China on Thursday demanded Canada release a Huawei Technologies executive who was arrested in a case that adds to technology tensions with Washington and threatens to complicate trade talks.
Huawei's chief financial officer, Meng Wanzhou, faces possible extradition to the United States, according to Canadian authorities. The Globe and Mail newspaper, citing law enforcement sources, said she is accused of trying to evade U.S. curbs on trade with Iran.
The timing is awkward following the announcement of a U.S.-Chinese cease-fire in a tariff war over Beijing's technology policy. Meng was detained in Vancouver on Saturday, the day Presidents Trump and Xi Jinping met in Argentina and announced their deal.
Stock markets tumbled on the news, fearing renewed U.S.-Chinese tensions that threaten global economic growth. Hong Kong's Hang Seng lost 2.5% and the DAX in Germany sank 1.8%.
The Chinese government said Meng broke no U.S. or Canadian laws and demanded Canada "immediately correct the mistake" and release her.
Beijing has asked Washington and Ottawa to "immediately release the detained person" and explain the reason for her arrest, said a foreign ministry spokesman, Geng Shuang.
Huawei Technologies Ltd., the biggest global supplier of network gear used by phone and internet companies, has been the target of deepening U.S. security concerns. Under Trump and his predecessor, President Obama, Washington has pressured European countries and other allies to limit use of its technology.
The United States sees Huawei and smaller Chinese tech suppliers as possible fronts for Chinese spying and as commercial competitors. The Trump administration says they benefit from improper subsidies and market barriers.
Trump's tariff hikes this year on Chinese imports stemmed from complaints that Beijing steals or pressures foreign companies to hand over technology. But American officials also worry more broadly about Chinese plans for state-led industry development they worry might erode U.S. industrial leadership.
U.S. leaders also worry that Beijing is using the growth of Chinese business abroad to gain strategic leverage.
"The United States is stepping up containment of China in all respects," said Zhu Feng, an international relations expert at Nanjing University. He said targeting Huawei, one of the most successful Chinese companies, "will trigger anti-U.S. sentiment in China."