Foreign businesses in China rattled by ‘hostage diplomacy’

Huawei executive Meng Wanzhou’s return from Canada this week was lauded as a diplomatic triumph in China, but the celebrations left a bad taste for the expat business community, already rattled by the threat of “hostage diplomacy”.

That dread was based on the part of the story Chinese state media were largely silent about -- just as flag-waving crowds prepared to welcome Meng at Shenzhen airport, two Canadians were heading the other way after being detained for nearly three years.

Ex-diplomat Michael Kovrig and businessman Michael Spavor were seized in China in December 2018, just days after Meng was detained in Vancouver on a US warrant in a fraud case.

Beijing insisted these were unrelated events, but the detention of the “Michaels” was widely seen as retaliation, an impression reinforced when they were released exactly as Meng left for China.

“It increasingly seems like business is being more politicised,” said Steven Lynch, managing director of the British Chamber of Commerce in China.

And a Shanghai-based Canadian manager said: “The celebratory, nationalist reception of Meng was off-putting to quite a few international executives here.”

Foreign firms in China have always trod a fine line on politically sensitive issues to not upset the authorities in the world’s second-largest economy.

But the Meng-Michaels case ramped up fears about staff being arrested based on diplomatic hostilities between China and their home countries.

Many firms beefed up their risk strategy and drew up “frantic” contingency plans for possible staff detentions, according to the Canadian manager in Shanghai.