In this issue: China lifts three-year ban on Canadian canola, Canada’s Indo-Pacific Strategy, CWF’s Belt and Road Monitor
China lifts three-year ban on Canadian canola
Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau announced that China lifted its three-year ban on two Canadian canola companies. Ken Ball, PI Financial adviser, told the Western Producer that China was forced to make this decision because of the global shortage of vegetable oil stocks, largely due to the war in Ukraine.
Media reports that the move will make little dent in the immediate pressures Canadian farmers face due to increased costs for inputs, waterlogged fields and minimal canola left for market until the fall. There is hope for longer-term benefits as canola demand and prices hit an all-time high.
Past president of the Agriculture Producers Association of Saskatchewan, Todd Lewis, told CTV News that access to China’s market will bring long-term benefits. “The future is pretty bright for those producers that can grow some canola, especially after last year’s weather-related issues,” Lewis told CTV News.
On the other hand, Western Producer reports that the U.S. Energy Information Administration forecasts a near tripling of renewable diesel production. Meanwhile, Canada has four new Canola crush plants due to come on stream by 2024 (see previous brief). As North American demand grows and Canadian crushing expands, access to the Chinese market may become less important for Canadian exporters. Read more about the expansion of North American renewable diesel production and its forecasted impact on Canadian canola in this previous brief. Stay tuned for coming CWF work on this subject.
Canada bans Huawei and ZTE from its 5G networks
Innovation Minister Francois-Philippe Champagne announced that companies must terminate Huawei 5G equipment by June 28, 2024, and existing 4G equipment by December 31, 2027. The federal government’s ban may hurt small companies most which could hit consumers in the pockets, Global News reports. Crown corporation SaskTel previously made plans for a 5G ban on Huawei but is “frustrated and angry” with the 4G decision, 650 CKOM reports.
Canadian tech news site MobileSyrup adds that small telecommunications companies, such as Iristel, invested millions in Huawei equipment as it was affordable and could withstand colder temperatures. Now companies have to remove and replace 4G and 5G equipment without government compensation, the Financial Post adds. Consumers in affected regions could face possible service disruption as companies make the necessary replacements.
Help with these issues could come from the United States. As outlined in Section 3247 of the Innovation and Competition Act of 2021, the U.S. offers to “support Canadian efforts to identify cost-effective alternatives to Huawei’s 5G technology.” While it’s a stretch to think Americans will pull out their cheque books, this may offer an avenue to make the ask. U.S. financial support and collaboration could be critical in expanding internal access to remote and first nations communities.
Is the Indo-Pacific a viable alternative?
U.S. Indo-Pacific Economic Framework
President Biden’s Indo-Pacific Economic Framework (IPEF) was announced this month on the heels of a $150 million commitment for new ASEAN initiatives (see previous brief). Bloomberg says that the IPEF is the “most significant US effort to engage Asia on economic matters since former President Donald Trump in 2017 withdrew from the Trans-Pacific-Partnership.” Another Bloomberg article says the IPEF “falls laughably short of what’s needed” and that it is a failed attempt to counter Beijing’s influence.
A CNBC article reports that China’s defense minister has accused the U.S. of trying to “hijack” Indo-Pacific region countries. In response, China has pivoted and turned focus to other things, like the Regional Comprehensive Economic Partnership, CNBC also reports. See this previous brief for more on RCEP and what it means for China and Western Canada.
Canada was not invited to the IPEF announcement but Carlo Dade, CWF’s Director, Trade and Investment Centre, says there is no need to panic. Our blog Hot Takes on the U.S. Indo-Pacific Economic Framework and Canada is a message for western exporters still smarting from the U.S.-China phase one agreement that the IPEF is not “a comprehensive trade agreement nor is it a vehicle to achieve one” and Canada must forge ahead to establish its own, more traditionally styled trade negotiations with Asia.
Canada’s Indo-Pacific Strategy
According to the National Post, the Canadian federal government has recruited advisers, academics, private sector representatives and former politicians to design its Indo-Pacific Strategy. Committee members include westerner and former Conservative MP Rona Ambrose. The committee will provide independent advice to Global Affairs Canada to strengthen trade, diplomatic and military relations in Asia and the Pacific.
China expert and CWF contributor, Dr. Stephen Nagy proposes a possible Indo-Pacific Strategy for Canada in an article for the Australian Strategic Policy Institute.
