What to Do About China: A Menu of Options

Image credit: Sean Kilpatrick/Canadian Press

by Colin Robertson
CGAI Fellow
June 2020

Introduction
Canada’s China problem
The West’s China challenge
Help Hong Kong and Support Taiwan
What Can We Do?
A Menu of Options
Further Reading
About the Author
Canadian Global Affairs Institute

Introduction

Golden anniversaries are usually an opportunity for celebration. But Canada-China relations are at their lowest ebb since Pierre Trudeau and Mao Zedong established diplomatic relations in 1970. The ongoing saga of the 3Ms – Meng Wanzhou and Michaels Spavor and Kovrig – personify the diplomatic rupture. But we have deeper systemic differences – not just on the rule of law, transparency, and human rights – but on interpretations of international agreements and the rules-based system that underwrites the global order.

For Canada and its allies, the situation is complicated as Sino-U.S. relations morph into a new Cold War. Miscalculation could create a hot war. We need to put a premium on diplomacy, rediscovering our old habits of helpful fixing, and helping to create peaceful coexistence.

We need to consider a menu of options for eventual reengagement with China: on sovereignty and security, on diplomacy, on trade, on human rights, on Hong Kong, on Taiwan. We need to be conscious that developing and implementing a China policy will be challenging. Effectiveness requires popular support and cross-party consent. It will need to adapt to external events. Most of all, it will require a China willing to deal with us, not as an American vassal-state, but as a middle power, G-7 member, and G-20 partner.

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Canada's China problem

What a mess! Who would have thought that Canada’s decision to proceed with the extradition request from the United States for Huawei Chief Financial Officer Meng Wanzhou on fraud charges in December 2018 would have resulted in the Chinese imprisoning Canadian businessman Michael Spavor and former diplomat Michael Kovrig on national security charges, and then boycotting Canadian meat and canola?

We can expect more of the same from a rising and defiant China. Nor is Canada alone. There are numerous examples and methods by which Beijing penalizes countries that incur its wrath, including hostage diplomacy and curtailing trade privileges. Like our canola, Norwegian salmon was boycotted after Liu Xiaobo was awarded the Nobel Peace Prize. When Australia pressed for an international inquiry into the origins of the novel coronavirus, its beef exports were suddenly derailed.

After accusations from then Chinese Ambassador Lu Shaye of “western egotism and white supremacy,” the Chinese diplomatic offensive against Canada continues. Canadian efforts at Track Two dialogue, ministerial outreach, and the appointment of a new Canadian ambassador have not improved relations. The Chinese think Canada is behaving like a tributary to the United States, undermining the value of the relationship that convinced Chinese leadership to connect with Canada in 1970.

There have been ups and downs in the relationship. Canada, like other western nations, imposed mild sanctions in the wake of the Tiananmen Square massacre (1989). The general approach to China, especially under Jean Chretien and the Team Canada missions, was towards closer trade, commerce and people-to-people ties. The Harper government’s initial ideologically-driven ambivalence to the relationship led to a public chastisement by then Chinese premier Wen Jiabao (2010), but we still achieved a Foreign Investment Protection Agreement and an Approved Destination Status that has significantly increased Chinese tourism to Canada.

The ‘3Ms’ take relations to a nadir. They symbolize fundamental difference in our systems. In democracies like Canada, the rule of law means an independent judiciary. In China, the judiciary does the biding of its authoritarian Chinese Communist Party (CCP) leadership.

China’s aggressive behaviour is alienating its neighbours and trading partners, as Canadian ambassador Dominic Barton recently observed. As with attitudes in other democracies, China’s behaviour has changed Canadians’ perception of China and eroded their confidence in closer relations.

The affair has also underlined that a weakening rules-based system leaves Canada exposed and vulnerable. Once we could count on immediate support from allies, especially the U.S. Instead, President Trump initially mused about including Meng “if I think it’s good for what would certainly be the largest trade deal ever”. Despite a request from Mr. Trudeau, he cut a deal without reference to freedom for the Michaels. The Europeans eventually spoke out, but it took diplomatic effort. It has been a sobering education in geopolitics for Mr. Trudeau and the Canadian public.

"There's a level of admiration I actually have for China. Their basic dictatorship is actually allowing them to turn their economy around on a dime." Liberal Leader Justin Trudeau, November 2013

“Canada has an independent judicial system that functions without interference or override by politicians. China doesn’t work quite the same way and doesn’t seem to understand that.” Prime Minister Justin Trudeau, May 2020

“We continue to work with partners and allies around the world on ways to ensure that China knows that its actions in Hong Kong are deeply troubling, are of real concern for the sake of people of Hong Kong but elsewhere around the world as well” Prime Minister Justin Trudeau, May 2020

Source: Pew Foundation, Angus Reid

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The West's China challenge

The admission of the People’s Republic of China into the post-war rules-based system – taking the Chinese seat in the UN Security Council in 1971 and then joining the World Trade Organization in 2001– acknowledged geopolitical realities. There was hope, even expectation, that with economic liberalisation would come political liberalisation, and that China would embrace the norms of the rules-based liberal international order. It hasn’t worked out that way. Instead, China is defining its own approach to the international order. As the erudite Chinese Ambassador Fu Ling observes, “that same order is like an adult in children’s clothes. It is failing to adjust.”

