IN THIS EDITION: Agriculture and mining update, what the fight over TikTok means for Canada, COVID-19 vaccine still held up in China, back-and-forth continues over Hong Kong.
Agriculture and Mining Update
Floods in China have destroyed approximately 13 million hectares of cropland, which has caused food security concerns in the country. The affected region is responsible for approximately 70% of rice production in China. The floods, the worst China has had in 20 years, have affected 55 million people and have caused approximately $21 billion in damage with 3.7 million people displaced.
President of the Canola Council of Canada, Jim Everson, reported that Canadian canola exports are consistently about one third of what was previously exported to China prior to January 2019. Everson blames political motives which have resulted in restrictions to Canadian canola shipments. In June, Canadian canola oil and canola meat exports reached the lowest volumes shipped in four months. Canada’s trade deficit with China has persisted and reached $1.6 billion in June. The restrictions have forced exporters to get creative and find back channels to the Chinese market through the United Arab Emirates and France. These back channels allow exporters to meet demand and cash in on canola oil prices, which are at a two year high.
Increased mineral demand from China has helped to stabilize mining commodity prices and fuel transaction activity in Canada. Despite the challenges of the COVID-19 pandemic, Canada has remained an attractive destination for foreign capital. The mining and metal’s industry has fared relatively well. EY’s Canadian Mining Eye index, which tracks quarterly Canadian mining sector performance, rebounded by 72% in Q2, after a decline of 30% in the first three months of 2020.
Canada, TikTok and China
TikTok and its parent company ByteDance have come into the crosshairs in the tech dispute between China and the United States. President Trump has issued an Executive Order on Addressing the Threat Posed by TikTok with the stipulation that Americans can engage in transactions with the app for 45 days, until September 15, when American citizens or anyone in the United States will be banned from transactions with the app.
The Executive Order cites a national emergency, based on cybersecurity concerns with TikTok, as the reason for the order (see China Brief 049 for more). The President has also issued another Executive Order, also based on a national emergency over cybersecurity concerns, in regards to WeChat. WeChat is a popular social media messenger app which allows mainland Chinese to communicate with others around the world and is owned by TenCent, one of the world’s largest internet companies second only to Alibaba in China with a $686 billion value. Experts believe that China will retaliate in some way. The President has also made the unprecedented call for the US government to receive a portion of the profits from any sale. There has been some question as to whether or not the President can enforce such a stipulation.
TikTok has said in a statement “[the order] sets a dangerous precedent for the concept of free expression and open markets. We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly — if not by the Administration, then by the US courts.” There are reports that TikTok could file a lawsuit as soon as August 11 with the U.S. District Court for the Southern District of California. Chinese officials have argued that the U.S. is “shooting itself in the foot with a ban” and harming its own interests.
What does this mean for Canada? Microsoft is in advanced stages of negotiations for a TikTok deal, which could take one of two approaches. The first would be a sale including all rights to the US, Canadian, Australian, and New Zealand markets. The second would grant Microsoft all rights outside of China as regional purchase would present significant tech hurdles. The Canadian government has not announced any sort of ban on TikTok and has remained quiet about the sale. The issue is similar to that with concerns over Huawei and 5G networks, so it is not surprising the federal government has not spoken publicly about the two issues (a formal decision on whether or not to allow Huawei has yet to be announced). As the WeChat order was not expected, there may be more in the coming days on the impacts to Canada.
TikTok influencers could see impacts to their revenues if bans or regional approaches are put in place. In April 2020, the top ten TikTok accounts made between $109,000 – 197,500 US per video; the 15-second maximum length allows for multiple videos a day. Canadian TikToker Kristen Hancher makes an estimated $115,000 per post with access to 23 million followers. With reduced audiences or a ban, influencers may not be able to access sufficient numbers of followers for companies to pay them the same amounts.
Broader concerns focus on how the TikTok deal will impact future tech development. Some predict that the scrutiny TikTok is under will chill or severely limit other companies in the global tech sphere, particularly if American or Chinese companies are involved. There are also significant concerns if the President can force a foreign company to sell to an American company through Executive Order and then also force some of the profits of that sale to go to the US Treasury.
