FILE - People walk past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China, June 14, 2018.
FILE - People walk past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China, June 14, 2018.

WASHINGTON - Top White House officials are continuing to take a hard line on U.S.-China trade talks, even after the arrest of a prominent Chinese tech executive that some fear could derail a trade truce between Washington and Beijing.

In an interview with VOA, White House trade and economic adviser Peter Navarro repeatedly refused to comment on the record about the arrest of Meng Wanzhou, chief financial officer of Huawei, whose company is at the heart of trade tensions between the U.S. and China.

But Navarro said that the Trump administration is "demanding not asking" that China make fundamental changes to its economy.

"What we're demanding is that China obey the rules of the international road and become a fair actor in international trade," Navarro said. "And surely that will require a restructuring of the model that's now predicated on state-owned enterprises, protectionism, (and) mercantilism."

White House trade adviser Peter Navarro arrives fo
FILE - White House trade adviser Peter Navarro arrives for a news conference in the Rose Garden at the White House, June 7, 2018.

Navarro remains optimistic that the U.S. and China will be able to reach an agreement before 90 days, after which U.S. President Donald Trump has said he will expand tariffs on Chinese imports. But he also said China has a "very long history" of not living up to its trade promises.

"This is going to be a tough negotiation," Navarro said. "The biggest problem will be the ability to actually verify things rather than just being strung along, because we've seen that movie before."

Interview Transcript: Peter Navarro on US-China Talks, Trade
In an interview with VOA reporter William Gallo, White House trade and economic adviser Peter Navarro says he remains optimistic about U.S.-China talks, but warns that the Chinese government has a long record of breaking its promises on trade. QUESTION: "There was obviously big news last night. It was reported that the CFO of Huawei was arrested.

Huawei arrest

Meng was arrested in Canada at the request of U.S. authorities on the same day U.S. and Chinese officials held talks at the G-20 in Argentina that resulted in the three-month truce.

The arrest, which was first reported late Wednesday, raised concerns the trade truce could be derailed. Markets ended lower in Asia and were down earlier in the day on Wall Street following the news, though they largely recovered by the close of the day's trading. 

Huawei, which sells more smartphones than Apple, is viewed by many as a national security and privacy threat due to its close links to the Chinese government. U.S. and Canadian officials haven't said what charges Meng faces, but the U.S. Justice Department is investigating whether Huawei violated U.S. sanctions on Iran.

FILE - Meng Wanzhou, chief financial officer of Ch
FILE - Meng Wanzhou, executive board director of the Chinese technology giant Huawei, attends a session of the VTB Capital Investment Forum "Russia Calling!" in Moscow, Russia Oct. 2, 2014.

Gao Feng, a spokesman for China's Ministry of Commerce, also attempted to tamp down concerns, saying the China and U.S. delegations are in "smooth communication and good cooperation."

"We are full of confidence that China and the U.S. can reach an agreement within 90 days," the spokesman said Thursday.

Investor concerns

Following the G-20 talks, the U.S. and Chinese delegations released significantly different accounts of what was agreed upon.

After stock markets tumbled on fears the U.S.-China truce was collapsing, U.S. President Donald Trump sent several tweets Wednesday that were widely seen as an attempt to calm investor fears.

"Not to sound naive or anything, but I believe (Chinese) President Xi (Jinping) meant every word of what he said at our long and hopefully historic meeting," Trump said.

But it's unclear the extent to which Beijing is prepared to give into U.S. requests, which even Navarro admitted amount to a fundamental restructuring of China's economy.

"Yeah, they're going to have to restructure. Now that doesn't mean they lose face with their own people. The fact is their own people should welcome that because if you have a more democratic market in some sense ... that will be a good thing for China, as well," Navarro said.

Those comments were similar to that of National Security Adviser John Bolton, who told NPR on Thursday that the trade negotiations could "have potentially profound impact on their political structure, as well."

Chinese officials have given no indication they are willing to change their economic or political system as a result of U.S. demands.

Progress will only be harder to achieve after the Huawei arrest, says Dali Yang, a political science professor at the University of Chicago and senior fellow at the Chicago Council on Global Affairs.

"Huawei is considered the star of China's innovation-based technological development. If the arrest leads to the crippling of Huawei as was the case with (Chinese telecom giant) ZTE, it will threaten to stoke the fires of nationalism in China, which in turn would make it difficult for the Chinese leadership to make compromises in the trade talks," he said.

Patrick Cronin with the Asia-Pacific Security Program at the Center for a New American Security, agrees that Xi may use the Huawei episode to stall progress in trade talks.

"Damage may be minimized if a clear legal basis for (the arrest) emerges. However, even then, what Washington sees as an action against a company will be seen by Beijing as an action against the (Chinese Communist Party)."

Already, some U.S. lawmakers take the view that there is little difference between the Chinese Communist Party and some of the country's major companies.

Senator Mark Warner tweeted Thursday that "There is ample evidence to suggest that no major Chinese company is independent of the Chinese government ... and Huawei ... is no exception."