Our nation has reason to be wary of becoming too dependent on China in wake of Huawei fallout
Canada is being pushed around by China these days to prevent extradition to the U.S. of a Chinese billionaire’s daughter and executive of telco giant Huawei. Two Canadian diplomats have been unjustly imprisoned by China in retaliation.
This is unacceptable behaviour, but there will be more to come if the woman is eventually extradited to the United States for what the Chinese call “bogus” charges. But Canada must extradite her. To do otherwise would be to interfere in the American-Canadian legal system. Canada is getting bullied by China, but it’s nothing compared to what China is doing to other trading partners. It’s waving a big stick in more devastating ways, which is why Canada and others — caught between China and the United States — should avoid too much trade liberalization or dependency on the ruthless giant. Behind this is that America’s president, Donald Trump, has rightly called out the Chinese for trade cheating, cyberattacks, industrial espionage, theft of technology and an attempt by Huawei to penetrate key infrastructure systems through 5G projects.
The United States has also asked allies to ban Huawei’s 5G initiatives. Australia and New Zealand have done so. Canada has not. China is upset with Australia, not only for its Huawei ban, but also for denying residency and citizenship to a Chinese billionaire who has been accused of political interference.
Two weeks ago, China fired a warning shot at Australia. Reports emerged saying Aussie coal shipments had been halted at five Chinese ports and that they may be banned. Since 32 per cent of Australia’s exports are to China, mostly coal, this caused the Australian dollar to tank, along with mining stocks. Prices recovered after China denied a ban and claimed delays were due to a need for increased testing of Australian coal.
But the damage was done. A threatening message was sent to a country dangerously dependent on China trade. Likewise, New Zealand and Chinese relations frayed recently following its ban on Huawei’s 5G projects, as well as a ban on foreign (read Chinese) buyers of real estate to address its housing affordability crisis.
In this case, China used tourism as a weapon. Chinese tourists can only travel to countries issued its Approved Destination Status (ADS). Removal can cost a country billions in lost revenues. This month, New Zealand became the target of an article in Chinese state-owned Global Times that claimed Chinese tourists were scrapping travel plans to New Zealand to “punish” the country, and claimed the political relationship was “strained.” Like Australia, New Zealand has become enormously dependent on China. New Zealand’s dairy industry provides 11 per cent of China’s needs and Kiwis host thousands of Chinese international students and tourists every year. More jitters followed on Feb. 12 when an Air New Zealand flight was turned back due to “paperwork.”
Turns out, the paperwork problem involved the airline’s reference to Taipei as the capital of Taiwan rather than a city in China, according to a report. Elsewhere, China’s tourism weapon has been devastating. Last year, China banned travel to Palau, a tiny Pacific nation, for continuing to recognize Taiwan. The ban left Palau’s hotels empty and an airline without customers. In 2017, the Chinese banned tours to South Korea in retaliation of its approval to host a U.S.-based anti-missile system designed to intercept incoming missiles from North Korea. China claimed the system threatened its security.
The estimated losses to South Korea? US$4.6 billion in tourism-related revenues, according to an estimate by the county’s central bank.
The new reality is that multilateral trade has been bilateralized. As the United States and China slug it out, Canada and the rest must navigate carefully and be wary of too much dependence on Beijing.