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China Frees Canadians After Huawei CFO Leaves, Ending Crisis

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(Bloomberg) -- In a sudden resolution to a diplomatic crisis between the U.S., China and Canada, a top Huawei Technologies Co. executive flew home as China released two jailed Canadians.

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For almost three years, Meng Wanzhou, Huawei’s chief financial officer, was under house arrest in Vancouver as she battled extradition to the U.S. on fraud charges. Across the Pacific, Michael Kovrig and Michael Spavor -- detained within days of Meng’s December 2018 arrest -- languished in Chinese jails, pawns caught in a geopolitical rivalry between the U.S. and China.

The seemingly intractable impasse came to a rapid resolution Friday after Meng struck a deferred prosecution agreement with U.S. authorities to resolve criminal charges against her. Within hours, the Supreme Court of British Columbia discharged her and Meng immediately left for the airport to board a chartered Air China flight back to Shenzhen, home to the Chinese technology giant’s headquarters.

Shortly after, Prime Minister Justin Trudeau announced that the two Michaels, as they’re known in Canada, were also on their way home.

“There is going to be time for reflections and analysis in the coming days and weeks,” Trudeau told reporters in Ottawa. “But the fact of the matter is I know that Canadians will be incredibly happy to know that right now, this Friday night, Michael Kovrig and Michael Spavor are on a plane and they’re coming home.”

China on Saturday reiterated its stance on the issue, saying the arrest of Meng was a political persecution against Chinese citizens with a purpose to suppress Chinese high-tech companies. What the U.S. and Canada did is a typical arbitrary detention, state broadcaster CCTV said on Saturday, quoting Foreign Ministry spokeswoman Hua Chunying.

U.S. Secretary of State Antony Blinken said in a statement that his government welcomed China’s decision to release the two Canadians “after more than two-and-a-half years of arbitrary detention.”

The long-running case became a symbol of the intensifying geopolitical rivalry between the U.S. and China, throwing into stark relief the risk faced by those who get caught in the middle. Within days of her arrest, Chinese authorities jailed two Canadians, triggering a diplomatic showdown that has cost billions of dollars in lost trade and plunged bilateral relations to their worst point in decades.

U.S. prosecutors in Brooklyn had charged Meng with fraud, accusing her of lying to HSBC Holdings Plc about Huawei’s business dealings in Iran as part of an attempt to violate U.S. trade sanctions. Meng had denied any wrongdoing and accused the U.S. of overreach.

Appearing by video on Friday, Meng pleaded not guilty in a Brooklyn courtroom but subsequently admitted to misleading a financial institution about Huawei’s business operations in Iran. U.S. government lawyers said they will defer prosecution in the matter and dismiss the charges entirely by Dec. 1, 2022, if Meng complies with terms of the agreement, which include refraining from saying anything that contradicts U.S. prosecutors’ stated facts about the case.

Huawei said in a statement on Saturday that it looks “forward to seeing Ms Meng returning home safely to be reunited with her family.” The company will continue to defend itself against the allegations in the U.S. court.

The subject of Meng’s return trended on Chinese social media Saturday, attracting more than 110 million views on the country’s Twitter-like website Weibo.

The Communist Party’s People’s Daily said in a Weibo post that it was because of China’s “relentless efforts,” while Global Times Editor-in-Chief Hu Xijin said in a post that he hoped Meng’s release could help thaw China’s relationship with Canada and improve ties with the U.S.

Since Meng’s arrest during an airport stopover in Vancouver, her case has emerged as part of a broader effort by the U.S. government to contain Huawei, which Washington has designated a national security threat. The Chinese Communist Party, in turn, saw the pursuit of Meng -- the eldest daughter of Huawei’s powerful founder -- as a politically motivated attack on one of its chief technology champions.

The two Michael’s release is a critical triumph for Trudeau, just days after a national election in which he faced stiff criticism from the rival Conservatives over his handling of relations with Beijing.

China had repeatedly linked the cases of the two Michaels, as they are known in Canada, to Meng’s, with a Foreign Ministry spokesman saying last year that halting her extradition “could open up space for resolution to the situation of the two Canadians.”

Spavor, a Canadian tour organizer, was sentenced last month to 11 years for spying. There had not yet been a verdict for Kovrig -- a Hong Kong-based analyst at the International Crisis Group and former Canadian diplomat -- who was arrested the same day as Spavor. The two men were detained more than 1,000 days.

(Updates with CCTV report in 6th paragraph.)

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