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There’s a good chance the Chinese will retaliate for the arrest of Huawei CFO Meng Wanzhou by targeting American businesses in China, former assistant U.S. trade representative Jeff Moon told CNBC on Thursday.

Meng was arrested on Saturday in Canada and is facing extradition to the United States reportedly for violating U.S. sanctions on Iran.

In an interview with “Power Lunch,” Moon said that while China has responded to the escalating U.S. tariffs in somewhat “measured ways,” the arrest is fairly aggressive and may tip China into being more forceful in its retaliation.

“Every American firm that does business in China is vulnerable, because Chinese laws are extremely vague. There is no way to get official clarification. So people, in order to do business, have to work in that murky regulatory environment,” said Moon, who served as assistant U.S. trade representative to China under President Barack Obama.

“The Chinese can crack down quite easily because those laws are vague and they can interpret them however they want,” he added.

Meng’s detention came on the same day that President Donald Trump and Chinese President Xi Jinping struck a 90-day truce on implementing additional tariffs. The arrest wasn’t announced until Wednesday.

Huawei is being investigated for using HSBC to allegedly make illegal transactions involving Iran, Reuters reported on Thursday. The Shenzhen-based technology company is the world’s second-largest seller of phones behind Samsung. Meng is the founder’s daughter.

Moon thinks U.S. officials should talk to the Canadian government about not extraditing Meng. If the extradition happens, there is a “high possibility” China will retaliate in a similar fashion.

If so, “things will start getting out of control, and reaching an agreement that will settle the trade dispute will be much harder.”

The escalating trade war has fueled fear among investors, and Meng’s arrest added to that concern. U.S. equities fell sharply on Thursday, a day after the Dow Jones Industrial Average plunged nearly 800 points.

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US-China trade uncertainty is ‘the enemy of growth’, OECD warns as it slashes forecasts

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U.S. President Donald Trump and China’s President Xi Jinping leave a business leaders event at the Great Hall of the People in Beijing on November 9, 2017.

Nicolas Asfouri | AFP | Getty Images

Trade tensions between the U.S. and China stalled a global recovery and are continuing to endanger investment and growth, the secretary general of the OECD warned Monday.

“We were in the middle of a recovery when all these decisions about trade started and not only did it stifle the recovery, it basically has produced the slowdown and the potential for greater damage is still there,” Angel Gurria told CNBC.

“Everybody is betting today… on a deal between China and the U.S. but the problem is that on the face of it the tensions are getting greater and, second, the problem – the spillover effect of this tension – is becoming more and more evident,” he told CNBC’s Joumanna Bercetche at the start of the OECD’s Spring Forum in Paris.

Gurria said trade tensions were impacting growth and investment and had made the OECD shave almost 1% of its own global growth predictions in the last 12 months. A year ago, it predicted 3.9% growth in 2019, now it is forecasting 3.1%. It is due to release its latest economic outlook Tuesday.

“Uncertainty is the greatest enemy of growth and when you don’t have investment because of trade uncertainties, then of course as a rule of thumb, growth will come down and this is what’s happened in a relatively short period of time. It’s really a very bad scene today, it’s a very great source of concern,” he said.

“Why do you invest? You invest to produce, to sell, to get a reasonable profit. But if you do not know if you’re going to have access to the market, you don’t know what tariff you’re going (to face) or whether there will be access at all, then what you do then if you’re a responsible investor is that you hold back, if you’re a responsible consumer you hold back,” Gurria said.

“Investment is the seed of the growth of tomorrow and this is why, after a short period of time, we’ve had this enormous cut in the projections of growth going forward.”

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Chess legend Garry Kasparov warns of a ‘cyber Cold War’

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Former world chess champion Garry Kasparov plays a game of chess with school children in South Africa.

Foto24 | Gallo Images | Getty Images

Ominous warnings about artificial intelligence spelling doom for mankind are pointless — it’s state actors like Russia and China we should be worrying about, according to former world chess champion Garry Kasparov.

“We should stop wasting our time talking of killer robots and terminators,” Kasparov told reporters in Paris last week. “No matter how sophisticated algorithms may be, it still needs a bad human actor.”

And as long as there are bad actors out there, he adds, “new technologies will give them new opportunities.” For context, Kasparov was asked by CNBC about the possibility of AI being used in a new wave of potentially crippling cyberattacks.

“Right now we are in some sort of cyber Cold War, and deterrence is the only response,” said Kasparov. “It seems like there’s no political will to make such a strong statement.”

He said Western countries like Britain, America and France should stop offering nations like Russia and China “futile compromises” when it comes to things like election interference and the theft of sensitive commercial data, because they will just continue to “break the rules.”

