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The state of Canada-China relations: cool to frigid ... but is there hope?

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Wendy Dobson

How would you describe the current relationship between Canada and China?

I would characterize it as cool to frigid. One possibly positive recent development is that our foreign minister met with his Chinese counterpart on the edges of a multilateral forum in Europe in August. Their agenda has not been made public but at least the meeting took place. That is hopeful.

Toronto Star columnist David Olive recently wrote: “With its belligerent disregard for the rest of the world, China’s ruling regime has overplayed its hand in several ways.” Agree or disagree?

I mostly disagree with this description of China — although there are questions being raised as to whether President Xi Jinping has overplayed his hand at home by over-centralizing power within China, which could have domestic consequences. But internationally, I think the comment is overplayed. It ignores the significance of 5,000 years of Chinese history as well as the fact that for more than 100 years foreigners invaded and occupied China leaving deep resentment at being taken for a ride by Western powers. In recent years China has reacted against foreign powers belligerence towards it, and that is a driver of Xi Jinping’s vision of what he calls China’s Great Rejuvenation.

There has been much ado around the adoption of Huawei’s 5G Network. What is your take on the situation?

In the background is U.S. pressure on all members of the Five Eyes intelligence-sharing group — consisting of Canada, the UK, the U.S., Australia, and New Zealand — to ostracize Huawei from western telecommunications networks on the grounds that it is an agent of the Chinese government and required by the state to share information on its clients and customers. A very senior U.S. official is reported to have vowed to kill Huawei in a recent rather intemperate speech. The excuse for that language is the belief that Huawei is an agent of the Chinese government. And yet, it is widely accepted that 5G technology is considered to be a solid technology.

Canada has delayed its decision about banning 5G technology. And as long as there is no U.S. reprisal, why not delay the decision? It is well known in Canada that the companies that have significant 4G and a basis for upgrading to 5G need some time to unravel the technology that they’ve got and change it to one that is Five-Eyes consistent. Whether or not they’re working on that as we speak, I don’t know. We don’t know much about the Canadian purpose right now in this area.

Many would say that the deep freeze between Canada and China started when Meng Wanzhou was arrested at Vancouver Airport in response to a US extradition request. A judicial decision by Canadians will eventually deliver a verdict. There seems to be no end in sight to that scenario. If it were up to you, what would you do?

With Meng Wanzhou under house arrest and the Two Michaels [Michael Spavor and Michael Kovrig] incarcerated in China for hundreds of days now, the Canadian government has continued to emphasize its commitment to the rule of law. The U.S. extradition request is seen within that framework and the government is saying it will be respected and carried through to a judicial decision.

At the end of June 2020, a group of former senior officials led by Allan Rock, former minister of justice and attorney general, and Louise Arbour, former president and CEO of the International Crisis Group, signed an official letter to the Prime Minister. The group argued that a fundamental foreign policy obligation of the Canadian government is to protect our citizens abroad. They requested the Prime Minister terminate the Meng extradition process and provided a legal opinion from a highly respected Canadian legal expert who argued that the judicial process is at a stage where it could make the judgment calling for freedom for Meng in exchange for the release of the Two Michaels. Such a finding implies there is more than one consistent interpretation of the rule of law.

At the time of writing it seems fair to conclude that the option suggested by Allan Rock and his colleagues should be seriously considered. A key unknown, however, and one that is raised by government adherents to the rule of law, is that a precedent like this proposed hostage exchange could put at risk the well-being of Canadians who happen to be in China at a time of future political tensions between the two governments.

5G aside, is China fulfilling its goal to rank among the world’s great innovators?

I would say yes. The state-supported Made in China 2025 initiative, or MIC 2025, is behind the development of digitized technologies and the movement forward in artificial intelligence in China, and it is well up the international curve on both counts. China is also learning quickly about successfully acquiring technologies through foreign direct investment. It is, I imagine, facing some constraints caused by tensions between the State and the market. Since the Party’s primary concern is to maintain political and social stability, it has drawn heavily on foreign sources of technology through foreign investment and foreign partners to learn. So it’s a two part, yes-but kind of situation which is discussed in my book’s second chapter.

Many believe China’s economic influence will continue to expand through to 2030. Has the pandemic impacted that prediction?

