JUSTIN TRUDEAU IS HARDLY THE FIRST PRIME MINISTER TO NAIVELY EXPECT ALL TO GO WELL WITH CHINA. WE MUST UNDERSTAND THAT IT IS POWERFUL, AMBITIOUS AND WILLING TO DO WHAT’S NECESSARY. MCPARLAND,
The Wall Street Journal carried a story on the weekend, even as readers were absorbing news that a top executive of China’s Huawei Technologies had been arrested in Vancouver.
“American Entrepreneurs who Flocked to China are Heading Home, Disillusioned,” it headlined. The article cited numerous cases of U.S. investors who, having spent years pouring money and energy into efforts to achieve success in China’s massive, increasingly prosperous marketplace, were giving up in the face of ever-shifting legal, political, regulatory and other hurdles. Establishing a reliable foothold in a country where it’s impossible to forecast what new and perplexing wrinkle might present itself at any given moment had simply proven too much for them. Better to take their skills, initiative and drive back home to a country where the rules are relatively reliable and transparent, and likely to remain so long enough to build a business on.
Learning the lessons of China has taken a very long time for Canadians, just as it has for Americans. Successive governments, Liberal and Conservative alike, have struggled with it, forever finding that — just as they thought they had a clear grasp of the powers they were dealing with — something new and unexpected had been added. Chrétien Liberals treated it as one big trade fair, sending over planeloads of eager dealmakers to sign contracts and return home convinced their future was bright with promise. The Harper Tories put human rights over business deals, only to backtrack and send the prime minister on a belated mission to try and mend fences. For Justin Trudeau’s Liberals, China was just another matter to be easily resolved through a cheery smile, expressions of goodwill and good old Canadian niceness.
As with his predecessors, he’s had his illusions erased. The prime minister’s visits to Beijing have been a mix of disappointment and embarrassment. Dreams of an enhanced trade relationship have gone nowhere. And now Beijing is issuing threats. On Saturday Ottawa was warned of “serious consequences” unless Huawei chief financial officer Meng Wanzhou is released immediately. Turning the table on past Canadian lectures, China’s embassy denounced the arrest as a “gross violation of human rights.” As is usual with Beijing, the full extent of its rage was transmitted via state-influenced media, which assailed the U.S. — which requested Meng’s arrest — as a “despicable rogue” stuck in “a pertinacious Cold War mentality.”
The reaction, and the fact the dispute centres on Huawei, encapsulates so much of what makes China an increasing worry to business and political figures. It is one of the country’s most successful and respected companies, having grown to become a leading player among the world’s telecommunications equipment and services providers.
It is also closely tied to China’s communist leadership, a typical example of the close-knit and opaque nature of Chinese firms and their links to the state. Meng is the daughter of Huawei’s founder, Ren Zhengfei, though she started her career there as a receptionist and her relationship to Ren was not widely known until she climbed closer to the top of the corporate ladder. Despite worldwide operations, such is the level of distrust of Huawei that, even before Meng’s arrest, Ottawa was under pressure to ban its equipment in next-generation telecommunications networks, as Australia, New Zealand and the U.S. have done. Intelligence agencies in those countries maintain the Chinese firm is a security risk and have blocked telecom companies from using its 5G technology.
Though Huawei insists it is free of state control and denies breaking any laws, suspicions remain deep and difficult to shake. Reports indicate Japan will soon join others in banning government purchases of its products to guard against intelligence leaks and cyber attacks.
The case against Meng reflects these doubts. The U.S. is seeking her extradition on accusations she sought to evade sanctions on Iran by disguising links between Huawei and a firm named Skycom. While Meng claimed Skycom was a separate entity, a Crown lawyer told a British Columbia court that, in reality, the two firms were directly tied to one another. “Skycom is Huawei,” he said.
Meng’s arrest and detention is viewed by Beijing as an immense insult to Chinese pride. A Foreign Ministry statement slammed her treatment as “lawless, reasonless and ruthless, and ... extremely vicious.” China wants her freed immediately, insisting she is no flight risk and owns two homes in Vancouver. A U.S. affidavit disagrees, alleging she has “no fewer than seven passports” and for months has arranged her travel plans to deliberately avoid arrest warrants.
China maintains Washington has long used its global muscle to gets its way well beyond its own borders, and that Meng’s arrest is part of U.S. efforts to contain China’s emergence as a serious rival. Both are true enough. But Western fears reflect years of observing that Beijing plays by whatever rules it chooses in pursuing its national interests, and is willing to deploy whatever military, political or commercial tools are necessary — covert or otherwise — to achieve its immense ambitions.
Whoever serves as Canada’s next prime minister should study the Huawei case closely and get real about China. Good intentions and international fellowship make good window-dressing but are no more than that. Its willingness to aim threats and invective at Ottawa betray the crudeness that lays beneath. Future governments need to avoid dreams and delusions and recognize China as the large, self-absorbed and calculating power it is, and handle it with extreme caution.