China Brief: China’s relationship with Canada’s West
Issue 92 | March 15, 2023

In this issue: Rising security concerns impact trade with U.S., foreign election interference, Canada walks back critical mineral investment ban and much more.

Impact of rising security concerns on Canadian trade with the U.S.

Kevin J. Wolf, former U.S. Assistant Secretary in charge of the Bureau of Industry and Security at the Commerce Department, joined Nelson G. Dong, prominent U.S. lawyer and expert on export controls, to discuss the potential impact that new and increasing U.S. security rules will have on Canadian exporters to the U.S. and Canadian importers of U.S. technology.  

Why is this in the China Brief? To find out, listen to the CWF webinar: You, Your Supply Chain’s Supply Chain and Trouble at the Border. 

Foreign election interference: A breakdown

First, context. Required reading for anyone trying to understand the issue is the Report on the assessment of the 2021 Critical Election Incident Public Protocol (CEIPP) by former Canadian Foreign Ministry Deputy Minister Morris Rosenberg, commissioned by the Privy Council Office. 

“A large clandestine transfer of funds earmarked for the federal election from the PRC Consulate in Toronto was transferred to an elected provincial government official via a staff member of a 2019 federal candidate.” This quote, from a Global News report, has been at the centre of allegations of Beijing’s meddling in Canadian elections. With a multitude of perspectives on the matter, we are here to break things down for you. Here are the key actors and their respective views: 

Chinese Canadians: A perspective that has been heavily overlooked by the public media is that of the Chinese-Canadian community. Spiked racism and targeted threats from unknown phone numbers are just a few of the realities for the Chinese-Canadian community right now, reports CBC News. Global News also reported on public demonstrations in Montreal where the local Chinese-Canadian community “reacted in anger” to an RCMP investigation that publicly named two Chinese-Canadian social organizations. 

Government: Prime Minister Trudeau has announced that an independent special ‘rapporteur’ will investigate alleged Chinese interference in Canada’s federal elections, BBC reports. The Liberal Party also says that the overall results 2019 and 2021 elections were not affected by Chinese interference operations. Opposition parties are calling for there to be a public, independent investigation instead. 

Other stories: In line with the China Brief goal of providing information that is less covered, one of Canada’s leading national security and intelligence experts, Wesley Wark, presented an evidence-based case on CBC for why a public inquiry into the topic of election interference is not needed. Included in his argument is that we need to be aware that election interference is not just a foreign threat but it is increasingly a domestic one for Canada. 

In keeping with the theme of perspectives not well-covered in Canada, a deeply informed counter narrative came from a piece in Al Jazeera by former “spy guy” in the insular orbit of Canadian journalism— former Globe and Mail national security reporter Andrew Mitrovica. 

Read how this political issue could have reputational implications for Canada as allies watch what unfolds.   

Canada walks it back—no longer forcing Chinese divestment in critical mineral mines

Canada’s tighter foreign investment laws on Chinese-owned critical mineral mines in Canada (see in this past brief) could impact the ability of miners to produce metals required for the global energy transition, according to Ivanhoe Mines Ltd. founder Robert Friedland, BNN Bloomberg reports.  

To ease the concerns, Natural Resources Minister Jonathan Wilkinson said in an interview with Reuters that in order to avoid policy uncertainty, Canada will not push Chinese-state investors in three of its large mining companies out of investment roles.  

Ottawa plans to unveil an updated version of the Investment Canada Act this spring that will enable the government to reject or impose certain conditions on foreign investments that it deems as a potential threat to the nation’s security. Wilkinson also said in the Reuters interview that “of course Canada will continue to have trade with China, some of that may involve trade in critical minerals.” 

And for more on ‘friend-shoring’ once again being challenged by practicality, read this piece in the Globe and Mail.  

U.S. companies also struggle to abide by friend shoring: starting with Ford Motor Co.

A small town in Michigan will be the new home of a $3.5 billion EV battery factory. And this is relevant why? Because the new plant is a joint venture between Ford and Amperx Technology Co Ltd., the largest EV battery technology manufacturer that happens to be based in China, reported in the Toronto Star. 

