Canadian entrepreneur Michael Spavor (pictured) and former Canadian diplomat Michael Kovrig were arrested in China in 2018 on charges of espionage and sharing state secrets, and held in prison since then. Spavor’s trial was on March 19, 2021, in Dandong near China’s border with North Korea. Kovrig’s trial was on March 22 in Beijing. As of this writing, no verdict has been announced.

Their trials coincided with the U.S-China Summit in Anchorage, Alaska, on March 18 and 19, 2020, which involved a tense back-and-forth between the two countries. Court proceedings were closed-door and Spavor’s and Kovrig’s lawyers were not allowed to be present. That, according to Canada’s deputy chief of mission in China, violates the Canada-China consular agreement.

Prime Minister Justin Trudeau is confident that the arrest of the “two Michaels” was in retaliation for the arrest of Meng Wanzhou, CFO of Huawei Technologies Co., at Vancouver International Airport in December 2018. Meng, the daughter of Huawei founder Ren Zhengfei, was arrested in compliance with the U.S.–Canada extradition agreement. She was charged with fraud and violating trade sanctions by selling U.S.-made technology to Iran.

The episode points up the role that industrial espionage and technology theft has played in China’s recent resurgence — and the high stakes for travelers from many nations.

Huawei has denied working with Iran, but recently released documents from 2010 show that Huawei supplied Iran with Hewlett-Packard computer equipment. Meng’s extradition hearing in Canada began on October 26, 2020. Final arguments are likely to occur in May.

The Two Michaels are not the only ones that have been caught up in “hostage diplomacy.” Canadian Robert Shellenberg was arrested in China on drug smuggling charges in 2014. In December 2018, after Meng’s arrest, he was retried in China after an appeals court decided his 15-year sentence was too light and given the death penalty. China also gave the death penalty to Canadian citizens Fan Wei, Xu Wiehong, and Ye Jianhui, all on drug smuggling charges. They were also given these sentences after Meng’s arrest.

Canadian missionaries Kevin and Julia Garratt, who had lived in China since 1984, were arrested in 2014 on charges of spying. Kevin Garratt spent two years in the same jail in which Kovrig and Spavor are held. The Garratts, who were later released, were arrested after Su Bin, a Chinese businessman and hacker, was arrested in Canada on charges of stealing information on U.S. military aircraft. Su, extradited to the United States, was sentenced by U.S. court to four years in prison and a $10,000 fine .

Meng, who is out on bail, is reportedly staying at one of her homes in Vancouver. According to The Economist, she is able to go shopping and visit her friends. Meanwhile, Kovrig and Spavor are likely experiencing conditions similar to Garrett’s while he was in the same jail:

The food came in through a slot in the door and I ate with other prisoners sitting around a plastic bowl… I was told I might be executed or sent to North Korea,” he said. “I wasn’t physically tortured, but I was forced to sleep on a wooden board with a thin cotton pad and the lights on 24 hours a day. There were guards and cameras watching constantly.”

Mike Smuth, “What’s it like to be jailed and tried in China? Ask those who’ve been through it” at Global News (March 21, 2021)

Some nations are sensing the threat. The U.S. and several other countries have banned the use of equipment from China’s two largest telecommunications companies, Huawei and ZTE, out of concern that state-backed hackers will spy on American companies and individuals.

The fall of Canada’s Nortel: A cautionary tale

Back in 2000 when some of us were just entering college, Nortel Networks Corp., headquartered in Ottawa, was one of the big names in telecommunications equipment. Bloomberg says that in 2000, Nortel’s market value was around C$367 billion (U.S. $250 billion):

The company dominated the market for fiber-optic data transmission systems; it had invented a touchscreen wireless device almost a decade before the iPhone and controlled thousands of fiber-optic and wireless patents. Instead of losing its most promising engineers to Silicon Valley, Nortel was attracting brilliant coders from all over the world. The company seemed sure to help lay the groundwork for the next generations of wireless networks, which would be known as 4G and 5G.

Natalie Obiko Pearson, “Did a Chinese Hack Kill Canada’s Greatest Tech Company?” at Bloomberg (July 1, 2021)

It was also around 2000 that a hacking group out of China started a decade-long siphoning of Nortel’s intellectual property. The Canadian Security Intelligence Service had detected data transfer from Nortel to China in the late 1990s, but for various reasons, Nortel did not do enough to address the issue. By 2004, Chinese hackers had access to any document they wanted from Nortel’s employees, including its chief executive:

Hackers had stolen his password and those of six others from Nortel’s prized optical unit, in which the company had invested billions of dollars. Using a script called Il.browse, the intruders swept up entire categories from Nortel’s systems: Product Development, Research and Development, Design Documents & Minutes, and more. “They were taking the whole contents of a folder—it was like a vacuum cleaner approach,” says Brian Shields, who was then a senior adviser on systems security and part of the five-person team that investigated the breach.

Natalie Obiko Pearson, “Did a Chinese Hack Kill Canada’s Greatest Tech Company?” at Bloomberg (July 1, 2021)

In 2009 Nortel filed for bankruptcy. And just as Nortel was on the decline, a Chinese telecom company that was known for making inexpensive equipment started taking off: “This is plain and simple: Economic espionage did in Nortel,” Shields recalls, “And all you have to do is look at what entity in the world took over No. 1 and how quickly they did it.”

That entity was Huawei.

Next: Huawei’s history of copying its competitors and then underbidding them to get ahead.

Note: The photo of Michael Spavor is courtesy Daehanmindecline (CC BY-SA 4.0).

You may also wish to read: The age of the Wolf Warrior: China’s post-pandemic strategy The younger diplomats take their cue from a Chinese Rambo-style movie and the rewritten history they learned at school.