Tensions between Canada and China could threaten Canada’s chances of early access to a COVID-19 vaccine. As seen in a previous China Brief, China’s CanSino Biologics Inc. struck a deal with Canada’s National Research Council in May to have the vaccine tested in Canada. This deal was promoted with the possibility that Canadians would receive early access to the vaccine. Chinese customs has yet to approve the shipment of the vaccine candidate to Canada.
David Mulroney, Canada’s ambassador to China from 2009 to 2012, says the delay is likely part of China’s retaliation efforts over Meng Wanzhou’s arrest, but China’s uncooperative customs authorities could also cause delay. Mulroney says current tensions raise questions as to why Canada decided to work with a Chinese partner on such a time-sensitive and important project. Guy Saint-Jacques, another former Canadian ambassador to China, agrees that the delay could be attributed to geopolitics and the detention of Wanzhou in Vancouver. Mr. Mulroney also recently told the Special Committee on Canada-China Relations that Canada cannot be naïve about its relationship with China and that Canada should defend its interests “reasonably and realistically.”
Scott Halperin, the Dalhousie scientist heading Canada’s planned Phase-1 trial of the vaccine, says that he has not received any projected time lines and are continuing to wait for the vaccine. The federal government has said that it has looked into pre-orders for other vaccines at advanced stages in the trial process. Alberta Senator Doug Black has pushed for the federal government to fund a proposal for a Canadian-made vaccine through Providence Therapeutics to avoid international competition for vaccines. The company submitted a $35 million proposal with the federal government for 5 million doses of its mRNA vaccine for delivery in 2021. The federal government has not announced a decision.
Hong Kong elections, arrests, and sanctions
Canada joined with its Five Eyes allies, calling for Hong Kong to allow the Legislative Council elections to proceed and to reinstate disqualified candidates. The statement follows reports that a dozen pro-democracy candidates were prevented from candidacy in the elections and Hong Kong leader Carrie Lam’s decision to delay the September 6 elections due to a rise in COVID-19 cases. The Chinese Embassy in Canada responded and said that the statement “ignored the facts, [harbored] ulterior motives and toyed with double standards, interfered in China’s internal affairs, and was full of arrogance and prejudice, seriously violating international law and the basic norms of international relations.”
China also suspended Hong Kong’s mutual criminal assistance agreements, including extradition treaties, with Canada, the U.K. and Australia. The move is in retaliation for the previous suspension of those three countries’ extradition treaties with Hong Kong.
The United States and China also escalated tensions with a series of sanctions related to Hong Kong. The United States government announced that eleven individuals, including Carrie Lam, were sanctioned over actions in support of the Security Law. China responded with sanctions on a total of eleven individuals and companies for their actions towards Hong Kong. China has also made a high-profile arrest under the Security Law with the detention of Jimmy Lai, the head of Apple Daily which is Hong Kong’s largest pro-democracy newspaper. Other executives from the company were also arrested.
In Canada, the country’s largest Chinese-language newspaper Sing Tao did not allow a collection of Hong Kong Canadians to purchase a full-page ad to denounce Hong Kong’s National Security Law. The ad was critical of David Choi, chair of the National Congress of Chinese Canadians, who has been supportive of the legislation. The head of the paper said the ad was denied because it was from an anonymous group. Ming Tao, another Chinese-language paper, did publish the ad once reference to David Choi was removed. The issues over the advertisement has brought concerns over Chinese-Canadian media’s impartiality, with some questioning whether the papers are skewed towards pro-China content.
• Chinese courts have sentenced two Canadians, Ye Jianhui and Xu Weihong, to death on drug charges in China, which means four Canadians face Chinese death penalties since Meng Wanzhou’s arrest in 2019. Wang Wenbin, a spokesperson for the Chinese Foreign Ministry, said the charges came from an independent judiciary decision but “the Canadian side knows the root difficulties” when asked if the decision was tied to Meng Wanzhou’s detention.
• The Calgary zoo pandas Er Shun and Da Mao remain in Calgary as the zoo waits for international travel permits, even though there is still urgent need to return them to China. The story first drew attention in May when the zoo announced they would be returned due to lack of fresh Chinese bamboo as a result of pandemic restrictions; the delay is now due to additional Chinese import requirements. The zoo expects its bamboo supplies from British Columbia to run out in September.
Stephany Laverty, policy analyst and Taylor Sterzuk, research intern
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.
Photo by Solen Feyissa on Unsplash