Trade doing its own thing—once again

Last month, we talked about U.S.-China trade breaking records amid geopolitical turmoil. This month Canada-China is following suit. By the end of last year, Canada was importing record-breaking values of goods from China ($100 billion) according to recent StatsCan Data. The two leading import categories were consumer goods ($28 billion) and electrical equipment ($28 billion).  

But it wasn’t just imports that broke records, total Canadian exports to China reached a historic high value of $27.9 billion in 2022, with the leading export categories being agriculture, metal ores and forestry products. As China continues to emerge from COVID lockdowns these numbers will likely continue to rise. 

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

Two sessions

The Chinese Government recently held the Two Sessions, also understood as the annual plenary sessions that take place each Spring. Here are a few key takeaways from the meeting: 

  • A ‘modest’ GDP growth target of five per cent was announced, which is at the lower end of expectations. Earlier this year, the IMF raised China’s 2023 growth forecast to 4.8 – 5.6 per cent after the country shifted away from its zero-COVID policy and prioritized economic growth, Reuters reports. 
  • Defense spending will see a 7.2 per cent increase, slightly higher than the previous year’s rise. 
An aging Belt and Road Initiative

Nearly 10 years have passed since the announcement of China’s extensive Belt and Road Initiative (BRI). The Carnegie Endowment for International Peace states in a recent commentary that to boost public confidence in the BRI, China will leverage two major political events this year 1) the country’s parliamentary session and 2) the third Belt and Road Forum for International Cooperation, which will commemorate the initiative’s 10th anniversary.  

Plus, check out this recently conducted interview with Yu Hong (Yu), senior research fellow at the East Asian Institute at the National University of Singapore about the challenges and opportunities of the next 10 years of the BRI.  

Indo-Pacific Strategy—from an export perspective

A story by the Canadian Press references a recent Canada West Foundation webinar,  What does the Indo-Pacific Strategy mean for Western Canada, that focused on the importance of the region to economies in the West. The webinar featured academics Dr. Stephen Nagy and Dr. Meredith Lilly and Mac Ross of Pulse Canada. 

The Indo-Pacific is Canada’ second-largest regional export market, including both overall exports and food and agriculture specifically.  

Farm Credit Canada reported the following export figures from 2022:   

  • Wheat: China, Japan, Indonesia and Bangladesh accounted for 33.6 per cent of total Canadian wheat exports 
  • Canola: China and Japan accounted for 62.2 per cent of Canadian exports  
  • Pork: Japan, China, Philippines, South Korea and Taiwan accounted for 48.2 per cent of total Canadian pork exports  
  • Soybean: China, Japan, and Indonesia accounted for 41.8 per cent of total Canadian soybean exports  

The same Farm Credit Canada report suggests key growing markets for Canadian exporters and producers are:  

  • India: Canada’s agricultural exports to India are relatively small but have promise for Canadian food producers and exporters as India will (by 2030) be world’s largest country.  
  • Japan: Japan is among Canada’s primary export markets for food and agriculture. With limited land and a population of 125.7 million, Japan relies heavily on food imports. Given that Japan is part of the CPTPP, Canadian exporters have access to preferential terms. Additionally, negotiations for a separate bilateral economic partnership agreement between Canada and Japan are underway. 
  • South Korea: Canada’s exports to South Korea have been on a consistent rise since 2017. Unique to the other major economies in the region, South Korea has a free trade agreement that is already in effect with Canada.  

Other News

  • Despite Alberta’s impressive cow-to-person ratio of 4.85 million to 4.4 million, and its status as the largest contributor to Canada’s cattle inventories, China hasn’t moo-ved on reaccepting Alberta beef, the Western Standard reports. For over a year now, Canadian beef exports to China have been prohibited due to a case of atypical BSE in a cow from central Alberta. Read this previous brief for more.  
  • Canada has opened operations in the Philippines to expedite immigration processing capacity. Read more about that here.  

– 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.