Canada’s approach to China has hit a wall – which is the perfect time to take a new path

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In the fall of 2016, Justin Trudeau stood side by side with Premier Li Keqiang, smiling from beneath the intricate woodwork of the Forbidden City on the Prime Minister’s first official trip to China. Local state media noted the colour of his tie – red – as a token of good fortune. Soon after, Mr. Trudeau held hands with his wife and daughter as they strolled and skipped on a section of the Great Wall cleared for their visit.

“Every time I come here, it gets more and more beautiful,” Mr. Trudeau said.

In the years that followed, John McCallum, then Canada’s ambassador in Beijing, exuberantly distilled Ottawa’s hopes for China to three words: “more, more, more.”

All of that has faded into historical artifact: Both Mr. McCallum’s diplomatic tenure, after he was fired for repeatedly speaking in defence of Huawei executive Meng Wanzhou after her arrest at the Vancouver airport, and the flourish of good feeling that accompanied Mr. Trudeau’s desire to foster a new era of collaboration, co-operation and partnership with China.

The arrest of Ms. Meng and China’s subsequent actions – arresting Michael Kovrig and Michael Spavor, blocking agricultural imports and sentencing four Canadians to death – have brought to a sudden halt the agenda envisioned by Mr. Trudeau, one that included a free-trade deal with Beijing, an extradition treaty with China and a warm welcome to Chinese tourists and students.

Now Canada’s chief goal with is to advocate for the release of Mr. Kovrig and Mr. Spavor, Canadians accused of state secrets violations.

All other priorities have faded in importance, even though Canada has little to show for its efforts. Despite widespread criticism of China, including most recently from the European Union, the men remain behind bars. Even pleading for diplomatic visits has shown no result, with China citing the pandemic to cut off access since January.

Chinese officials, meanwhile, say Beijing will do nothing with Ottawa until Ms. Meng is released, an outcome that could take years of legal wrangling and, if history is a guide, constitutes a faint possibility. Matters stand to grow worse if, instead, she fails to win her freedom.

“If Meng Wanzhou is extradited to the U.S., every effort to boost the China-Canada relationship will be doomed to failure,” a Chinese diplomat warned. The Globe and Mail granted the person anonymity because they are not authorized to speak publicly.

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Canada and China, it’s clear, have plunged into an extended freeze, one with no obvious end date. But if the diplomatic difficulties stand in the way of getting anything done, they may also provide an impetus to build a China policy that departs from the past, at a time of momentous historical change, as the country challenges U.S. supremacy even as Washington seeks to circumscribe Beijing’s rising influence.

Some of the shape of that new direction is likely to be included in a new framework for dealing with China currently being drafted in Ottawa, part of what Foreign Minister François-Philippe Champagne called “reassessing and adapting our foreign policy.”

“We need to adapt. We’re facing a new China,” he said in an interview this week. That framework, which he expects to release in coming weeks, will seek to delineate where to challenge, compete, co-exist and co-operate with China.

There are few simple answers. For political leaders in Canada and other western democracies, formulating a posture toward China – a trading superpower that acts like a hostage-taking rogue state – may be the single most complex international-affairs question in modern times.

China is “amazing. It is horrible. It is encouraging. It is incredibly depressing,” said a Canadian diplomat who recently served there. The Globe is not identifying the person because they are not authorized to speak publicly.

“How do you calibrate a foreign policy for a country like that?”

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Ottawa has been notable for its reticence to take decisive action against China, relative to the stiff trade and human-rights measures taken by the U.S., the new obstacles to foreign investment erected in Europe, the rewriting of foreign interference laws in Australia and the curtailing of the use of Huawei’s 5G technology by intelligence allies.

Canada’s approach to China has been even more stark in comparison with its response to the U.S., which has included forceful rejoinders to new tariffs. Ottawa made no such moves after China blocked agricultural imports. It has not joined its allies in rebuffing Huawei.

