Chinese President Xi Jinping confronts Canadian Prime Minister Justin Trudeau at the G20 Leaders Summit in Bali, Indonesia.Sean Kilpatrick/The Canadian Press
Ian Bremmer is president and founder of Eurasia Group.
Chinese President Xi Jinping has a habit of bullying small democracies. Politically unchallenged at home and increasingly assertive abroad, China’s strongman leader responds with threats and intimidation when less powerful countries have the nerve to upset Beijing.
So when Mr. Xi confronted Justin Trudeau in full view of the world’s media at the G20 summit in Bali, Indonesia, last month, he was making an example of Canada’s Prime Minister. Mr. Trudeau’s supposed offence? Briefing reporters that he had raised alleged Chinese interference in Canadian elections during a short bilateral meeting. Mr. Xi’s behaviour was revealing. You can bet he would never speak like that to the U.S. President.
The episode – coming in the wake of China’s abduction of two Canadian citizens, Michael Spavor and Michael Kovrig – should be clarifying. When Mr. Xi told Mr. Trudeau that in the aftermath of their confrontation, “the results can’t be predicted,” it wasn’t a veiled threat but a fairly direct one. There could be tangible consequences in store for Canada, particularly economic ones.
Like many countries, Canada depends on the large Chinese market for exports. But the reverse isn’t true. Most individual countries each count for a small portion of China’s international trade. China holds power over many trading partners, and Beijing doesn’t hesitate to wage asymmetric trade warfare against small democracies that it thinks are acting uppity.
There needs to be some serious thinking about how to handle this. Ottawa’s new Indo-Pacific strategy, unveiled toward the end of November, is a step in the right direction. But make no mistake, the path ahead is going to be long and difficult.
When it comes to geopolitics, there’s no middle ground for Ottawa in the competition between Washington and Beijing. While trade and investment across the Pacific will sustain economic growth and interdependence, on key strategic issues such as technology and critical minerals, not to mention political values such as democracy and human rights, Canada is firmly in the U.S. camp. Canada, of course, is an intimate and long-standing U.S. ally – a founding member of the North Atlantic Treaty Organization, a partner in the North American Aerospace Defence Command, and a trusted contributor to the Five Eyes intelligence alliance.
But in recent years Canada has been ragging the puck on China and slow to pivot toward the Indo-Pacific region. Canada was the last Five Eyes country to ban Huawei from its critical infrastructure, and when the Biden administration launched its new Indo-Pacific Economic Framework for Prosperity last May, Canada was conspicuously absent. All of that hasn’t gone unnoticed in Washington. Nor in Beijing.
Ottawa’s new Indo-Pacific strategy suggests that the Trudeau government has recognized this geopolitical reality and is ready to act more decisively. The long-awaited document characterizes China as an “increasingly disruptive global power” and promises to hold an inaugural Canada-United States Strategic Dialogue on the Indo-Pacific next year – music to the ears of policy makers south of the border.
This new geopolitical pivot does come with new economic opportunities. Canada’s Deputy Prime Minister, Chrystia Freeland, recently emphasized the need for increased “friend-shoring” in supply chains during a visit to Washington, and soon after Ottawa moved to force three Chinese companies to divest from Canadian lithium miners. Combined with provisions in the U.S. Inflation Reduction Act that incentivize critical mineral mining and electric vehicle battery production within North America, it adds up to Canada becoming a leading partner for the U.S. in the green energy transition.
Moreover, Canada has untapped commercial advantages in the Indo-Pacific. Thanks to free trade agreements with South Korea and Japan (the latter through membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership), it’s well positioned to deepen engagement on critical minerals and electric vehicles with those two automaking giants. Fast-growing economies such as India and those in Southeast Asia should be natural trading partners for Canada. The new Indo-Pacific strategy rightly stresses economic opportunities in a fast-growing region whose potential Canada has yet to fully tap.
But Canada will never be a major defence player in the Indo-Pacific. While Ottawa can certainly contribute to regional peace and security, the Indo-Pacific strategy’s proposed nearly $500-million in new spending over five years on naval presence and participation in regional military exercises is a drop in the bucket. It’s nothing close to what’s needed to join the big leagues of AUKUS with the U.S., Britain, and Australia or the Quadrilateral Security Dialogue (“The Quad”) alongside the U.S., Australia, Japan and India, both of which are focused on balancing China’s growing power in the region.
Which brings me back to Ottawa’s troubled relationship with Beijing. It’s always going to be hard for a small liberal democracy to deal with an authoritarian, state-capitalist great power run by a dictatorial president. China is the world’s second most powerful country, and the trade relationship is far more important to Ottawa than it is to Beijing, leaving Canada exposed to economic coercion. China’s technology and intellectual property theft, apparent interference in Canadian elections, and Xi Jinping’s derisive attitude toward Justin Trudeau show that Beijing thinks it can act with impunity. Canada is holding a weak hand, even if it manages to play it well.
This is the reality of the G-zero world, where no power or group of powers can impose global rules of the road. Middle powers like Canada are more exposed to the whims of great powers like China, and they have to work even harder to protect and advance their interests.