Cloning pigs? It’s no joke in China
A group of researchers from Nakai University’s College have found a way to clone pigs using AI technology says a recent article from science-driven news outlet Nature World News. This development could help China’s push for food security as China’s current supply of 400 million pigs does not meet demand. While clones are not new, the AI component is and should fast-track China’s cloning abilities. The researchers claim that if their fully-automated cloning method is implemented successfully China’s domestic pork production will skyrocket. This is one of many initiatives involved in China’s continued push for domestic food manufacturing of the future.
CWF’s Belt and Road Monitor and Five-Year Plan Monitor
China’s multi-billion-dollar Belt and Road Initiative (BRI), the state-backed global infrastructure development strategy, has the potential to enormously shift global trade through new levels of infrastructure and supply chain integration, in the Asia-Pacific region as well as globally. China’s most recent five-year plan (FYP) sets the country’s priorities for 2021 to 2025 as well as the vision for 2035. These shifts have the potential to alter both the Chinese and global markets for Western Canadian-produced commodities. The China Brief now includes a section with relevant BRI and FYP developments. We welcome feedback as we continue to develop this new feature.
BRI shifts its approach
Financial company Refinitiv’s latest report Infrastructure 360 Review – BRI Focus: The Great BRI Reset unveils disruptions to the BRI amidst pandemic recovery and greening of the economy. The review notes that in 2021 China announced 194 projects valued at $80.51 billion, down from the average of 224 projects per year valued around $255 billion. China has also launched the Global Development Initiative (GDI). The report speculates as to whether the GDI, focused on achieving the UN’s Sustainable Development Goals, could overtake the BRI.
The East Asia Forum (EAF) recently highlighted policy shifts related to the BRI, as President Xi Jinping commented in late 2021 that the BRI should focus on projects that are “small and beautiful” and avoid “dangerous and turmoiled places.” China’s central bank recently announced limits on the value of overseas loans, which the EAF projects could lead to more frugal loans in 2022 and smaller projects. The IMF, World Bank, and U.S. Treasury’s push for debt relief and creation of the Debt Service Suspension Initiative will also hit China hard “as the world’s largest bilateral creditor,” the EAF report continues.
Meanwhile, a year after its announcement at the G7 June 2021 meeting there are still no details on the American counter to China’s BRI, the Build Back Better World initiative, which according to the N.Y. Post appears to have “shriveled on the vine.”
U.S. attempts to counter China in Latin America continue to limited success
The United States is host to the Summit of the America’s, the tri-annual gathering of North and South American leaders. While China is not attending, Politico says “China’s long shadow looms over” the summit as the United States continues to try and counter China’s BRI efforts in the region.
U.S. military officials have expressed concerns over China’s investments in the region as projects could be converted to security infrastructure. The Silk Road Briefing says China and Argentina are in discussions to develop the Beagle Channel, a key military and shipping hub.
Ricardo Guerrero, a consultant on internationalization and law for business, wrote in an op-ed for China’s Global Times that Latin America is sending a message to the United States through its partnerships with China via the BRI. “If Latin America is assembled as a whole, it is a piece to be considered on the world geopolitical chessboard” and should be similarly treated as such.
Peter McKenna, author of Canada Looks South: In Search of an Americas Policy, told Global News that Canada could increase its presence in the region and offer an alternative to the U.S. and China: “…they want us to play a role there — begging us to play a role. And here we are sitting back, virtually ignoring the region, treating it like it’s an afterthought when we have vested interests at play.”
- China’s National Development and Reform Commission released a document which sets two updated targets as part of the 14th Five-Year Plan: 3300 terawatt-hours for renewable energy generation and 50 per cent of the consumption increase in the country to be renewable by the end of the five-year period. The South China Morning Post has more on these documents here.
- Bloomberg reports that the 50 per cent target was originally 66 per cent when the plan was first announced in October 2021. This shift in language could allow for greater coal consumption.
- Axios reports that Ant Group may be allowed to proceed with its initial public offering (IPO) after regulators stepped in to stop the first attempt, which would’ve set the 2020 record for the largest IPO globally. Bloomberg says China’s major tech companies now outperform similar companies in the U.S. as the crackdown eases.
- China wants to assure investors that the country is reopening with Premier Li Keqiang setting up a task force focused on foreign investor relations, the Business Standard reports. After reopening for a week, Shanghai went back into lockdown which could extend economic pressures highlighted in this previous brief.
- Canadian and Australian military pilots report an increase in China “buzzing” as the crews monitor North Korea to ensure compliance with UN trade sanctions.
– Stephany Laverty, Taylor Blaisdell, policy analysts, and Connor Watrych, Jasleen Bahia policy interns
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.