In this issue: Canada’s Indo-Pacific Strategy, oil in yuan, rules-based trade takes a hit, and more.

Indo-Pacific Strategy

At last! Canada’s hyped Indo-Pacific Strategy (IPS) has been released, and if you’ve been living under a rock or were watching the Canada-Croatia World Cup game at 9:00 a.m. on Sunday, Nov. 27, you can read it here or read this shorter summary of the strategy that Peace and Diplomacy put together.  

CWF has followed development of the strategy, inserting western views into policy conversations and producing an op-ed, a policy brief and a forthcoming paper on what the Indo-Pacific Strategy means for Western Canada.   

In addition, our Trade and Investment Centre has also been highlighted in follow-up coverage:  

  • In an Asia Pacific Foundation piece, CWF’s trade policy economist Sharon Sun says that “for a country where trade accounts for 60.9 per cent of its GDP, the commitment to increase presence, investment, and understanding in the world’s fastest-growing economic region is a good and necessary start for Canada’s long-awaited Indo-Pacific Strategy.” 
  • And in an Institute for Peace and Diplomacy piece: “Without real investment in time and resources at every level on China, Canada will fall behind our allies who are also our competitors in China and in the region.” 
  •  Our Trade and Investment Centre Director Carlo Dade told the Financial Post that “they (the federal government) got the big things right and they missed some of the small things,” and that addressing China in the strategy was a good decision because “even if you try to run away from China, you run into China.”   

Reaction to Canada’s IPS has been met favourably by the U.S. embassy. CBC quotes the American ambassador to Canada as saying that “Ottawa has woken up…to a pressing geopolitical challenge.” The ambassador further notes, that “there were worries in Washington about whether Canada was too chummy with China.” 

Oil in yuan?  

A recent summit between China and Saudi Arabia focused on many things, but one thing important for western Canadians is that Saudi Arabia is ditching the dollar and will now trade oil with China in yuan, Reuters reports. As does Market Insider which quotes an analyst noting that “the Saudis have a lot to buy from China and China has a lot to buy from Saudi Arabia. Why should they transact in a third-party currency and incur all of these exchange-rate costs?” Chinese state network CGNTV has a deeper dive into other developments from the recent Arab-China summit convened by Saudi Arabia. 

Rules-based trade takes a hit…from the U.S.

Several outlets including the South China Morning Post, and Japan Times covered the recent string of U.S. losses (plural) at the World Trade Organization in a case brought by Norway and five other nations, including China, challenging U.S. steel and aluminum tariffs. Four WTO dispute panel rulings have found that U.S. tariffs on steel and aluminum do not qualify for the WTO’s Article 21 national security exception and therefore violate WTO rules.  

In a response which Canadians will find familiar, InsideTrade reports that the U.S. is flatly refusing to abide by the WTO rulings. As expected, Chinese media are having a field day trolling the Americans. See the Global Times and Sina Finance coverage.  

Also familiar to Canadians, a Bloomberg article explains the American rationalization for refusing to comply. The Americans can appeal the rulings to the WTO appellate body, but it is not sitting because the U.S. has refused to allow the appointment of judges. Again, according to Inside Trade, taking this route would leave the case in limbo. 

Going for 2 for 0, China’s Ministry of Commerce has said it will challenge U.S. semiconductor export controls at the World Trade Organization (WTO), Inside Trade reports.  A spokesperson for the Chinese Ministry of Commerce said the controls violate international trade rules. As Canada seeks a path between supporting the U.S. in its conflict and competition with China and its support for international rules-based trade, these issues portend some of what lies ahead.  

Other Trade News 

A Taiwanese publication reports that officials on the island are optimistic that a trade deal can be reached with the U.S. on everything but tariff cuts (not possible given U.S. domestic politics) by the end of 2023, raising the question of whether a trade deal without tariff cuts is really a trade deal? 

Protests in China cause a spike in immigration to Canada

Protests against the COVID-19 lockdowns have erupted across China in what are being called the most widespread demonstrations since Tiananmen Square, the New York Times reports. Immigration from China to Canada has hit a new peak, the Globe and Mail reports. Permanent resident admissions from China reached 9,925 in the July-to-September quarter, which is triple the pandemic low (2,980) recorded in the same quarter of 2020.  Immigration consultants have reported the ongoing surge of inquiries from potential Chinese immigrants is likely motivated by the COVID-19 restrictions and shifting political climate in China. 

