Investors stampeded for the safety of government debt, pushing the yield on the US 10-year Treasury note back below 2.9 percent to its lowest level in three months.
Only minimal details are out yet, but as per some sources, she was arrested on December 1st in Vancouver and will have a first bail hearing on December 7th.
"China should be fully prepared for an escalation in the #tradewar with the USA, as the United States will not ease its stance on China, and the recent arrest of the senior executive of #Huawei is a vivid example", the tweet, which had opposing fists with Chinese and U.S. flags superimposed upon them, said.
This year, the Treasury and Commerce Department also asked the Justice Department to investigate Huawei for possibly violating economic sanctions against Iran, according to an official who spoke on the condition of anonymity because he was not authorized to discuss the investigation.
Later, other sources claimed that the arrest had been made to investigate whether Huawei violated U.S. sanctions on Iran or not.
Lu Xiang, an expert on China-U.S. relations at the state-backed Chinese Academy of Social Sciences, said the arrest of Meng is "extremely shocking".
Meng was changing flights in Canada when she was detained "on behalf of the United States of America" to face unspecified charges in NY, according to a Huawei statement.
The detention of Meng Wanzhou, Huawei's chief financial officer, comes after American authorities reportedly launched an investigation into suspected Iran sanctions violations by Huawei, which was already under scrutiny by USA intelligence officials who deemed the company a national security threat.
The timing of the arrest could not have come at a worse time for Huawei. But if the transcript the SCMP obtained is genuine, the dialogue helps explain the background of Meng's arrest in Canada.
Huawei said it was unaware of any wrongdoing by Meng and was provided "very little information" about the charges.
Huawei has said it complies with all applicable export control and sanctions laws and US and other regulations. Under U.S. President Donald Trump and his predecessor, Barack Obama, Washington has pressured European countries and other allies to limit the use of its technology.
Meng's arrested caused global markets to tumble and prompted a stern response from China, which has demanded her immediate release. Earlier this year, it was reported that Huawei continued to sell network equipment to the Persian Gulf nation despite Washington's punitive measures.
If there is no deal at the end of that period, the U.S. will increase tariffs on US$200 billion of Chinese goods from 10 per cent to 25 per cent.
Huawei is not the first Chinese telecoms equipment firm to face the ire of U.S. authorities. Huawei also recently surpassed Apple as the second biggest maker of cellphones after South Korea's Samsung Electronics Co.
David Mulroney, a former Canadian ambassador to China, says that while he doesn't want to overstate the possibility of a Canadian being jailed, China will be looking for ways to strike back.
A Chinese government statement said Meng broke no United States or Canadian laws and demanded Canada "immediately correct the mistake" and release her. Huawei has since been blocked from selling its gear in Australia and New Zealand, got frozen out of a Korean contract, and faces US -led competition even in Papua New Guinea.
Despite being essentially barred from the critical USA market, Huawei surpassed Apple to become the world's number two smartphone maker in the second quarter of this year.
Meng's arrest also threatened to inflame disagreements over Iran and Trump's decision to break with other governments and re-impose sanctions over the country's nuclear development.