Such restraint is not for lack of other options. Ottawa could take a more assertive approach, making sections of the economy off-limit to Chinese investment while imposing a blanket ban on Huawei products. “I would make sure that anyone coming into Canada with a Huawei phone gets it confiscated,” said Jérôme Beaugrand-Champagne, a Canadian lawyer with two decades of experience in China. “We should be realistic that China is not a friend.” Or it could march in the opposite direction, abandoning any critique of human-rights abuses in China in favour of pursuing profit alone. “We have to start treating China the way we treat Saudi Arabia,” suggests David Ownby, director of the Center of East Asian Studies at the University of Montreal. “We manage to deal with Saudi Arabia despite there being a thoroughly odious regime, because they have money and oil.”

Or Canada entirely eschew trade with an authoritarian regime in the name of principle. “You just have to be willing to say, ‘You know what? I might not make as much money. But it’s not worth it,’ ” said Times Wang, a Canadian whose father, Wang Bingzhang, is a democracy activist long imprisoned in China.

Still others suggest mollifying Beijing over its immediate concerns in order to advance other aims. “It’s obvious that the key for better Canada-China relations is to end the extradition of Meng Wanzhou to the United States,” said Daniel Bell, a Canadian who is dean of the School of Political Science and Public Administration at Shandong University. That’s an option Mr. Trudeau has explicitly rejected.

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But the stakes are high as his government seeks a new way forward. Think of Canada as a vessel that has spent much of its recent history ensconced in protected waters, first maintained by the British and then by the U.S., whose military and economic might offered a shield against international uncertainties. Now that protection is breaking down and “we’re out of a safe harbour,” thrusting Canada into a difficult new world, a senior Canadian foreign affairs official said. The Globe is not identifying the official because they were not authorized to speak publicly.

The widening split between a democratic superpower and an authoritarian economic rival portends “rising nationalism, protectionism, splintering into rival blocs – which is really dangerous,” said Gregory Chin, a political scientist at York University. “This is how we got into world wars.”

Mr. Champagne gave little indication in his interview with the Globe of concrete defensive steps Canada might take, other than saying he doesn’t think the time is right to purse a long-stalled free-trade deal. His position is unlikely to mollify critics who have accused his government of too little action toward China.

Ottawa, Mr. Champagne said, is analyzing what measures it can take on foreign investment, security and cybersecurity. That includes “preparing an appropriate response” to allegations of Chinese intimidation and interference, in concert with Public Safety Minister Bill Blair.

Canada is also co-ordinating with allies, he said.

“Canada is best when we act in good company. This is where we can have maximum impact,” Mr. Champagne said.

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Dealing with China has never been uncomplicated. Right-leaning U.S. politicians called Pierre Trudeau “the Canadian Castro” after he began talks toward recognizing Beijing, a move Mr. Trudeau deemed preferable to isolating a large portion of the world’s population. On the day Ottawa formalized those ties nearly 50 years ago, Taiwan’s ambassador flew out of the country and left behind a bitter note questioning Canada’s new ties with a country whose Communist leadership had indulged “in a sustained orgy of atrocities against the people.”

But successive generations of Canadian leaders have largely mirrored the elder Trudeau’s approach, seeing in China’s market a potential for profit and in its people a source of immigrants and, more recently, students and tourists. Today, it is Canada’s second-largest individual trading partner and its third-largest source of visitors and foreign direct investment. Though its performance at home is often different from the image it projects, China has positioned itself as a fellow defender of globalization, international institutions and international climate policy. Working together with Beijing on problems such as carbon emissions is critical, Prof. Chin said. “For the world’s sake, we have to get that stuff right,” he said.

But it’s also time, he said, for “a bold strategic rethink” on China, discarding outmoded views of the country and its leadership in favour of a more realistic response to changes that have already been cemented in place for more than a decade.

China argues that none of that is needed, saying the reason to work with Beijing in 2020 is unchanged from 1970. “When the Canadian government 50 years ago decided to establish diplomatic relations with China, they knew what kind of political system China had,” said Lu Kang, a former Chinese government spokesman who is now director-general of the Foreign Ministry’s Department of North American and Oceanian Affairs. “That political system did not change,” he said in an interview.

But the power wielded today by that system, at home and abroad, bears little comparison with decades past. Scholars point to 2009 as a pivotal moment of change, after the Beijing Olympics and the Wall Street carnage of the great financial crisis. Those events imbued China with nationalistic pride and confidence in its own model of economic and political governance.

