China Brief: China’s relationship with Canada’s West
Issue 91 | Febuary 15, 2023

In this issue: Super cows, U.S.-China trade doing its own thing and of course … the balloon

Super cows?

Canadian dairy cows have some serious competition as Chinese scientists at Northwest University of Agricultural & Forestry, located just outside Xi’an China, have successfully cloned three “super cows,” Global News reports. This project is part of China’s goal to revitalize the country’s domestic ag sector and reduce its 70 per cent reliance on imported dairy cows. It is being claimed that these cows produce 50 per cent more milk than the average Canadian Holstein cow. In 2020, China was the fifth largest importer of Canadian dairy products.  

U.S.-China trade is doing its own thing

Despite political tensions between the U.S. and China being high as a “meteorological” intelligence balloon (if you don’t get that joke, please catch up here), trade prevails. The latest data from the Commerce Department reveals that U.S.-China total trade reached a new high of $690 billion in 2022, with exports spiking 17.7 per cent and imports 16.3 per cent, according to Inside Trade.   

Despite the increase, Chinese exporters are concerned about shipping disruptions and political fractures and are establishing factories in Mexico to secure sales to the U.S., a path initially forged by Japanese and South Korean companies, The New York Times reports. By moving production to Mexico, Chinese companies can use “Made in Mexico” labels on their products and operate under the North American trade agreement.    

 Ed Gresser, former Assistant U.S. Trade Representative for Trade Policy and Economics, sums this up in Politico: The decisions of consumers and businesses so far have been more powerful than governments.”   

Okay … let’s talk about the balloon

Backed by Canada’s “unequivocal” support, the U.S. military shot down a Chinese balloon last weekend off the coast of North Carolina. After launching an internal analysis, a senior State Department official confirmed that the balloon was equipped with multiple antennas capable of “intelligence collection operations,” BBC reports.  

Chinese Foreign Ministry spokesperson Mao Ning criticized U.S. “overreaction” in shooting down the balloon and suggested the accusations may be part of U.S. information warfare tactics against China, Global News reports. This is not the first time China has launched balloons over the U.S., as reported by The Hill 

Plus, it has been confirmed the balloon traveled above Alberta, and Saskatchewan before re-entering the U.S. at the beginning of the month, CTV News reports. As of this writing, three other objects haven been downed – two in the U.S. and one in Canada. So far only the first has been attributed to China. 

What does a U.S. hard line on China mean for Canada?

Biden gave his State of the Union Address last week a re-emphasized the hard line on China, which you can watch here. As the U.S. makes bigger moves to decouple from China, Canada will have to step up to the plate when it comes to filling in the gaps. Flavio Volpe, president of Canada’s Auto Parts Manufacturers Association told BNN Bloomberg that “it would be a mistake to assume that the U.S. will automatically turn to Canada for energy, raw materials and manufactured goods.” 

Also, something to keep an eye on is the executive order to ban U.S. investment in various kinds of Chinese tech (AI, 5G and advanced semiconductors) that is currently being considered, CNBC says.   

Canadian education takes a step away from China

In a move aimed at protecting sensitive research and IP, Innovation Minister Francois-Phillipe Champagne has expressed concern over the collaboration between Canadian universities and Chinese military scientists, The Globe and Mail reports. According to a recent report by The Globe, over the past 18 years, 50 Canadian universities have partnered with China’s National University of Defence Technology (NUDT) on various research projects. The Canadian Security Intelligence Service warned that this type of joint research could benefit China, giving it an economic and military advantage. The University of Alberta was the second leading organization involved with NUDT behind Waterloo, according to the same report.  

 Senior media strategist Thandi Fletcher, at the University of British Columbia (one of the 50 institutes), told the Globe that it is typical for researchers to share findings, including those from collaborations, with a global audience. But she and the University are mindful of the shifting global political climate and the possibility that some research collaborations may present national security concerns. 

Canadian universities have relied heavily on foreign funding for research and development and it has been reported that the financial connections between Huawei and Canadian universities have amounted to a sum of over $56 million, Policy Opinions reports.  

In other news, Canadian universities are getting ready for an influx of Chinese students, as the Chinese Ministry of Education has announced that students pursuing studies at Canadian universities who opt for remote learning (from China) this spring semester and beyond will not have their qualifications recognized in the Chinese job market, CTV News reports.  

