IN THIS EDITION:  Look to the West for solutions to Canada-China relations, Experts weigh in on US election impacts on Western Canada’s relations with China

Special Committee on Canada-China Relations should look to the West 

Colin Robertson is calling for the House of Commons’ Special Committee on Canada-China Relations to resume. CWF testified at the committee, observations from that testimony were the basis for a Hill Times article. If the committee resumes it is critical to bring in more representation from western Canada given that the West accounted for 73.3 per cent of Canada’s agricultural trade with China and 63 per cent of total Canadian exports to China in 2019. And 23 per cent of imports to Canada from China went to the western provinces.  

These figures come from an upcoming Canada West Foundation report focused on Canada’s trade relationship with China, and how agriculture can be the basis for a new, win-win solution to reset relations with China. 

New NAFTA restricts Chinese investment 

The new NAFTA may have prevented Chinese investors from opening a second infant formula plant in Canada, possibly even Western Canada, as export limits for cow’s milk formula and dairy pricing changes under the agreement presented new challenges for Canada Royal MilkThe first plant built by the subsidiary of China Feihe Ltd.  in Kingston, Ont., brought $332 million direct investment300 construction jobs, 277 direct-full time jobs, and could see 1,000 or more jobs over time.  

Chinese demand boosts copper 

Mount Polley copper mines, located in British Columbia, may restart as global copper prices rise. China plays a significant role in international copper prices as the country represents half of global consumption. Other countries have also helped push copper as COVID-19 recovery plans focus on green initiatives and green technologies which use copper. 

Ginseng surplus in Canada 

COVID-19 travel related pressures and strained Chinese relations have helped create a surplus of Canadian ginseng crops  roughly 20 per cent of last year’s crop is unsold. Canada is the second largest exporter of ginseng behind China but Chinese buyers have been unable to travel to Canada to assess the crops. 

US official encourages building ties with Taiwan 

Miles Yu, principal China policy and planning advisor to U.S. Secretary of State Mike Pompeo, has said in an interview to the Globe and Mail that Canada and other Western countries should work more closely with Taiwan, even if such a move risks provoking tensions with China. Matthew Fisher, an international affairs columnist and foreign correspondent, argues that tensions with China could push Canada to form stronger ties with Taiwan. A Canadian warship recently sailed through the Taiwan Strait; the Chinese government has condemned such actions by Canada and other nations in the past. 

Everything Else 

• Ebang International Holdings Inc., a Chinese firm, has established a Canadian subsidiary which would allow the company to access the North American market for “foreign exchange trading, digital currency transferring, and dealing in virtual currencies in Canada.” 

• China (+0.3%), Canada (+6.7%) and Norway (+46.9%) are the top export markets for the UK as they are the only export markets out of the Top 20 that have shown positive growth since 2019. China was a positive market for pork, Canada for beer and gin, while Norway was a strong market for sugars and animal fats and oils. 

• The Meng Wanzhou case returns with defence lawyers arguing that U.S. officials cherry-picked evidence from a PowerPoint presentation and, as a result, the judge could stay proceedings or exclude the evidence in question. 

• Cong Peiwu, Chinese Ambassador to Canada, said in an interview that a release of Meng Wanzhou would help thaw the chill between Canada and China in terms of trade and diplomatic relations. 

• Former Canadian Ambassador to China Guy Saint-Jacques says that Canada should look at the Foreign Investment Promotion and Protection Agreement as the Chinese government encourages private businesses to align with the United Front Work Department. 

• How will B.C.’s new Chinese-Canadian museum navigate the complexities facing modern Chinese-Canadians? Ng Weng Hoong, a Vancouver-based journalist, has some insightful thoughts here. 

While the federal government reviews TMAC Resources pending sale of its assets to Chinese company Shandong Gold Mining, there is optimism in Hope Bay that the sale goes through to generate economic growth and jobs in the region. For more on this story and others related to jobs and education, see Canada West Foundation’s Future of Work and Learning Brief on October 13, 2020. Read the first edition here.

Spotlight: Experts weigh in on US election impacts to Western Canada-China relations

The Question 

Will U.S. policy towards China remain largely unchanged no matter which candidate wins the upcoming U.S. presidential election as many analysts are suggesting? How will a commodity exporter like Western Canada (ag, energy, timber, minerals, etc.) be impacted by any policy shifts made under a Biden presidency or a second Trump administration?

The Insights 

The views expressed in this section are opinions and do not necessarily reflect the views or positions of the Canada West Foundation or the China Brief authors. 

Whoever is elected in the U.S., expect the U.S. to be inwardly focused to deal with the deepening cultural, socio-economic divisions prevalent in society that have been aggravated by the COVID-19 pandemic economic tsunami. This means a Trump or Biden administration will be focused on rebuilding the domestic economy. The question for Western Canadian exporters is the tone and nature of that focus.