“Official China decided no more Mister Nice Guy – that we’re not going to bend over backward. We’re not going to hide our light under a bushel. We’re going to start being more direct, asking for what we want,” Prof. Ownby said.

“China’s rise was becoming more apparent and the wisdom of following the capitalist west was called into question.”

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Beijing’s explicit rejection of western values, in its economy and in its treatment of its people, has turned systemic differences into frictions. As China has gained economic power and international affluence, an accumulation of long-standing western grievances has grown more acute, with unhappiness over Beijing’s state-sanctioned appropriation of foreign technology, its lack of economic reciprocity, its eschewal of human-rights norms and its use of economic pressure to achieve international political compliance – such as through Hollywood self-censorship.

Multiple models are emerging for how to respond.

Washington has adopted a tough offensive policy toward China, with trade tariffs, evictions of scholars suspected of siphoning knowledge to the People’s Liberation Army, human-rights-based sanctions against Chinese leaders and blunt warnings from Secretary of State Mike Pompeo about “what the China threat means for our economy, for our liberty, and indeed for the future of free democracies around the world.” China’s conduct toward its neighbours and its own people “are not the actions of a responsible global actor, but a lawless bully,” David Stilwell, the top U.S. diplomat for East Asia, said this week.

In Europe, foreign ministers have openly criticized China for its mass incarceration of Uyghur Muslims in the western Xinjiang region and its imposition of a National Security Law on Hong Kong, which has eroded that city’s autonomy. The EU has designated China a “systemic rival” and become more insistent in its demands.

“We want more fairness. We want a more balanced relationship that also means reciprocity and a level playing field,” European Council President Charles Michel said this week, after a virtual summit with Chinese President Xi Jinping. Europe, he said, “needs to be a player, not a playing field.”

Europeans have “revolted” against China, said François Godement, senior advisor for Asia at the Institut Montaigne. Rather than go on the offensive like the U.S., however, European states have largely adopted a more defensive posture toward China, rooted in a sense that efforts to change China are unlikely to succeed. Therefore, it is important to concentrate energy at home, including through policies to limit investments from Chinese firms.

“It is now up to Europeans to make their own interests and values China-proof,” Mr. Godement wrote in Europe’s Pushback on China, a recent monograph. “The pursuit of a defensive agenda is the only answer to the combination of rigidity and advances in China’s rise,” he wrote.

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Canada, for its part, has joined international condemnation of China on human-rights issues, including moving first to cancel an extradition treaty with Hong Kong.

It’s not clear, however, how much Mr. Trudeau is willing to depart from the ideals of multilateralism and open trade that he sees not only as bedrock Canadian values, but as important international organizing principles. Canada, Mr. Trudeau hopes, can continue to press for others to uphold a rules-based global order that has sought to establish an even playing field for countries of all sizes.

There are numerous opportunities for co-operation with China, too. China’s most pressing problems aren’t entirely different from those plaguing other countries: management of big data; social debt and retirement funds; public health.

“We must engage,” said Mark Kruger, a former Bank of Canada official who has worked in the Canadian embassy in Beijing and is now global opinion editor at Yicai Global, a Shanghai-based financial media service.

“If COVID-19 has taught us anything, it has clearly demonstrated how deeply interconnected we are,” he added. And “China is going to become more, not less important. Do we want to be in this game or not?”

But Canada is a small country at a time of big-country jostling. And Ottawa is a defender of a multilateral world at a time when both Beijing and Washington have sought one-to-one deals, both with each other and other partners.

Canada has made itself “the champion of international decency. We’re a promoter of the an older norms-based system,” said Yifei Zhang, a Canadian who is the Beijing general manager for Control Risks, a risk consultancy. “But that system is at risk and maintaining it is not what China or the U.S. are about any more.”

The challenge for Ottawa is how to succeed in that kind of world. Can Canada muscle through concessions from China for its banks and auto manufacturers equal to what the U.S. or Germany can achieve? And as a country, “what do we do or make or provide that China needs? What do we do that China cannot do without?” Mr. Zhang said. “It might be nothing. Actually, I think Canadians have been avoiding that answer, because they’re afraid that in fact it is nothing.”

