The arrest of Meng Wanzhou, chief financial officer of Huawei, sent shockwaves through policy circles in Washington, D.C., as well as in government and corporate actors in China.

There has been much handwringing over what President Trump knew about the arrest — which came on the same day as his meeting with Chinese leader Xi Jinping on the sidelines of the G20 — and when he knew it, but that narrow focus ignores the bigger picture here.

Meng’s arrest confirms what many already suspected: Huawei presents a multifaceted threat to U.S. interests, both at home and abroad.

It is true that Huawei is a private company and that, as a private company, it is profit-driven in a way that China’s behemoth state-owned enterprises are not. But no company in China is truly independent of the Chinese Communist Party — when the party calls, phones are answered and directives are undertaken. This is why U.S. policymakers have moved to essentially block Huawei (and its smaller Chinese cousin, ZTE) from the U.S. market.

There is little reason to believe that its network technology and cell phones would not provide the CCP and its armed wing, the People’s Liberation Army, with backdoor access to American communication networks — including those used by for national security purposes — and infringe on the privacy of American users.

Indeed, this concern has only grown as telecommunications companies begin to roll out fifth-generation (5G) mobile technology. High-speed 5G networks make possible the accelerated growth in the “internet of things,” as more and more consumer products — from refrigerators to home security systems to vehicles — become networked, developments which will undergird the next innovation economy.

Huawei, and China more broadly, wants to set 5G standards and dominate the information and communications technology (ICT) sector going forward. It is in a competition with U.S. companies to do so.

China, unfortunately, does not need the U.S. market to win the 5G competition. With much of the rest of the world open to Chinese telecom products, Chinese corporations’ big spending on research and development and China’s aggressive and perhaps underhanded efforts in international standards-setting bodies, the race for 5G has turned into a heavyweight bout.

Huawei and its sister companies, like ZTE, all backed by the Chinese Communist Party, have a real shot at the title.

If they win this race, not only will the United States lose out on hosting the 5G industrial ecosystem (as it did for 4G), which would put U.S. tech firms at a competitive disadvantage, but it would also own the patents necessary for building 5G networks. In licensing those patents to U.S. companies, Huawei could introduce vulnerabilities in American networks without having to directly provide its own technology.

There is also a contrary concern: that the CCP could direct Huawei not to license 5G patents to American companies, thus inhibiting 5G’s penetration in the United States. Such a decision could easily, and reasonably, be interpreted as an act of economic warfare.

Even with Huawei locked out of the American market, Huawei’s global activities have implications for U.S. national interests. Many American security allies have been slow to come around to the American point of view on Huawei and, until recently, had been welcoming of Huawei technology.

Latent concerns among U.S. allies, however, are finally coming to the fore — though those concerns are insufficiently widespread, particularly within NATO, and debates over Huawei in places like the U.K. are far from settled.

Nor is Huawei just a concern when it does business with U.S. allies. Xi Jinping’s key foreign policy effort has, perhaps, been the Belt and Road Initiative (BRI), more accurately called a Belt and Road “strategy.” The BRI aims to build infrastructure across Asia, Europe, Africa and now Latin America, tying those places to China and establishing China as the new center of the global economy.

There has been much attention paid to the bridges, railroads, and highways that China is funding, but communications infrastructure is also a focus for BRI investments. If Beijing has its way, mobile networks from Krakow to Kuala Lumpur and from Abuja to Astana will be built on Huawei technology.

The implications for Chinese influence, Chinese espionage efforts and America’s own activities in these countries will be substantial and harmful to American interests.

As serious as all of these concerns are, the Meng arrest demonstrates that, whether on its own volition or at the direction of the Party, Huawei is also seeking to directly undermine U.S. foreign policy interests. Meng was arrested not for IP theft or cyber intrusions but for defrauding banks — essentially, for tricking them into violating American financial sanctions on Iran.

If the case against Meng is solid — and once would think it must be for the Department of Justice to take the actions it has thus far — then it serves as proof that unlawful, unethical business practices are driven from the top.

Huawei founder and CEO Ren Zhengfei will soon be facing the same questions about Meng’s actions that President Trump faces about the Meng arrest, though with far more serious consequences: what did Ren know about Huawei’s sanction-busting efforts and when did he know it?

In some ways, Ren is a revered symbol of China’s success of recent decades — an entrepreneur who, through grit and determination, brought his company from backwater start-up to national champion. Of course, in addition to Ren’s hard work, there was (alleged) IP theft and, as Huawei grew, support from the Communist Party.

Yes, Huawei is a private company, but it is also a tool of the Chinese Communist Party. Others ignore that simple truth at their own peril.

Michael Mazza is a visiting fellow in foreign and defense policy studies at the American Enterprise Institute.

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