China Brief: China’s relationship with Canada’s West
Issue 95 | June 21, 2023
In this issue: Russia poised to edge out Canada in China’s pea market, U.S. ag sales recover after trade war dip, Canada advised to maintain co-operative relationship with China.
Canada competes with Russia for pea exports to China, but will remain the top global pea exporter
According to Gaurav Jain, an analyst with AgPulse Analytica, Russia is poised to overtake Canada in pea exports to China. This shift is attributed to a phytosanitary agreement signed between Russia and China in December 2022. Although the Russia-to-China pea trade route has had a slow start, Jain predicts that the volume will increase significantly by July, driven by the lower price of Russian peas compared to Canadian peas. With the anticipated surge in Russian supply in the coming year, Canadian prices are expected to face downward pressure. Despite Canada potentially losing Chinese market share, it will remain the top global exporter, projected to ship 2.35 million tonnes of peas in 2023-24.
Plus, Saskatchewan’s Agriculture Minister David Marit remains optimistic about Saskatchewan exports despite the ongoing tensions between Canada and China. Acknowledging China’s importance as a market, Marit expressed hope for a resolution, considering China’s need to feed its population. He also emphasized the province’s expanding global presence with trade offices established in various countries, including Germany, Mexico, the United Kingdom, India and China, that will become increasingly important.
Canada advised to continue co-operative relationship with China
In a recent interview, Canada’s ambassador to China, Jennifer May, said that when it comes to the Canada-China relationship, Canada has “to make sure that we’re extending the hand, that we’re finding the areas of co-operation where we can and where it makes sense.”
Plus, in an op-ed in the Financial Post, Carlo Dade (Director of the Trade and Investment Centre at CWF) advocates for enhanced engagement with China as a means of self-defense, especially when it comes to trade. With trade accounting for two-thirds of Canada’s gross domestic product (GDP), surpassing the global average and even the United States and Australia by significant margins, protecting foreign trade is more crucial for Canada than other countries.
While the majority of Canadian exports still go to the U.S., China’s impact is impossible to avoid in sectors like agriculture which rely heavily on global markets. China, as the world’s first or second-largest economy, holds immense influence on global markets, affecting Canadian exports in markets beyond China (see forthcoming CWF What Now? policy brief on ag trade and the Indo-Pacific).
Not alone in this, defense chiefs from Australia, Canada and Germany also agree that engagement with China must continue despite concerns over growing dominance. At the Shangri-La Dialogue security summit in Singapore, Germany’s Defense Minister Boris Pistorius stated that “it’s not a solution to decouple. It is not a solution to build new walls and build new barricades. We have to find a way of coexistence which means not getting too dependent on anybody. And on the way not to refuse dialogue and cooperation.”
But selling to China or any market in Asia requires being able to move goods. Troubling news on that front—the Port of Vancouver was recently ranked among the worst ports in the world by a World Bank report. But Vancouver was not the only port left in the dust – no Canadian port did well. Read more in this Globe and Mail op-ed from CWF’s Carlo Dade on why Canada lags when it comes to port efficiency.
U.S. Secretary of State Anthony Blinken visits China
The U.S. may have also realized that it cannot run away as Blinken breaks a five-year hiatus this week with a meeting with senior Chinese counterparts in China. The high-stakes meeting served as a litmus test for the future of U.S.-China relations. Overall, it looks like it went well but there is still a long way to go, according to the South China Morning Post.
A reminder for Canadian farmers, USDA shows U.S. ag sales to China recovering from trade war dip
Despite the geopolitical tensions, U.S.- China agricultural trade has not only recovered from the trade war dip in 2018, it has blown past previous records. See below.
Source: https://www.fas.usda.gov/regions/china
Cutting ties with China’s Asian Investment Bank
In response to allegations of Chinese government interference, the Canadian government has announced its decision to sever ties with the Asian Infrastructure Investment Bank (AIIB).
The announcement follows the resignation of Canadian Bob Pickard, Global Head of Communications for AIIB, due to conflicting values and interests. The Beijing-based institution was established in 2016 and Canada joined in 2018 under the leadership of Prime Minister Justin Trudeau.
A counter-argument to remain in the AIIB was penned by a former Asian Development Bank Representative to North America. A dissenting view was also raised in the Saskatoon Star Phoenix.
Decoupling dampens Ballard’s enthusiasm for China investment
Canadian fuel cell manufacturer Ballard Power Systems is reconsidering a pending $130 million investment in China due to what the company is calling a potential “geopolitical collapse” amid escalating China-Canada tensions. CEO of Ballard, Randy MacEwen, announced at the company’s investor day that Ballard is collaborating with Deloitte to compare investment prospects in China against opportunities in Europe and the United States. The review is anticipated to conclude by the end of 2023.
‘Independent Special Rapporteur’ Johnston is out, but foreign interference remains
An issue extensively covered in the news, and one that we will keep brief here, is the continuing investigation of foreign interference in Canadian elections. David Johnston has resigned and there is still much work to be done.
Microsoft moves leading AI experts from China to new lab in Vancouver
Amid escalating geopolitical tensions, researchers based in Beijing are applying for visas to relocate to Vancouver, posing a significant challenge to China’s tech talent pool, the Financial Times reports. Microsoft Research Asia (MSRA), headquartered in Beijing, is making efforts to transfer its top artificial intelligence (AI) experts to its Vancouver institute. This move, known as the “Vancouver Plan,” is seen as a strategic response to strained relations between the United States and China. It aims to safeguard valuable talent from being recruited by domestic technology companies eager to develop their own versions of OpenAI’s ChatGPT.
CWF’s Indo-Pacific Monitor
Canada-South Korea relations in the Indo-Pacific
A new commentary from our friends at the Macdonald Laurier Institute “Building a Canada-South Korea partnership in the Indo-Pacific” is out now. Canada and South Korea have engaged in various high-level visits, including Prime Minister Justin Trudeau’s recent trip to Seoul, marking the first visit by a Canadian leader in nearly a decade. While both nations seek to expand their role in the Indo-Pacific, this commentary provides recommendations and deeper insights into the relationship.
Expanding Interswitching Threatens to Undermine Canada’s Indo-Pacific Agenda
A heated debate surrounds a new regulation that could have implications for the Asia-Pacific trade corridor. The proposed amendment in Bill C-47, currently under discussion by the federal government, seeks to expand the regulated interswitching distance of railways in the Prairie provinces from 30 to 160 kilometers. This change has raised concerns as it could potentially divert traffic away from Canadian railways towards U.S. trade corridors without offering reciprocal access for Canadian shipments.
Other News
- The recently published Chinese Citizens Global Perception Survey by the China Institute at the University of Alberta presents insights into how the Chinese public perceives global relations and the various influences that shape these perceptions.
- China defeats Canada in the second leg of women’s Volleyball Nations League. See here.
- Ever wonder how the massive Chinese diaspora in Vancouver came to be? See the history here.
- Plus, read why so much of the world’s manufacturing still takes place in China here.
- Independent Senator Yuen Pau Woo has an exhibit on the Chinese Exclusion Act in the exhibition hall of the Senate with many exhibits from Western Canada.
– 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.