Canada and Taiwan talks have commenced

Long-awaited formal negotiations between Canada and Taiwan have commenced, centered around new investment opportunities to support growth and jobs for both countries, and are being referred to as the “Foreign Investment Promotion and Protection Arrangement,” CTV News reports.  

While the trade between the two countries is not massive, it is seeing growth—totalling $10.2 billion in 2021, up from $7.4 billion in 2020, according to official figures.Taiwan has also cracked Alberta’s list of top ten export countries according to recently revised 2022 StatsCan trade data. For more on this relationship, stay tuned for a forthcoming Indo-Pacific report from Canada West Foundation.  

The talks are expected to irk China. Here is a different perspective on the topic.

Also, Taiwan was paid a balloon visit as well.  

More on China’s reopening

Last month we highlighted how Canada’s tourism sector is expecting an increase in business from China after lockdown restrictions in that country were dropped. The reopening is also expected to drive demand for Canada’s major exports (oil, natural gas, grain, cereals and other goods), ultimately helping the Canadian economy to avoid a recession, Reuters reports. However, recovery is not a done deal. There is a risk that a rapid increase in demand could create a spike in oil and commodity prices and drive-up inflationary pressure, says Bank of Canada Governor Tiff Macklem in the same Reuters piece.  

CWF’s Belt and Road, Five-Year Plan 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. 

A low-profile BRI?

China’s BRI has shifted its focus to a less flashy approach to engagement, Foreign Affairs Magazine writes. The country is increasing its involvement in think-tanks and academic programs, expanding its media presence, and investing in green energy and security, among other areas. 

A report from Fudan University’s Green Finance and Development Centre showed a 63 per cent rise in Chinese investments in the 147 participating nations, totalling $32.5 billion. The energy sector was the second largest recipient of Chinese investment, receiving $9 billion, mainly for oil, gas, and green energy projects. However, total construction deals declined 27 per cent to $35.3 billion, marking the lowest level of construction spending since the launch of President Xi Jinping’s initiative, Silk Road Briefing reports. 

Canada cozying up to India

After mentioning it 27 times in the 23-page Indo-Pacific Strategy and the recent official visit by Foreign Affairs Minister Melanie Holy, Ottawa has started to move on efforts to strengthen bilateral relations with India, Asia Times reports. Here is what both countries have to say about the relationship:  

  • “From Cleantech to critical minerals and education programs, there is a demand in India for what Canadians make, and grow, and the services we provide,” Foreign Affairs Minister Melanie Joly 
  • 2023 could become the year of India-Canada reset, given the Indo-Pacific strategy convergence, trade talks which could culminate in an Early Progress Trade Agreement [EPTA], and a number of high-level meetings this year,” former High Commissioner to Ottawa Ajay Bisaria told The Hindu 

Canola opportunity in Indo-Pacific

In the next few years, the growth in canola crush capacity in Western Canada is expected to provide new opportunities to increase the use of canola meal in domestic animal feed and create demand for livestock and fish feeding in the Indo-Pacific region, Real Agriculture reports. 

Canada’s Indo-Pacific Strategy has some work to do

In a commentary released by UofA’s China Institute, the success of Canada’s Indo-Pacific Strategy, and the China section in particular, is questioned. “Canadian governments have a recent history of wide pendulum swings on China policy. Let’s hope this strategy helps chart and maintain a constructive, middle path—one that can advance Canada’s interests in a way that transcends changes in government.”  

Plus, members of Asia Pacific Foundation Canada’s Young Professionals Fellowship program, have some recommendations for Ottawa on the IPS as well.

Other news

  • At the special committee on Canada-China relations last week, the topic of state-owned Chinese broadcasters in Canada came up. Read more about the debate here. 
  • Mines once owned by Canadian companies in Tibet have acted as a “surrogate for a state-of-the-art Chinese mining sector geared toward dispossessing Tibetans.” Read the full story here 
  • Dr. Stephen Nagy writes a sobering piece on the inconvenient truths of a West-China coexistence in which he says “seeking selectively to weaken international institutions, norms and practices, China’s objectives conflict directly not only with the so-called West but also with many countries in the Global South.”  
  • OpenAI’s hit ChatGPT app may be off-limits in the Chinese market, but businesses are racing to integrate the app’s technology into their own offerings and create similar homemade solutions, Reuters reports. 

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.