National Post (Latest Edition)

We must rethink relations with China

- Joe oliver

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.

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