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Beijing’s solution for Canada is simple: submit. The ambitious agenda from the time of Mr. Trudeau’s 2016 walk on the Great Wall remains relevant, said Mr. Lu, the Chinese official. But “all this co-operation needs the right circumstances,” he said. China has demanded the release of Ms. Meng as a precondition to ending the diplomatic standoff.

U.S. prosecutors accuse Ms. Meng of fraud related to violations of sanctions against Iran, saying she misled banks over Huawei’s close ties to a company doing business there.

The Chinese government has, without evidence, called her innocent and raged at Ottawa for a political “mistake.” Canadian leadership “did something very, very wrong and ruined” the atmosphere between the two countries, Mr. Lu said.

Release Ms. Meng, though, and good times can return, he said. Continue to pursue her extradition and it “could bring about more opportunity costs for the Canadian government and for the bilateral relationship in general,” he warned.

Historically, the great majority of U.S. extradition requests to Canada result in suspected criminals being dispatched south of the border, a prospect that suggests those costs stand to be long-lasting.

Still, while China’s treatment of Canada and other countries in similar circumstances, is “basically how the Mafia operates,” Chinese leadership has also kept “the bigger picture stable,” said Sean Ding, an analyst at the China-focused research firm Plenum who splits his time between Toronto and Washington.

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U.S. businesses offer a particularly vivid illustration of the corporate benefits of staying the course. In a survey published earlier this month, the American Chamber of Commerce Shanghai found an increase in the percentage of firms that called their China operations profitable last year – as the trade war intensified – while a third of those surveyed expect revenue to rise this year, despite the ravages of the pandemic. The political furor between the two countries has done little to dampen commerce.

With Canada, too, China has leavened political hostility with economic niceties. Exports to China are up 2.2 per cent this year and Canadian pension funds and other investors continue to pour money into the country, with the Canada’s total stock of portfolio investment in China up 10.2 per cent in the first half of 2020 over last year – signs both of Chinese willingness to buy Canadian goods, and a Canadian desire to invest in China.

Chinese government-backed industry groups have also become newly warm to foreign businesses, including those from Canada. “I am seeing some warmer overtures,” said Noah Fraser, managing director for China with the Canada-China Business Council. “It’s nice to be treated as a friend again, at least from a Canadian perspective.”

For many in the business community, the outsized economic importance of China continues to outweigh other considerations.

In Hong Kong, the Canadian Chamber of Commerce has offered little criticism of the National Security Law, or NSL, which has imposed some of Beijing’s standards of justice on the city and led to the arrest of high-profile democracy activists. Instead, in an Aug. 31 policy recommendation, the chamber criticizes the media. “The negative news coverage of Hong Kong and the new NSL have hidden successful efforts by the Government and the community on fighting the virus and development of the Greater Bay Area,” the submission says.

In meetings this summer, some of the chamber’s members went further. Though views were mixed, “some people enthusiastically support the national security law, saying it’s high time we had this,” said a person who attended multiple meetings. The Globe is not identifying the person because they are not authorized to speak publicly.

Such a view is out of step with the Canadian public, which has badly soured on China.

It’s not clear, though, how much a scorched-earth approach can achieve.

“If Canada all of a sudden becomes very hard line toward China, China is not going to just release the two Michaels,” Mr. Ding said.

Better, he says, to ignore the rhetoric and seek to maintain middle ground in the unpredictable and twisting path of two tussling superpowers.

“It’s hard not to pick a side. But for smaller countries, you have to figure out: How do you still engage both sides – China and the U.S. – and not be caught in the cross-fire? Because I don’t think stopping China is an option.”

Canada and China at a crossroads: More reading

Verbatim

In depth

Canada abandons free-trade talks with China in shift for Trudeau government

More than 100 ex-diplomats urge Trudeau to swap Meng for Kovrig and Spavor

Canada only country willing to detain Meng Wanzhou, China says

Opinion

Doug Saunders: ‘Tough on China’ is a winning idea for Erin O’Toole – if he can decide what ‘tough’ means

Preston Lim: How China’s legal bulwarks for its atrocities in Xinjiang can be overcome

Michael Bociurkiw: For Hong Kong residents looking to escape repression, it might already be too late

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