Huawei Technologies Co. Chief Financial Officer Meng Wanzhou failed to persuade a Canadian judge to end extradition proceedings, keeping her under house arrest in Vancouver as the fight against U.S. efforts to prosecute her moves forward.

The ruling marks an early victory for U.S. authorities but is likely to further strain relations between Canada and China. On Tuesday, China -- Canada’s second-biggest trading partner -- called for Meng’s immediate release “to avoid continuous damage of China-Canada relations.” Two Canadians, detained within days of Meng’s arrest in December 2018, also remain jailed in China.

Meng, the eldest daughter of Huawei’s billionaire founder Ren Zhengfei, has emerged as the highest-profile target of a broader U.S. effort to contain China and its largest technology company, which Washington sees as a national security threat. The U.S. Justice Department charged her with conspiring to defraud banks by tricking them into conducting transactions that violated American restrictions on selling technology to Iran.

Meng Wanzhou, chief financial officer of Huawei Technologies Co., leaves her home to attend Supreme Court for an extradition hearing in Vancouver, British Columbia, Canada, on Wednesday, May 27, 2020. Meng failed to persuade a Canadian judge to end extradition proceedings, keeping her under house arrest in Vancouver as the fight against U.S. efforts to prosecute her moves forward.

Associate Chief Justice Heather Holmes of the British Columbia Supreme Court on Wednesday dismissed Meng’s request to throw out the case, ruling that it meets a key test of Canada’s extradition law known as double criminality -- or whether the alleged crime in the U.S. would also be a crime in Canada.

Meng had argued that the U.S. was disguising its sanctions-violations allegation as a fraud in order to get around the double-criminality rule. Had they taken place in Canada, the banking transactions at issue wouldn’t have violated any Canadian sanctions, they said.

Holmes rejected that argument, saying it would be possible to prosecute a fraud that took place in Canada that put a U.S. bank at economic risk for violating U.S. sanctions.

Meng’s approach “would seriously limit Canada’s ability to fulfill its international obligations in the extradition context for fraud and other economic times,” Holmes wrote.

Experience shows that many fraudsters benefit from international dealings through which they obscure their identity and their gains, she said.

“For the double criminality principle to be applied in the manner Ms. Meng suggests would give fraud an artificially narrow scope in the extradition context,” Holmes said.

The ruling doesn’t end Meng’s battle against handover. Her next court hearings are scheduled for June.

Meng claims there was an abuse of process when she was arrested in 2018 and has sought additional details from the Canadian government, police and border officials on the circumstances of her detention. The Canadian government claims some documents are privileged and she can’t see them. Her lawyers plan are challenging those claims.

Meng, 48, faces tough odds: of the 798 U.S. extradition requests received since 2008, Canada has refused or discharged only eight cases, or 1 per cent, according to Canada’s Department of Justice.

The case was triggered when Meng was arrested on a U.S. handover request during a routine stopover at Vancouver airport, a city where she owns two homes and often spent summer holidays.

China has accused Canada of abetting “a political persecution” against a national champion. In the weeks after her arrest, China put two Canadians -- Michael Spavor and Michael Kovrig -- in jail, halted billions of dollars in Canadian imports and put two other Canadians on death row, plunging China-Canada relations into their darkest period in decades.

U.S. President Donald Trump muddied the legal waters further when he indicated early on that he might try to intervene in her case to boost a China trade deal.

Canadian Prime Minister Justin Trudeau -- caught between his country’s two biggest trading partners -- has resisted any such attempt to interfere in the high-stakes proceedings, saying the rule of law will govern Meng’s case.

The pursuit of Meng by U.S. authorities predates the Trump administration: officials had been building a case against her since at least 2013, three years before Donald Trump was elected president.

The U.S. claims Meng lied to banks including HSBC Holdings Plc and tricked them into processing more than US$100 million in transactions through the U.S. in breach of sanctions. China called the allegations politically motivated and accused Canada of “arbitrary detention.”