Here's what's going on with the Marriott hack, Huawei and the DOJ — and it's all related to China and trade

  • Three stories involving China are suddenly converging into one laundry list of misdeeds likely to be used as leverage in the administration's ongoing trade talks with China.
  • The Marriott breach, Huawei case and an expected Justice Department indictment over allegations China has tried to hack large managed service providers are coming together as trade talks continue.
Chinese President Xi Jinping and U.S. President Donald Trump during a meeting outside the Great Hall of the People in Beijing.
Artyom Ivanov | TASS | Getty Images
Chinese President Xi Jinping and U.S. President Donald Trump during a meeting outside the Great Hall of the People in Beijing.

Three seemingly unrelated news stories about data theft, cybersecurity and sanctions, are converging as one big-picture issue related to President Donald Trump's ongoing trade negotiations with China.

What happens next with any of them could have significant implications for that deal, the markets or both.

Marriott hack

Sources close to the investigation into a breach of the information of 500 million Marriott customers tell CNBC the initial phases of the probe are pointing to involvement by the Chinese government. However, it's unclear the nature of China's involvement.

In the past, these revelations may not have dinged the radar of a public used to major hacks. But the injection of a possible China connection, in addition to the massive scope of the breach and the fact the intrusion lasted four years, means Marriott's troubles may have just become part of the wider market and trade dramas.

Huawei CFO arrest

Meng Wanzhou, CFO of Chinese hardware giant Huawei and daughter of its founder, was granted bail Tuesday night. Meng is facing charges in Canada related to alleged improper funneling of payments between Iran and the company via a third-party intermediary in Hong Kong. The U.S. wants to extradite Meng.

China has threatened retaliation. Michael Kovrig, a former Canadian diplomat, was arrested in China on Tuesday, with Prime Minister Justin Trudeau and his diplomatic agency and saying they are working with Chinese officials on the matter.

Trump said in an interview with Reuters on Tuesday that he would consider intervening in the Justice Department's case against Meng if it would help support favorable negotiations.

"If I think it's good for the country, if I think it's good for what will be certainly the largest trade deal ever made — which is a very important thing — what's good for national security, I would certainly intervene if I thought it was necessary," he said.

Justice Department

In addition to being on the hook for successfully arguing the case against Meng, the Justice Department is close to dropping new indictments on Chinese government-connected hackers, possibly this week, according to The Wall Street Journal.

Those indictments likely will focus on allegations that China tried to use large, U.S.-based enterprises that provide internet service, business, security, DNS and other services for large companies, as a conduit for hacking into their corporate clients.

The Trump administration has been considering using these indictments to make a broader call-out of China, adding to the pile of security and fraud related accusations, The New York Times reported this week.

For the internet service providers that may be named or identified in the pending indictments, this could mean they see their names dragged into the proceedings, too.