I would say the Chinese government response to the pandemic, although at first delayed and covered up, has been managed effectively. China has excelled in terms of the volume of available PPE, ventilators and more recently the hunt for an effective vaccine. But the most important factor that has helped it beat the virus is its authoritarian regime, which has been very effective in managing contact tracing and controlling of crowd behaviour through strict lockdowns. In the west, we might disagree with some of the authoritarian tactics used, but the results cannot be ignored.

U.S.-China relations deteriorated significantly under president Donald Trump. As president-elect Joe Biden takes over the reins, is this an opportunity for Canada to make a bold move?

I don’t think so. If China-U.S. relations deteriorate continue to, it’s going to unwind the deep interdependence that has characterized their relationship, and that would have a negative impact on income growth. We’re talking about Canada’s two largest trading partners here, so bilateral trade between Canada and each of these two giants could also decline. If things continue to deteriorate, there is no doubt that Canada will suffer — and we won’t be able to do much about it. It is therefore very important that we join coalitions with other countries to pressure both China and the U.S. to work out how to live together.

You believe we should hedge our bets in terms of our Canada/Asia strategy. What do you mean by that?

The fact is, China is not the only country in Asia. A number of middle powers and organizations exist to facilitate Asia’s economic integration with other countries. One such group is the Association of Southeast Asia Nations (ASEAN). Its 11 members are Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Canada is forming trade relationships with these middle powers but should deepen ties to include security cooperation as well.

One of the largest and most forward-looking groups is the Trans-Pacific Partnership — the trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the U.S. signed in 2016. The U.S. subsequently withdrew its membership, but with Japan’s leadership the remaining countries then negotiated a new agreement called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, incorporating most of the provisions of the TPP and forward-looking improvements (such as including direct investment and services). It entered into force on 30 December 2018.

These kinds of innovative groups are trying to deepen relationships between Asia and the west, regardless of what is going on in Washington. And they’re also trying to make it attractive for the Chinese to be part of the group, as well. They are key factors in Canada’s ability to hedge our bets going forward.

You have said that “multilateral pressures on China to adopt laws consistent with global standards are likely to be more effective than resorting to bilateral pressures.” Please unpack that statement for us.

The multilateral pressures would be used to advance understanding of issues on which there is fairly wide common interest among governments and that they recognize the desirability of shared rules of conduct. When you think about the big issues that lie ahead where we need to work together, climate change is at the very top of the list. Getting top-level Chinese involvement is really important going forward.

Water management is an area where working together will move things forward. Other sectors are telecommunications and cyber security, where Asians don’t have multilateral rules of conduct. Governments need to work together rather than creating blocks of countries with competing interests. The Chinese have threatened to respond to the ongoing obstacles erected to Huawei by attracting Asians to join a newly-created Asian regulatory block including rules governing telecommunications and cybersecurity. The prospect of proliferating entities that are inward-looking is worrisome as an alternative to countries working together.

To pose a question that you pose in your book, is there enough goodwill and mutual respect between Canada and China to accommodate our differences?

Right now, I’d have to say the answer is no. The Canadian public is quite angry about what many view as Chinese bullying via such threats as Free Meng Wanzhou or we will not release the jailed Canadian wrongdoers. Hopefully our leaders will discourage such behaviour. Looking ahead, we as a middle power must learn to deal with China’s increasing assertiveness. Some argue for Magnitsky-like sanctions on officials for human-rights violations against China’s large Uighur minority. But acting on its own, Canada is small and of limited significance. We should focus on cooperation, not competition. We should form coalitions with other middle powers and civil society to manage differences and push back against Chinese practices and standards that are inconsistent with global standards. And we should cooperate with others to engage with China on such shared goals as fighting climate change, promoting human rights and preventing future pandemics.

This interview first appeared in the Winter 2021 issue of Rotman Management magazine.

Wendy Dobson  headshotWendy K. Dobson is professor emerita of economic analysis and policy at the Rotman School of Management and a former Canadian associate deputy minister of finance. She is the author of Living with China: A Middle Power Finds Its Way (Rotman-UTP Publishing, 2019), which was a finalist for the National Business Book Award, Canada’s most prestigious literary award for business writing. The book was also a finalist for the 2019/2020 Donner Prize, which recognizes the best public policy book written by a Canadian.