We must rethink relations with China
Exhilaration and relief are subsiding following the Two Michaels’ liberation after 1,020 days of inhumane imprisonment. They personally will have to cope with the psychological side effects for some time, in spite of their remarkable resilience. As a nation, we need to begin a hard-nosed rethink of our relationship with China, one consistent with our national interests and values.
The assessment must be based on a clear-eyed understanding of China and the implications for our economy, security and sovereignty.
The Sino-canadian relationship must also be evaluated in geopolitical terms, especially the response to China’s growing assertiveness and America’s intent to strengthen diplomatic, military and strategic alliances, for example the recently formed AUKUS (joining Australia, the U.K. and the U.S.). Canada cannot afford to be a bystander to such alliances.
Exhilaration and relief are subsiding following the two Michaels’ liberation from 1,020 days of inhumane imprisonment. They personally will have to cope with the psychological side-effects for some time, in spite of their remarkable resilience. As a nation, we need to begin a hard-nosed rethink of our relationship with China, one consistent with our national interests and values. The assessment must be based on as clear-eyed as possible an understanding of China and the implications for our economy, security and sovereignty, given that uncertainty, calculated risks and moral dilemmas will all be unavoidable.
China’s blatant hostage diplomacy is just one tactic in its use of raw power — unrestrained by the rule of law, international norms or common decency — to bully other countries. The hope that as China’s economic prospects improved it would gradually become less repressive and more democratic has long since been dashed. Furthermore, President Xi Jinping’s commitment to Mao Zedong’s socialist vision, albeit without an extreme cultural revolution, has put paid to the idea that China might evolve into a free-market economy.
The Chinese Communist Party’s monopoly of state power, directed by President Xi, encompasses virtually every aspect of Chinese life. Commercially, it extends beyond state-owned enterprises to private Chinese-controlled companies in foreign countries. Chinese direct foreign investment in Canada therefore needs to be reviewed with appropriate caution.
In spite of current tensions, Canada’s exports to China increased by 38 per cent year-over-year in the first quarter, while imports were up 32 per cent and total trade exceeded pre-pandemic levels. On the other hand, although China is Canada’s second largest commercial partner, our trade with her is less than a twelfth of ours with the U.S. Its importance should therefore not be exaggerated nor ever used to justify compromising our security. A free-trade agreement with China would open our economy to political interference, surveillance and more intellectual theft, especially in critical industries like defence, rare minerals, health and telecommunications. The federal government must ban Huawei equipment from our 5G networks.
When I was minister of finance, I did not see a meaningful advantage to Canadian companies that justified our joining the Asian International Infrastructure Bank (AIIB), whose evident goal is to further China’s global strategic and economic objectives. Yet in 2018, Prime Minister Trudeau “invested” $256 million to curry favour with his favourite basic dictatorship. Since that didn’t work out as planned, we should withdraw from the AIIB and employ the funds to urgent domestic infrastructure projects.
Canada signed a Foreign Investment Promotion and Protection Agreement (FIPA) with China in 2014 to protect Canadian companies doing business there from arbitrary government policies, with reciprocal rights for Chinese companies in this country. The government needs to review whether Chinese firms have inappropriately exploited FIPA and if Canadians operating in China are receiving fair treatment, including mining companies, whose capital is welcomed but which frequently encounter subnational impediments to developing proven reserves.
Despite these difficulties, it would be highly advantageous to pursue energy exports to China. During several trips to Beijing I discussed with senior officials, including once with President Xi, our two countries’ strategic complementarity regarding oil and gas. Canada needs to diversify to overseas markets and China wants to diversify supply from less stable countries. Our providing vital energy to China would partially even up a currently asymmetrical bilateral economic relationship, since finding buyers for energy is usually easier than finding sellers. Would China have been as intimidating, or as willing to incarcerate the Michaels, if our oil was helping it cope with its current extreme energy crisis? Of course, overseas energy exports depend on our ability to build more pipelines to tidewater, an extremely costly Canadian failure.
The Sino-canadian relationship must also be evaluated in geopolitical terms, especially America’s response to China’s growing assertiveness and its intent to strengthen diplomatic, military and strategic alliances, for example the Quad (the U.S., India, Japan and Australia) and the recently-formed AUKUS (joining Australia, the U.K. and the U.S.). Canada cannot afford to be a bystander to such alliances — yet our closest friends increasingly doubt our commitment to a collective response to the Chinese challenge, not to mention our ability to keep confidences. We must also speak out against the Uyghur genocide, abuse of the Falun Gong, erosion of Hong Kong’s democracy and intensifying threats to Taiwan. We should use the Magnitsky Act to target top Chinese individuals for human rights abuses. Canada can still — cautiously — derive benefits from China’s market but, given our economic integration with the U.S. and our shared values of democracy, human rights and the rule of law, we must become a more reliable and robust partner in an American-led alliance that confronts Chinese aggression.
Canada should pursue a strategy that single-mindedly advances our national interests, stoutly defends our fundamental values and harbours no illusions about whom we are dealing with. That means forgoing some short-term advantages in the interests of our longer-term national interest, in spite of the siren calls of rent-seekers, the obviously compromised and the terminally naive.