IN THIS EDITION: Canadian LNG exports to China, Canadian wariness about Huawei growth, and efforts to solve the China-Canada dispute.

“The goal is to put pressure on Mr. Trudeau, and his government, to bend to Beijing’s will, and failing that, to punish – so other countries think twice before arresting one of China’s lordly untouchable class.”

– Campbell Clark, the Globe and Mail, July 18

Even though things tend to slow down in the summer, developments in the China-Canada relationship are happening full tilt. Here’s what’s on our radar:

FortisBC signs term contract to export LNG to China

FortisBC has signed a two-year contract with the Chinese LNG distributor Top Speed Energy Corp. It will ship 53,000 tonnes per year of LNG to China by the summer of 2021. It is a two-year contract.

53,000 tonnes is fairly modest – it is enough to heat roughly 30,000 B.C. homes per year, and based on today’s price, is about $161,000. Canada has exported little LNG to China in the past – in 2017, Canada exported $135,000, and in 2018, approximately $610,000 – with no exports the decade before that. (Canada has exported so little LNG to China because Canada does not have a lot of LNG export facilities to ship from –the FortisBC facility is the only one, though others are in the works to be built, notably Kitimat).

Canadians growing leery about Huawei

A recent survey looked at whether Canada should permit Huawei to participate in building Canada’s 5G networks. According to the results, only 17 per cent of respondents think Canada should, and a massive 68 per cent are against Huawei involvement. The province with the greatest aversion to Huawei is B.C., where 81 per cent of those surveyed are against Huawei’s involvement in Canada’s 5G.

Former Ambassador to China John McCallum raises Canadian hackles

In an interview with the South China Morning Post, McCallum argued that Beijing should tone down its rhetoric against Canada, because it will do the Liberal Party damage and could help get the Conservative Party elected – a party that McCallum says will be “much less friendly to China than the Liberals.” This brought condemnation from the Liberal government; the Conservative Party, meanwhile, has asked CSIS to investigate whether the comments pose a threat to the upcoming election.

University of Manitoba cuts research ties with researcher connected to China

Dr. Xiangguo Qiu worked at the National Microbiology Lab in Winnipeg, and helped develop a treatment for the Ebola virus. The lab is a highly secure, level-4 virology facility (the only one in Canada) equipped to deal with the most serious human and animal diseases. Dr. Qiu and her husband were escorted out of the lab by the RCMP over an alleged “policy breach.” Is not clear if Dr. Qiu is a Canadian citizen, permanent resident, or Chinese citizen.

When asked about the case, NATO Secretary-General Jens Stoltenberg seemed to suggest possible espionage.

Canadian student detained in China

Another Canadian has been arrested in China – according to Chinese authorities, the arrest had to do with alleged drug offences. According to an anonymous Canadian government official quoted in The Globe and Mail, the government has no information to indicate the latest arrest is linked to the detention of Canadians Michael Kovrig and Michael Spavor.

From our shop:

• Trade & Investment Director Carlo Dade and Trade Policy Economist Sharon Zhengyang Sun wrote that there are two overriding trade lessons for Canada in China’s current actions.

Don’t take good markets – like Japan, South Korea, and Mexico – for granted.

Canada needs to be better at managing and pricing the risk of doing business with China.

• Our last Pop-Up Policy event featured Brett Stephenson, Greater China Director of the Asia Business Trade Association, for an “on-the-ground” perspective and insights into the current China-Canada conflict. We released a special edition of the China Brief with Brett’s key takeaways – check it out here!

Some relevant stories about domestic China:

• While African swine fever continues to ravage the country, farms in China are fundamentally changing how they do business in order to try to keep the disease in check. Official data indicates that 100 million of China’s pig herd (which was 400 million a year ago) have died, although industry insiders say it is likely much higher.

• China is going to send government agents to monitor the various projects along its Belt and Road Initiative (BRI). Several BRI projects have sparked allegations of corruption (in Ecuador, Kenya, Kyrgyzstan, and Malaysia). However, this Axios piece argues there is more to it than that: “The Chinese government does not want to get rid of all corruption, only unsanctioned corruption. It wants to assert more control over its state-owned enterprises, which often have more influence than Chinese ministries, while preserving the flexibility to buy friends and pursue its own aims with less scrutiny.”

While there have been other developments in Canada’s relationship with China, fundamental problems linger – and solutions remain elusive. Here are some recent opinion pieces on how to approach these challenges:

• The real election threat is China (Terry Glavin, Macleans, July 16, 2019): Glavin eviscerates John McCallum’s recent public musings, which gave the impression the former ambassador was trying to encourage Beijing to support the Liberal Party in Canada’s upcoming election. Glavin argues that “legal” election interference will be a problem, noting that it is only “specifically covert foreign election interference that is against the law in Canada… not the sort of mischief McCallum has been making.”

• Diplomatic support for Taiwan may offer Canada leverage in dispute with China (John Ivison, National Post, July 12, 2019): Ivison argues that inviting Taiwan to an international event in Canada – such as the International Civil Aviation Organization meeting to be held in Montreal – would “[send] the message to Beijing that Canada should not be treated with impunity.”

• Critics of China policy provide no firm solutions (Editorial, The Western Producer, July 11, 2019): This piece argues that the Conservative Party of Canada has “largely contented itself with lobbing peanuts” at the federal government instead of trying to find a better way to deal with China, and that “Canada’s decision not to throw what would amount to peanuts at China may pay off in the future, but that may not be enough to help the Liberal government politically. It will take years to see the results of this strategy. In the meantime, the opposition’s contribution to the issue amounts to no more than noise.”

• No, Mr. Scheer, the blame for detained Canadians lies with Beijing, not Ottawa (Campbell Clark, The Globe and Mail, July 18, 2019): Clark argues that it is important to separate the cases of the arrests and detainments of Michael Kovrig and Michael Spavor from the rest of the dispute with China (i.e., agriculture trade issues). He says that while “It’s important to remember that because there are a lot of complications and nuances in Canada-China relations or in trade disputes over canola or pork – but no one should let that cloud the clear cases of Mr. Kovrig and Mr. Spavor. This is a hostage-taking.”

– Sarah Pittman, policy analyst

The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.