Commentary on Political Economy

Sunday 6 January 2019


An omnipresent danger in Canadian foreign policy is that a mix of avarice and anti-Americanism will cloud the country's capacity to distinguish friend from foe. That's as good an explanation as any for why Canada finds itself mired in such a painful and exploitative relationship with the Chinese dictatorship - the latest of many foreign policy crises to consume Prime Minister Justin Trudeau's government.
During the 1990s, Liberal Prime Minister Jean Chretien was one of the West's most credulous advocates of the idea that the reforms of the Deng Xiaoping era represented the dawn of a new, more liberal China. Trade junkets to Beijing became a hallmark of his premiership. In 2005, Chretien's successor, Paul Martin, signed a formal "strategic partnership" with then-President Hu Jintao that proved to be the bureaucratic roadmap for a dramatic deepening of relations.
The Conservative government of Stephen Harper that replaced Martin in 2006 was often blasted by the Liberals for insufficient deference to China's majesty - "one of the greatest civilizations on earth, a superpower of the 21st century," as Liberal leader Michael Ignatieff put it - but wasn't terribly different in substance.
Chinese President Xi Jinping, right, gestures to Canadian Prime Minister Justin Trudeau ahead of their meeting at the Diaoyutai State Guesthouse in Beijing, China, Wednesday, Aug. 31, 2016. (Wu Hong/Pool Photo via AP) Wu Hong
In 2012, Harper's government approved the purchase of the Albertan oil sands developer Nexen by the state-owned China National Offshore Oil - the largest overseas acquisition by a Chinese firm - and signed multiple trade deals that the prime minister bragged would "take bilateral commercial ties to new heights." Other ties were similarly heightened, with new visa programs and a full normalization of travel policy significantly increasing the presence of Chinese nationals in Canada.
Today, Canada's ties to China are every bit as deep and substantial as the last few prime ministers promised.
Valued at more than $C90 billion ($94.5 billion) annually, Canada-Chinese trade dramatically overshadows Canada's economic relationship with regional free-trade partner Mexico, as well as Japan, India and every nation in Europe. Australian trade with China is even bigger, worth some $189 billion last year, the Australian Bureau of Statistics says. 
In November 2017, Trudeau - who once infamously cited China's "basic dictatorship" when asked to name his second-favourite country - promised to pursue free trade.
Canada's public pension plan is heavily invested in China and intends to get significantly more so. Canada is the only North American member of Beijing's profligate infrastructure investment bank. Despite a cool reception in the rest of the English-speaking world, the Chinese cellphone company Huawei has been a heavy player in Canadian telecommunications research - and a prominent sponsor of the country's iconic sports program Hockey Night in Canada.
Expansion of the Alberta-to-British-Columbia Trans Mountain pipeline, Canada's leading infrastructure priority, has been largely justified as a means to get more Canadian oil to Chinese markets. China, for its part, is excited about the potential to enrich the many Chinese investors in Canada's petroleum sector.
For the past two decades, Canada's intake of Chinese-born permanent residents has averaged about 30,000 per year, and according to Foreign Minister Chrystia Freeland, 120,000 Chinese students study at Canadian universities.
Integration also manifests in other ways, however.
The attractiveness of Vancouver real estate as a safe investment for wealthy Chinese nationals has been widely blamed for turning the city's housing into some of the most unaffordable on earth. An explosive report from the attorney general of British Columbia in June found widespread Chinese money laundering in Vancouver casinos.
Global News has gruesomely documented the degree that Chinese gangsters have become major players in the illegal Canadian fentanyl market.(There were just under 4000 opioid-related deaths in Canada in 2017, the vast majority of them involving fentanyl.)
"The Triads have infiltrated Canada's economy so deeply that Australia's intelligence community has coined a new term for innovative methods of drug trafficking and money laundering now occurring in BC," Global News reported in April. "It is called the 'Vancouver Model' of transnational crime."
The Canadian intelligence community, meanwhile, has repeatedly warned that so much Chinese-Canadian integration has put the country's leading civil institutions in considerable danger of infiltration by Chinese spies - the monitoring of whom has been said to occupy half the time of Canada's spy-watchers.
Canada's political, academic and corporate secrets have all been identified at being at high risk of Chinese espionage. In 2014, the Canadian government experienced a major Chinese sponsored cyberattack resulting in an estimated loss of "hundreds of millions of dollars." Ottawa's 2017 decision to approve China's purchase of the Vancouver tech firm Norsat, whose technology the Pentagon uses, prompted an official rebuke from Washington for endangering continental security.
Most recently, Canada has faced a grotesque spectacle in which two Canadian nationals have been detained in China as punishment for Ottawa's decision to arrest Huawei executive Meng Wanzhou during a December stopover in Vancouver.
On Thursday, Canada said that 13 of its citizens have been detained in China since Meng's arrest. She is accused of breaking US law, and Canada has an extradition treaty with the United States (but not China, though the Trudeau government has toyed with the idea). As punishment for following its laws, Canada must pay a "heavy price," according to Beijing's propaganda machine.
The decision of Canada's leadership to forge closer relations with China always required ample self-delusion. Starry-eyed over imagined future wealth and a new great power ally to offset "dependence" on the United States, Canadians in high places have wallowed in decades of denial over the realities of the Beijing regime.
The '90s dreams of a China on an inevitable path to economic and political liberalisation are fast fading as Canada wakes up beside a cynical dictatorship with a planned economy weaponized against the West.
Canada needs to abandon its fantasies of changing China before China irreversibly changes it.

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