BRACING FOR CHINA’S WRATH
Meng ruling sparks fury
B.C. potentially has the most to lose if deteriorating relations between Canada and China over Huawei CFO Meng Wanzhou’s extradition case lead to trade retaliation.
On Wednesday, China accused Canada of acting “as an accomplice of the United States,” after a B.C. Supreme Court decision to continue the extradition case against Meng.
The statement urged Canada to release Meng and “not go further down the wrong path,” leading to speculation on what the consequences might be on the trade front.
“It’s an incredibly difficult period of time for the Canada-China relationship,” said Stewart Beck, CEO of the Vancouver-headquartered Asia Pacific Foundation of Canada. “It’s probably the worst its been since, certainly, I’ve been in diplomacy.”
China showed no hesitation in taking trade action against Canadian agricultural products at the start of the dispute over Meng’s arrest in December 2018.
However, Beck said he doesn’t necessarily see obvious targets for Chinese sanctions among B.C.’s top export industries that wouldn’t harm its own interests.
“One thing that you could say about the Chinese is they are quite pragmatic on the business sense and on the business side,” said Beck, a former Canadian diplomat with experience in China and Taiwan.
In 2019, B.C. accounted for almost 30 per cent of Canada’s $22.4 billion in export trade to China, the second-biggest trading partner for both the province and Canada.
Last year B.C. shipped $6.5 billion worth of goods to China, the top five being wood pulp, copper concentrates, lumber, coal and logs, just under 15 per cent of all B.C. exports to foreign markets.
China showed no hesitation in banning imports of Canadian canola seed, beef and pork last spring. Chinese officials cited quality concerns, but the measures were widely believed to be retaliation for the Meng arrest in December 2018.
Beck said it is easier to come up with sanitary concerns over agricultural products and China had domestic reasons for targeting the products that it did.
Beck doubts China would target commodities such as copper or coal because they are important to its own industries and it would have to come up with a solid justification. Tariffs might be more likely.
Products such as seafood, which might be in less demand domestically in China, or wood pulp and lumber, “may be at risk if there is alternative sources of supply,” Beck said.
“I’m not 100 per cent sure that that would be something that they would go after because it hasn’t really been a political issue before,” Beck said.
Susan Yurkovich, CEO of the Council of Forest Industries, which represents B.C.’s major lumber producers, said it hasn’t become more difficult for its members to do business in China since Meng’s arrest.
“We are focused on the commercial relationships and with respect to that, the forest sector has had long-standing commercial relationships with customers in China,” Yurkovich said, “and we still sell a lot of our product there.
“Chinese customers have been good partners for our sector and we hope that continues,” Yurkovich said.
The province cancelled the China leg of an Asian lumber trade mission in December 2018 at the time of Meng ’s arrest, but Yurkovich said she did make it to there at that time and has been back twice since.
“I personally did not notice anything different,” she said.
UBC political scientist Yves Tiberghien is also “placing my bet on (a) pragmatic response to the most recent court decision now,” but that will depend on what happens over the next several days.
“We had a firm response from the (Chinese) embassy in terms of wording, in terms of position,” Tiberghien said. “We know they don’t accept (the decision), they see it as the territorial application of sanctions by the U.S.
“So they made their point, but beyond that, I expect this to be contained, in terms of economic retaliation, so I don’t expect change.
“I could be wrong, but that’s the scholarly interpretation based on recent trends,” Tiberghien said.