In this issue: U.S. bill and Canada-China relations, Canola pressure, China’s wine development plan, China faces huge loss in Victoria, B.C. 

Major U.S. bill could shape Canada-China relations

A recent U.S. bill which has passed the U.S. Senate, “[to] address issues involving the People’s Republic of China” has significant relevance Canada, including Western Canadian industries such as mining and energy. The bill, a massive piece of legislation, includes a section on Canada which requires that 90 days after passage, the President submit a report to Congress “that describes how the United States will enhance cooperation with the Government of Canada in managing relations with the PRC government.” The bill also points to the need for America and Canada to “close[ly] coordinate” on a variety of fronts including “environmental stewardship, […] transparent practices in public procurement and infrastructure planning, the Arctic, energy and connectivity issues, [and] trade and commercial relations” as well as critical minerals.

While the legislation has so far gotten little attention, observers note its impact could be significant. Robert Asselin, a senior vice-president at the Business Council of Canada, told CBC News it’s a sign that that Canada needs to “get real on industrial policy.” He added “[t]o me, [this] just shows the U.S. versus China is redefining economic competitiveness, and here we are in Canada, thinking it’s business as usual. We’re still playing in the margins.” Trade consultant Eric Miller, meanwhile, cautioned that as the U.S. frames its long-term strategy to compete with China, the bill “looks potentially like a long-lasting new cold war strategy.” Read more in this CBC article.  

For Canada, the bill’s provision for a report on compliance by American allies with the objectives of the bill echoes the U.S. Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, also known as Helms-Burton. As such, the new China bill has the potential to bring similar frictions to the Canada-U.S. relationship when economic and trade interests diverge.

Canada makes a move on canola dispute

Canada has formally requested that the Dispute Settlement Body at the World Trade Organization (WTO) form a panel over China’s decision to halt canola seed imports. The ban was placed on seed from Canadian companies Richardson International and Viterra in 2019. The Dispute Settlement Body will discuss the request at its end of June meeting. Read more in this South China Morning Post (SCMP) article

Jacob Dehoust, senior market analyst with Archer Daniels Midland in Germany, predicts that canola supplies in Canada, and other parts of the world, will be “extremely tight” for 2021-22. EU biodiesel and Chinese demand will be the main causes of that tightening, which should sustain higher prices. Read more from Dehoust and other analysts in this Western Producer article.

China agrees to wine development plan

In a move of interest to Western Canadian wine producers and aficionados, China has approved a 15-year wine development plan for Ningxia Hui Autonomous Region. One winery, Xige Estate, from the region exported to Canada in the last year the owner told CNBC. The aim of the plan is to ramp up production to reach similar levels of that in Bordeaux, France.

The Chinese move to expand wine production comes amid increasing tensions with Australia over wine tariffs. Australia has taken its complaint to the WTO with the Diplomat explaining how that move affects the broader wine industry in this article.

The WTO complaint over wine follows Australia’s “85 anti-dumping and anti-subsidy cases against China between 1995 and 2020” according to this article from SCMP (paywall free version here). On June 24, China submitted three complaints to the WTO over concerns of Australian dumping and subsidies for 2014, 2015 and 2019. The article notes this move is unprecedented as China has typically kept its complaints to larger countries, such as the United States and the EU. Weihuan Zhou, an international economic lawyer at the University of New South Wales Law’s Herbert Smith Freehills CIBEL Centre, says the move suggests a “tit-for-tat” and “China’s turning a blind eye to Australia’s duties may have now expired.” The move could also be cautionary for other countries who have complaints against China at the WTO, such as Canada’s canola case.

How will Build Back Better World compete with Belt and Road Initiative?

Radio Free Asia has  a round up of thoughts from experts in Asia on what Build Back Better World (B3W) could mean for the region (for background, check out this previous edition of the China Brief) Individuals like Fithra Faisal Hastiadi, executive director of Next Policy, an Indonesian think-tank see B3W as a good alternative for non-aligned countries. Others like Walden Bello, co-chair of the Board of Focus on the Global South, a Bangkok think-tank dismiss the G7 initiative as “purely reactive […] with little serious thought to follow-through.”

Jonathan Hillman and Mathew P. Goodman from the Centre for Strategic and International Studies in Washington, D.C., explored the nuances in the B3W and Belt and Road Initiative, saying “[B3W] comes at an important moment. Global infrastructure needs are rising while China’s Belt and Road has been pulling back.” They add that “The new effort reflects common concerns about China’s foreign projects, which have left a trail of corruption, unsustainable debt, and environmental damage. It recognizes that criticizing those shortcomings is not sufficient. Competing requires providing attractive alternatives. Delivering on that promise, however, will require mobilizing private capital.”

Carlo Dade, Trade & Infrastructure Centre Director at the Canada West Foundation argued that B3W doesn’t make sense as serious policy: “There are at least half a dozen development banks that already fund infrastructure, including the Asian Infrastructure Bank. These organizations have decades of experience, capacity, connections and regional comparative advantage. Even though they have recently reduced infrastructure lending to focus on social and other development investments it would be far cheaper and more effective to fund them to ramp up rather than spend exorbitantly to recreate something that is already there.”

African Swine Fever and barley

Canadian barley is set to do well in 2021 as African Swine Fever pushes barley-feed demand in China and Russia, Turkey, Australia, and UK face barley shortages due to weather. Read more in this report from Global Trade. As China battles resurgences of ASF, experts like Todd Thurman, a consultant with SwineTex, says China is still fairly short of returning to pre-ASF pig population levels, and the resurgence in ASF has complicated the problem. The struggle lies in the emergence of variants. A report from Caixin Global says “new, difficult-to-detect variants of the African swine fever virus circulating in China have spread the disease to pig herds across the country, leading to rising incidents of mass infection on farms and stepped-up control measures to stop swine fever’s further spread into livestock supply chains.”

In other news

  • Two fired scientists could very well be “Chinese agents [who] infiltrated one of the highest prized national security elements when it comes to biosecurity and biodefence [the Winnipeg-based National Microbiology Lab (NML)]” says Christian Leuprecht, a security expert and professor at the Royal Military College and Queen’s University in a CBC interview. The case of the fired scientists received renewed attention in recent weeks with the Opposition Parties holding the Public Health Agency in contempt of Parliament for not turning over documents related to the firing to the Special Committee on China-Canada relations; Health Minister Patty Hadju said the documents had national security implications.
  • China, with the support of allies, called for an independent investigation into the Kamloops Residential School after the discovery of a mass grave with the remains of 215 children. The call followed Trudeau’s condemnation of “the systemic abuse and human rights violations” in Xinjiang earlier this week with the support of 40 other nations.
  • The Alberta government’s move to limit university contact with China continues to make the news, most recently in a Globe and Mail opinion piece by former Asia-Pacific Foundation of Canada co-presidents Paul Evans and Senator Yuen Pau Woo. A counter argument to their piece appeared in a new US embassy sponsored “Disinfowatch” published by the MacDonald Laurier Institute. This new site looks like it may focus on China-Canada issues. An opinion piece in theConversation also called upon the Alberta government to reverse its “ban on university collaborations.”
  • China’s men’s basketball team is in Victoria, B.C. for the “last chance” Olympic qualifying round robin and faces Team Canada on Wednesday, June 30. If NBA talent is any predictor of outcome this will be a rout for Canada as two-thirds of its players for this tournament also play in the NBA vs 0 for China. Anyone interested in putting money on China in this game is welcome to contact the Trade & Investment Centre director.

– Stephany Laverty, policy analyst and Mehera Salah, intern 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.