’s father, shares the name Huawei (华为) with the protagonist of the best-selling novel, Red Rock, in which a handsome communist agent enrolled at Chong King University counters the nationalist police and their CIA advisors ahead of the communist takeover of the city of Chong King. The novel was published coinciding with the enrollment of a student at Chong King University and must have caught the imagination of that youngster and harbored similar aspirations. That student’s name is: Ren Zhengfei.
Several years ago, internet searches conducted on Ren’s biographical information revealed that he joined the Engineering Corp of the People’s Liberation Army (PLA) after college and became so distinguished in his service that he was invited to attend, as a delegate of the PLA, the prestigious National Conference for Science. Since the eruption of controversy around Huawei’s connection with the Chinese government and the entailed security concerns for Huawei’s clients, this illustrious chapter in Ren’s career has been neatly expunged from the web.
Huawei’s military background is borne out by its extensive recruiting of those with backgrounds in Science, Technology, Engineering, and Mathematics (STEM) talents from Chinese universities affiliated with the PLA. The former, the well-known Xi’an-based PLA Institute of Telecommunications (中国人民解放军军事电信工程学院) (commonly known as Xi Jun Dian (西军电)), now renamed to the Xidian University (西安电子科技大学), has perennially been at the top of the list of universities ranked by the number of graduates that the tech giant gobbles up. This school, along with the PLA’s Harbin-based Military Engineering Institute (中国人民解放军军事工程学院) (also known as Ha Jun Gong (哈军工)), is one of China’s premier universities in science and technology for military applications. Now, China’s Jun Gong Qi Zi (军工七子), referring to the 7 universities tasked with training scientists and technicians serving the needs of the PLA, including all Ha Jun Gong campuses scatted across the country, are on the entity list of the U.S. Department of Commerce, meaning they are banned by the U.S. government in personnel exchange and equipment acquisitions; these are major feeder schools for Huawei.
No one can question the Chinese Government’s role in Huawei’s growth. As far back as 1999, Wu Bangguo, China’s Vice-Premier in charge of state-owned enterprises, personally intervened to clear Huawei of a tax fraud allegation. According to a Wall Street Journal article published in December 2019, the company has received as much as $75 billion in tax breaks over the years. In the five-year span prior to the article’s publication, Huawei’s official subsidies, as disclosed in the company’s annual reports, were 17 times larger than similar subsidies disclosed by Nokia Corp, the world’s second-largest manufacturer of telecom equipment.
The support that Huawei has received stands in contrast to the CCP’s recent stance on the Chinese private sector as a whole. According to a Wall Street Journal article published in December 2020, the Chinese government launched a campaign against private business to rein them in by “installing more Communist Party officials inside private firms, starving some [firms] of credit and demanding executives tailor their businesses to achieve state goals.” In November 2020, the government blocked a $37 billion initial public offering, touted as the largest in history, of Ant Group, one of China’s biggest private businesses. Around the same time, Ant Group’s owner, the legendary entrepreneur Jack Ma, disappeared from the public view for several months while Alibaba, also owned by Ma, was entangled in an antitrust investigation.
The Wall Street Journal also highlighted the dramatic drop from grace – and loss of fortune – of Wen Jianping, another billionaire, the owner of the former Beijing OriginWater Technology (which is now being forcefully taken over by a state-owned firm). Wen likened state companies to trees and private firms to shrubs. He said, “In the future, the trees will become larger and larger… shrubs will be transformed, becoming either a branch or an herb and the herb will die.”
Meanwhile, the Huawei tree grows bigger and bigger. Indeed, Jack Ma’s sudden disappearance and Wen Jianping’s surreal change of fate provide the perfect context for interpreting the Chinese government’s support of Meng Wanzhou surrounding her detention in Canada.
Meng’s release may have announced the end of the saga of “saving CFO Wanzhou.” Meanwhile, it offers the most damning evidence that Huawei is a state actor, and that Meng is a political figure in the eyes of the Chinese government. If anyone still believes Huawei is no threat to U.S. security and that its embargo should be lifted, he is an ostrich burying his head in the sand.