Opportunity vs threat: Canada’s unpredictable and sometimes irreconcilable relationship with China
It is becoming increasingly complex for Canada to balance economic opportunity with security concerns when dealing with China. PHOTO BY GIGI SUHANIC/NATIONAL POST ILLUSTRATION
Ottawa faces an increasingly complex challenge to balance economic opportunity with security concerns
The U.S. Commerce Department in July then sanctioned two BGI subsidiaries, saying they provided technology to conduct genetic analyses as part of the repression of Uyghurs and Muslim minorities in Xianjiang, China.
A review of trade data and foreign direct investment policy lays bare the tensions and inconsistencies in Canada’s relationship with China
At the core of the issue is how Canada should engage as China’s economic and technological clout continues to grow. The coronavirus trampled economic growth in 2020, but China emerged as the only major economy to increase its gross domestic product, growing by 2.3 per cent, and accounting for 14.3 per cent of global trade, according to Rosenberg Research and Associates.
Many business leaders and politicians believe China’s unstoppable growth offers too many opportunities to ignore and is key to breaking Canada’s reliance on U.S. trade, but that might open the door for more Chinese activity here as well and that country’s growing clout worldwide has raised concerns about its willingness to break international norms and its chequered track record on human rights.
Last week, for example, the Canadian government announced new measures to address human rights abuses in Xinjiang, including claims that ethnic Muslim minorities there are subject to “repressive surveillance, mass arbitrary detention, torture and mistreatment, (and) forced labour.”
“There’s the security picture and there’s the economic opportunity picture,” Wark said, “and the challenge for the Canadian government is how to make decisions based on the combination of those factors. I think it’s inherently complex.”
For one thing, security and business concerns are intertwined and Canada is often dependent on China in a way that China isn’t on Canada.
For example, Canada in April started to import increasing amounts of personal protective equipment from China as the pandemic took hold because it doesn’t produce enough at home.
The value of masks, gloves, disinfectants and other medical equipment imported from China jumped 630 per cent to $949 million in May from $129 million in March, according to data from Statistics Canada that the Financial Post obtained and analyzed.
In June, PPE imports from China rose again to $1.1 billion, representing 17 per cent of the total imports from China. In the same month in 2019, PPE accounted for just three per cent of total imports.
Canada needed those supplies, yet the federal government’s security concerns about China were evident in December when it rejected Chinese state-owned enterprise Shandong Gold Mining’s proposed $230-million takeover of TMAC Resources Inc., which operates a gold mine in western Nunavut.
The Ministry of Innovation, Science and Economic Development cited national security concerns in rejecting the deal without specifying exactly what those concerns are.
In May 2019, however, Mike Pompeo, then U.S. secretary of state, warned in a speech given to the eight-nation Arctic Council in Finland that even a Chinese civilian presence in the Arctic could create a national security threat.
Just as it’s dominating the South China Sea, (China) will seek to have a degree of agency in the Arctic that won’t be in our interests
DAVID MULRONEY, CANADA’S FORMER AMBASSADOR TO CHINA
David Mulroney, Canada’s former ambassador to China, who supported the government’s decision to reject the takeover, said the security concerns about TMAC were general.
“Just as it’s dominating the South China Sea,” he said, “it will seek to have a degree of agency in the Arctic that won’t be in our interests.”
The Arctic waters are increasingly navigable, and the number of voyages through federally monitored waters has topped 300 in recent years, from around 100 in 2009, according to data from Fisheries and Oceans Canada.
Of course, China already has a presence in the Canadian Arctic. MMG Ltd., also a Chinese state-owned enterprise, has controlled the rights to an undeveloped zinc and copper deposit in Nunavut’s Izok Lake and High Lake area since 2009.
No mine has been built, in part, because it is prohibitively expensive to transport bulk metals from such a remote location. However, the proposed Grays Bay Road and Port Project, if constructed at an estimated cost of more than $500 million, would pass near the mine site, potentially connecting it to a deepwater port on Coronation Gulf.
“Some investments into Canada by state-owned enterprises may be motivated by non-commercial imperatives that could harm Canada’s economic or national security interests, a risk that is amplified in the current (pandemic),” a press release noted.
Wark said it was hard to pinpoint an exact national security threat in the proposed TMAC deal, but he guessed it was related to Shandong being a state-owned enterprise.
There are growing concerns about Chinese investment in other parts of Canada, too.
In December, a community group in Stratford, Ont., staged a protest and wrote an open letter to the Ministry of Science, Innovation and Economic Development suggesting that a Chinese-owned company proposing to build a $400-million glass factory in the town threatens national security.
The worries tie into a broader backlash against China that has followed the detention of the “two Michaels” for more than two years.
Most Canadian business owners have no way of knowing or even figuring out which entities are involved in possible human rights abuses of Uyghurs, so there needs to be more official guidance, she said.
The federal Liberals last week announced “a comprehensive approach to defending the rights of Uyghurs and other ethnic minorities” so that Canadian companies are not unknowingly complicit in the repression.
The government listed a series of measures including a “Xinjiang Integrity Declaration for Canadian companies,” and new business advice on dealing with Xinjiang-related entities.
It’s possible the directive will put BGI back into the spotlight after its donation of medical equipment to Sinai Health barely caused a ripple last year.
BGI has a well-established presence in Canada, including a genomic sequencing laboratory in Montreal since 2019, as well as an outpost for its branch that manufactures and services gene sequencers, according to press releases on its website.
The company has said its relationship with Sinai Health dates to 2017, and includes a collaboration on a biomarker study with the Lunenfeld-Tanenbaum Research Institute for preterm birth risk, which was funded by Genome Canada, a government-funded non-profits that invests in genomic technologi
Heim-Myers said awareness about the importance of protecting genetic information privacy would continue to grow, in much the same way that Canadians have become more concerned about large tech companies collecting their personal data.
“People should care,” she said, adding genetic data is “highly personal information” that could be abused by insurance companies or employers to discriminate against people.
Charles Burton, a former Canadian diplomat to China and senior fellow at the Macdonald-Laurier Institute, said he believes Canada and other western nations are on the precipice of a cold war with China.
For example, China stopped accepting metallurgical coal shipments from Australia earlier this year and replaced them with shipments from Vancouver-based Teck Resources Ltd., where ambassador Barton once served as chairman.
“There should be an effort to try to establish some kind of common alliance for fair and reciprocal trade,” Burton said.
Some say that Barton is far too inclined to look for ways to maximize trading opportunities with China.
Mulroney, the former ambassador, is among those who believe Canada needs to think “in much more realistic terms” about the risks from China.
“If you listen to Dominic Barton, China is opportunity,” he said. “But if you listen to someone in the security world, China is a threat. The problem for Canada is we don’t actually have a foreign policy on this.”
• Email: gfriedman@postmedia.com | Twitter: GabeFriedz