The arrest happened because of the change in foreign policy concerning china by Trump. It's meant to send a message and apply pressure on the chinese and on iran. This has nothing to do with the rule of law no more than north koreans arresting christian evangelists and tourists is about the rule of law.

There is no misunderstanding. Everyone involved knows exactly what is going on. It's international politics. The only question is how this is resolved. Will it escalate or will the US and china achieve a compromise?