WASHINGTON/OTTAWA (REUTERS) - A top executive of China's Huawei Technologies who is under arrest in Canada is set to appear in a Vancouver court on Friday (Dec 7) for a bail hearing as she awaits possible extradition to the United States.

Huawei CFO Meng Wanzhou, 46, who is also the daughter of the company founder, was arrested on Dec 1 at the request of the United States. The arrest occurred the same day US President Donald Trump and Chinese President Xi Jinping dined together at the G-20 summit in Buenos Aires.

The arrest, revealed by Canadian authorities late on Wednesday (Dec 5), was part of a US investigation into an alleged scheme to use the global banking system to evade US sanctions against Iran, people familiar with the probe told Reuters.

The news roiled global stock markets on fears the move could escalate a trade war between the United States and China after a truce was agreed on Saturday (Dec 1) between Trump and Xi in Argentina.

Trump did not know about plans to arrest Meng, two US officials said on Thursday (Dec 6), in an apparent attempt to stop the incident from impeding crucial trade talks with Beijing.

Huawei has appointed Chairman Liang Hua as acting chief financial officer (CFO) staff briefed on an internal memo told Reuters.

Meng's arrest during a stopover in Vancouver, announced by the Canadian authorities on Wednesday, pummelled stock markets already nervous about tensions between the world's two largest economies on fears the move could derail the planned trade talks.

Another US official told Reuters that while it was a Justice Department matter and not orchestrated in advance by the White House, the case could send a message that Washington is serious about what it sees as Beijing's violations of international trade norms.

The official, speaking on condition of anonymity, acknowledged that the arrest could complicate efforts to reach a broader US-China trade deal, but would not necessarily damage the process.

Canada's Justice Department has declined to provide details of the case and Meng has secured a publication ban, which curbs the media's ability to report on the evidence or documents presented in court.

The bail hearing could be just a preliminary session to set out a schedule, lawyers said. The Crown counsel is expected to argue that Meng poses a flight risk and should be kept in a detention facility, legal experts said. The onus will be on Meng's lawyer to provide evidence that she will not flee, they added.

LONG FIGHT

If granted bail, Meng will likely have to post bail with "a surety of several million dollars", Vancouver lawyer Gary Botting, who has experience with extradition cases, said. She would also have to give up her passport, he said.

Meng could also be fitted with electronic monitoring equipment, and the court could go so far as to order security to monitor her while she awaits a decision on extradition, lawyers said.

If Meng fights extradition, her case could go on for years, lawyers said, pointing to examples like Lai Changxing, a Chinese businessman who fled to Canada after he was implicated in a bribery case and fought extradition to China for 12 years. If she chooses not to fight, she could be in the United States within weeks, experts said.

"You need massive material and evidence to support detention release," said Richard Kurland, a Vancouver-based immigration lawyer.

He said Meng would likely be returned to detention if there was no decision on bail. It is unclear where Meng is being held in Vancouver. Several lawyers have noted that detention facilities in the region are spartan and she would likely be sharing her quarters with other inmates.

Meng's detention also raised concerns about potential retaliation from Beijing in Canada, where Prime Minister Justin Trudeau sought to distance himself from the arrest.

"The appropriate authorities took the decisions in this case without any political involvement or interference... We were advised by them with a few days' notice that this was in the works," Mr Trudeau told reporters in Montreal in televised remarks.

IRAN SANCTIONS

The United States has been looking since at least 2016 into whether Huawei violated US sanctions against Iran, Reuters reported in April.

More recently, the probe has included the company's use of HSBC Holdings to make illegal transactions involving Iran, people familiar with the investigation said.

In 2012, HSBC paid US$1.92 billion (S$2.63 billion) and entered a deferred prosecution agreement with the US attorney's office in Brooklyn for violating US sanctions and money laundering laws.

An HSBC spokesperson declined to comment on Thursday. HSBC is not under investigation, according to a person familiar with the matter.

After news of the arrest, Huawei said it has been provided little information of the charges against Ms Meng, adding that it was "not aware of any wrongdoing by Ms Meng".

Huawei is under intense scrutiny from Washington and other governments over its ties to the Chinese government, driven by concerns it could be used for spying.

It has been locked out of US and some other markets for telecom gear, but has repeatedly insisted Beijing has no influence over it.

On Friday, a person with direct knowledge and a person briefed on the matter told Reuters that Japan plans to ban government purchases of equipment from China's Huawei and ZTE Corp.

The Yomiuri newspaper, which first reported the news, said the Japanese government was expected to revise its internal rules on procurement as early as Monday to prevent intelligence leaks and cyber attacks.

ZTE pleaded guilty in 2017 to violating US laws that restrict the sale of American-made technology to Iran in efforts to curb Teheran's missile and nuclear programmes.

Before the arrest on Wednesday, Britain's BT Group said it was removing Huawei's equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

Republican Senators Ted Cruz, Marco Rubio and Ben Sasse welcomed news of the arrest and said the world's biggest telecoms equipment maker posed a security threat.

Cruz tweeted: "Huawei is a Communist Party spy agency thinly veiled as a telecom company."

Huawei has said it complies with all applicable export control and sanctions laws and other regulations.