In response to the demonstrations, the Chinese government has started to roll back pandemic restrictions. A CNN headline encapsulates how massive this shift will be: The world changed overnight’: Zero-Covid overhaul brings joy—and fears—in China. With lagging, unreliable testing data in China, Toronto-based software company, RIWI, plans to fill the data gap in China’s tracking of COVID cases through a new high-frequency data series that measures cases based on civilian respondents.  

An update on critical minerals

Last month, we covered Ottawa’s divestment order against Chinese state-owned companies involved in Canada’s critical mineral sector. This month, CBC reports that to reduce its dependence on China for critical minerals, the U.S. military has invited funding applications from Canadian mining projects. Plus, Canada’s fresh-off-the-printer $3.8 billion Critical Minerals Strategy and the amended Investment Act Canada confirm the governments’ ambition to pivot projects away from Chinese investors in the sector, the Financial Post says.  

Despite everything canola trade continues

Despite on-going tensions, Canadian canola exports have surged, Progressive Farmer reports. Exports to China were 624,700 metric tons (mt) in October, up from 125,000 mt in the first two months of the crop year. Cumulative exports to China are reported at 749,700 mt as of October, up 107 per cent from the same period in 2021-22. This is the largest year-over-year percentage change in six years and the highest volume shipped to China in four years. 

Indo-Pacific Economic Framework for Prosperity (IPEF)

The first negotiating round of the Indo-Pacific Economic Framework for Prosperity (IPEF) continued in Brisbane this week with the U.S. presenting the first text proposals in areas of trade facilitation, agriculture, regulatory practices, and services for domestic regulation. Everything except tariff cuts. The agricultural text will focus on various non-tariff barriers, proposed rules on sustainability, import licensing, and sanitary and phytosanitary measures. Digital trade, a key issue for many stakeholders and participants in the negotiations, will be addressed in 2023, Inside Trade reports.  

CWF’s Belt and Road, Five-Year Plan Monitor and Indo-Pacific Monitor

As Canada and other countries look to implement Indo-Pacific Strategies, this section will also track developments in the region that are relevant to Western Canada. 

BRI Expansion

Middle East Monitor reports that Algeria and China have signed a BRI agreement to extend cooperation in “important areas” between the two countries. China replaced France as the country’s leading trading partner in 2013. 

BRI falling short

Forbes highlights that the BRI has fallen far short of its original goals using Sri Lanka and Pakistan as examples. A Politico article talks about how the West’s vague and underwhelming response to the BRI continues.  

A U.S. report confirms that China holds a higher percentage of Sri Lankan debt than previously believed, but dispels the notion of a Chinese “debt trap” around the Belt and Road Initiative, China Macro Economy reports. 

Canada and the Indo-Pacific

The day after Canada released its Indo-Pacific Strategy, Taiwan welcomed the document while China expressed its strong dissatisfaction and opposition to it, according to Radio Free Asia. 

How Canada plans to address human rights in the Indo-Pacific region remains in question, especially as the country moves to conduct military training and improve interoperability with countries such as Indonesia, Singapore, and Vietnam, Global News reports. 

India External Affairs Minister, Subrahmanyam Jaishankar, recently spoke with Canadian Foreign Affairs Minister Melanie Joly about potential areas for collaboration in the Indo-Pacific region, against the backdrop of increasing global concern over China’s military expansion in the area, Press Trust of India reports.  

Chinese military jets “reportedly” intercepted a Royal Canadian Air Force surveillance plane during a recent United Nations’ mission in the Indo-Pacific region, Global News reports. The incident occurred during the latest iteration of Operation Neon, a UN sanctioned mission on North Korea.  

Other News

  • A super-cool database that MacroPolo has released tracks the latest personnel changes in the Chinese Communist Party (CCP) Central Committee. Check it out. 
  • The UN COP 15 biodiversity summit, which commenced last week in Montreal, could be an opportunity to improve strained relations between co-hosts China and Canada, The Guardian reports. 
  • The University of Ottawa has come under criticism from Canadian leaders, including Prime Minister Justin Trudeau, for banning cameras at an event with the Chinese ambassador to Canada, Cong Peiwu, CBC reports. 
  • Canada has summoned China’s ambassador to discuss reports of a network of illegal Chinese “police stations” operating in the country, The Guardian says. 
  • To be taken with a grain of salt – over 60 per cent of Canadians now want to see a decrease in trade with China, a recent Bloomberg poll reveals. But survey respondents did not indicate a willingness to, or consideration of, cutting individual purchases of Chinese-made goods. 

– Taylor Blaisdell, 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.