Kasparov, who famously took on IBM’s Deep Blue supercomputer at a game of chess in the late ’90s — winning the first match and losing the second — has since become an outspoken political activist, and is now a security ambassador for antivirus maker Avast. He’s widely considered to be the best chess player of all time.

A critic of Russian President Vladimir Putin and his regime, Kasparov has frequently warned of Moscow’s meddling in elections like the U.S. 2016 presidential vote. Such claims of interference became the subject of a widely publicized probe by U.S. Special Counsel Robert Mueller into President Donald Trump’s campaign.

His comments come amid particularly strained relations between the U.S. and China, which are both in the midst of an intense trade war. To make matters worse, Washington is pushing for the extradition of Huawei CFO Meng Wanzhou, on charges of violating U.S. sanctions against Iran.

U.S. officials allege the telecommunications giant’s equipment could be used for Chinese spying. President Trump recently added further fuel to the flames by declaring a national emergency over the threat of “foreign adversaries,” adding Huawei to a trade blacklist that blocks it from buying U.S. technology without special approval.

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Winning stocks, sectors in Australia Morrison election victory

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Australian shares rose to an 11-year high on Monday as Prime Minister Scott Morrison and the Liberal-led conservation government claimed victory at the national elections, after overturning opinion polls that had predicted a Labor victory.

Results on the Australian Electoral Commission’s website showed that Morrison’s coalition had won 77 seats out of 151 in parliament.

Bank, coal miners, property and healthcare stocks jumped, pushing the benchmark S&P/ASX 200 index to an 11-year high, after opening 1.7% higher and hitting its highest intraday level since 2007.

Those were among the sectors most affected by the campaign of the Labor Party, which had pledged to take strong action on climate change and property tax loopholes, for instance.

“A coalition win can be deemed a ‘surprise’ for investors and the upshot is that many tail risks that were potential consequences from what was a significant and wide reaching tax and policy reform agenda from the (Australian Labor Party) are now removed,” investment bank Morgan Stanley said in a note on Sunday.

Here are some sectors that jumped on Monday.

Coal miners

Coal stocks soared on news of Morrison’s victory.

Yancoal Australia surged 5.7%, New Hope jumped about 4%, and Whitehaven Coal rose about 2% on Monday morning.

The defeated opposition Labor party had ambitious targets for renewable energy, but Morrison rejected efforts to increase the use of renewables to generate electricity, arguing it would damage the economy which relies on coal-fired power and mining exports.

Climate change had been a divisive issue in the run-up to the election — and for years in the country. Battered by extended droughts, damaging floods, and more bushfires, Australian voters were expected to hand a mandate to the Labor party.

A coal pit of the Hazelwood coal-fired power plant stands in Hazelwood, Australia, on Thursday, March 30, 2017.

Carla Gottgens | Bloomberg | Getty Images

But the energy sector may yet see more uncertainty ahead, experts said.

“Given that several of the new centrist cross-bench members have promised strong action on climate change, we may see Morrison caught between his own party’s right-wing and the independents keeping the government in office,” said Sam Roggeveen, director of the Lowy Institute’s International Security Program.

The pressure on coal miners has probably eased, but a wait-and-see approach should be taken for energy policies, John Milroy, an investment advisor at Australian private wealth management group Ord Minnett, told CNBC Monday.

Banks

The financial subindex jumped more than 5% on Monday.

Shares of Australia’s biggest lender Commonwealth Bank of Australia jumped about 6% and National Australia Bank surged 6.63%. Australia and New Zealand Banking Group also rose 6.46%, while Westpac soared 7.16%.

The financial sector had been under tremendous pressure following an investigation into its practices, which exposed shocking revelations of wrongdoing in the sector. The Royal Commission — a government-appointed committee which led the investigations — later recommended a clean-up of the sector.

But analysts had suggested the Labor Party might have taken a harder stance on the banking sector, than Morrison’s coalition party.

“It’s all about the regulations, what markets are expecting might come from a harder line taken (from) the recommendations by the Royal Commission. That seems to have come off the banks today, with the likely success of the coalition government,” Milroy said.

Real estate

Labor had campaigned on a promise of closing tax loopholes for owners of investment properties, and that could have battered housing prices — already in decline — even more.

Following the election surprise, property-related stocks bounced.

Property classified ads company REA Group was up 7% and shares of its rival, Domain Holdings Australia, rose 3% in early trade. Construction firm Lendlease Group bounced about 1%, while property developer Stockland jumped over 4.5%.

Health care

Shares of the country’s biggest private health insurer Medibank Private were up 10%, while smaller NIB Holdings was up 9% in morning trading after the preliminary election results.

The Labor Party had pledged to limit the price increase of private health insurance premiums at 2% for two years, a move that would have weighed on the insurers’ earnings.

— Reuters contributed to this report.

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