If Trump is re-elected, expect more American First economic nationalism. In practice, this means eschewing multilateral FTAs for FTA’s that are sectoral-based, and an economic statecraft that cajoles friends and adversaries. Think the negotiating style practiced to finalize the NAFTA 2.0 agreement, the US-China Phase One Trade deal, or the mini-trade agreement between the U.S. and Japan. In short, coercive negotiations leveraging access to the U.S. market. 

If Biden is elected, there are no guarantees that he will decide to join the CPTPP, especially with his strong labour union support. He will inherit an economy in a situation worse than that when Obama became President. He will be focused on the domestic economy, on protectionist trade policies, and policies to mend divisions in U.S. society. His track record suggests a non-zero sum, multilateralist approach to trade but this will depend on the extent of his electoral victory.

For commodity exporters in Western Canada, they should be clear-eyed that the U.S. is entering a phase of inward-looking, protectionist economic policies to deal with domestic problems and to re-orient its economy and society to outcompete China. This means pressuring Western Canadian commodity exporters to stop exporting to China when their products are deemed to be a “national security threat”. It potentially means more wrangling over intra-North American trade, and commodity trade to be informed by the intersection of domestic economic priorities and geopolitical competition. 

-Stephen R. Nagy, PhD, Senior Associate Professor, Department of Politics and International Studies International Christian University (ICU), Tokyo, Japan; Distinguished Fellow Asia Pacific Foundation, Canada; Fellow, Canadian Global Affairs Institute; Visiting Fellow, Japan Institute for International Affairs (JIIA); 2018 AIF Fellow, Center for Strategic and International Studies

The basic trend toward toughness in China policy is set, whoever wins the November election. Views in Washington on both sides of the aisle have hardened over the past five years as the result of Beijing’s more mercantilist and assertive policies. However, I would expect some shift of focus under a Biden administration. The concerns about critical technologies will remain, as will selective decoupling policies, but there will be less focus on the bilateral trade deficit and tariffs as the remedy for that. At the same time, a Biden administration will be more vocal about Beijing’s political repression at home – including in Xinjiang and Hong Kong – and its coercion abroad. Biden’s instincts will be to enlist allies and partners in cooperative efforts to put guardrails on China’s violations of international rules and norms in the security, economic, and human rights domains. Of course, looming over all this will be the continued fallout from Covid-19, racial injustice, and inequality in the United States. As a result, either a Trump-2 or Biden administration is likely to prioritize domestic concerns over international ones, including China – though the latter do have a way of demanding attention at the most inconvenient times. 

-Matthew P. Goodman, Senior Vice President for Economics and Simon Chair in Political Economy, Centre for Strategic and International Studies

Regardless of the outcome of the 2020 U.S. presidential election, the U.S. is likely to maintain the current view of China as a disruptive competitor. Much like Trump’s advisors on China, some in Biden’s team have also questioned the effectiveness of the U.S. historical approach to relations with China, which was based, sometimes mistakenly, as Kurt Campbell and Ely Ratner recalled in Foreign Affairs, on a belief that China would respect the rules-based international order.  

The difference between Trump’s approach to foreign policy and Biden’s is that Trump policies, which focus on trade protectionism, question the value of historic alliances, and devalue diplomacy, risk reducing  rather than boosting  U.S. competitiveness. Trump’s efforts to restrict Chinese activity in other countries have indeed resulted in a few “wins.” Recently, U.S. pressure on Chile led the government there to select Japanese firm NEC over China’s Huawei to build a cross-Pacific undersea cable, for example.  

That said, aside from these limited, one-off victories, which reinforce the notion  already popular in Latin America and other regions  of a hegemonic U.S., there is little to suggest that U.S. competitiveness is actually increasing in the region, let alone in key economic sectors. In addition to investing in domestic engines of growth, a Biden administration would probably aim to reduce protectionist measures, and partner with Canada and other allies on trade-related policy  all with important effects for Canadian and other exporters.? 

-Margaret Myers, Director, Asia & Latin America Program, Inter-American Dialogue

Trump’s willingness to use “turbulence” as a trading strategy creates a dangerous backwash for smaller economies like Canada. China views the Trump Administration and its trade policy as transitory and will use Trump’s focus on winning political battles to consolidate irreversible long term policy objectives like Hong Kong.   

Canada should assume that the Chinese will honor deals to purchase certain American commodities, and as such, could have negative short-term consequences. Beijing’s long view is that any change in U.S. Administration will result in trade policies focused on containing Chinese influence. For this reason, Beijing will want to maintain its political clout with Ottawa by ensuring that it continues to be a significant trading partner with Canada.   

A Biden Administration will reign in Chinese expansionism by strengthening the WTO and negotiating its way back into the TPP. The COVID pandemic exposed national security threats to America’s supply chain, and Biden will look to Canada to help address these weaknesses.   Biden realizes the key to North American security is prosperity, and prosperity requires economic expansion built on stable trade agreements. 

Timothy Mahoneyformer U.S. Representative for Florida’s 16th congressional district and a member of the Democratic Party

Stephany Laverty, 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.