The net effect of Chinese policies – trade and economics, security and defence, and human rights – has led western leadership to conclude that China constitutes a systemic competitor and a strategic adversary to democracies and to our values.

Initiatives like Made in China 2025 aim to make China dominant in global high-tech manufacturing through robotics and artificial intelligence. They utilize government subsidies and mobilize state-owned enterprises. Their practises include discriminatory treatment of foreign investment, forced technology transfers, intellectual property theft, and cyber-espionage. While China acknowledges climate change, it is the world’s biggest carbon emitter.

Source: Tomastvivlaren

China’s state-driven economic model and its state-subsidised companies take advantage of the openness of western economies, out-competing businesses playing by market rules. Its Belt and Road initiative strengthens China’s economic and security interests in Eurasia and beyond. An estimated one-third of global shipping passes through the South China Sea. China is now capable of controlling these vital waters in all scenarios “short of war with the United States.” China’s nuclear forces are expected to double in size over the next decade, composed of a triad of ICBMs, submarine-launched ballistic missiles and bombers.

Source: Duchâtel & Sheldon-Duplaix, 2018

Chinese cyber-espionage, disinformation, and subversion reinforce the domestic rule of the Communist Party and spread Chinese soft power abroad. Internationally, Chinese Foreign Minister Wang Yi says that China’s new ‘wolf warrior’ diplomacy is to push back against “deliberate insults”. Bravado and insecurity are a dangerous combination.

Under Paramount Leader Xi Jinping, the Chinese Communist Party has instituted a domestic “pervasive system of algorithmic surveillance” to control dissent. Arguably, this is the inevitable result of Chinese history that, throughout 5000 years, despite a mostly homogenous population, endured war-lordism, factionalism and a ‘Century of Humiliation’ in the wake of the Opium Wars, western occupation of its port cities, and Japanese invasion. Its neighbours include five nuclear armed states. If Russia, North Korea, and Pakistan are ‘friendly’, it’s only in a fair-weather sense.

The one certainty for the Chinese Communist Party is the importance of stability and the centrality of the CCP in guaranteeing that stability. The CCP has profited from rapid economic growth. This buys legitimacy. The Chinese system is becoming more hierarchical and authoritarian and, under Xi, it is moving from institutional to personal autocracy. If repression ratchets up, will the Chinese people still want this system? What will happen in economic crisis?

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Help Hong Kong and Support Taiwan

Hong Kong’s high degree of autonomy and rule of law is guaranteed to ensure Hong Kong’s future prosperity and success. With the world distracted by COVID-19, China is taking advantage to bring Hong Kong to heel. Deng Xiaoping once described it as “the pimple on China’s arse,” but he supported ‘one country, two systems’ because Hong Kong was the conduit for incoming foreign investment. Xi Jinping appears to believe that, having built up Shanghai as an international center, Hong Kong has lost its value. He is likely wrong. Hong Kong has become the third largest financial center after New York and London. Xi’s new national security law threatens to kill the golden goose that is Hong Kong.

Under this law, China, not Hong Kong, will define what are its authorities. What will happen when China places its security agents in Hong Kong? The new law violates China’s undertakings under the Sino-British Joint Declaration (1984). The foreign ministers for Canada, Britain, Australia, and the United States have expressed extreme concern. The British have promised to provide residency rights to their estimated 350,000 overseas passport holders. The Trump administration says it will withdraw Hong Kong’s preferential trade and commercial status, although U.S. business warns this hardly helps Hong Kong.

Canada has deep historical ties with Hong Kong. Canadians died in the defence of Hong Kong in 1941. We have deep trade and investment interests. Hong Kong ranks third as a global destination for Canadian exports of services and is Canada’s second most popular destination for investment in Asia. With at least 300,000 Canadian passport holders, it is our largest foreign expatriate community outside the U.S. According to a 2011 report by the Asia Pacific Foundation of Canada, seven in 10 Canadians living in Hong Kong have family in Canada, and one in four retain Canadian professional credentials, with many having attended Canadian schools, colleges, and universities. Hundreds of thousands of Canadians have family ties in Hong Kong. If things go badly, Canada will have to relocate not just our expatriates, but share the burden to give right of abode to those amongst the 7.5 million Hong Kongers with Canadian connections.

Meanwhile, there is China’s renewed threat of re-unifying Taiwan by force — either through a direct assault, blockade, or some kind of hybrid attack involving kinetic, cyber, and political warfare. This would be tragic and bloody. Taiwan has become a vibrant democracy with no interest in Beijing’s ‘one country, two systems,’ as voters underlined again in the recent re-election of President Tsai Ing-Wen.

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What Can We Do?

Our immediate objective is freedom for Michael Spavor and Michael Kovrig. Unfortunately, whatever the outcome of the Meng Wanzhou extradition process, the Chinese appear determined to hold them hostage for the long term. We need to keep up the pressure for their release and continue pressing the U.S. to help us free the two Michaels and remind them that their plight is a result of the U.S. extradition request.

If freedom for the two Michaels is our primary policy objective, our overriding priority must be to help avoid superpower armed conflict between China and the U.S. In his book Destined for War, Harvard’s Graham Allison observes that when rising powers confront ruling powers, there was bloodshed in 12 of 16 historical cases, what Allison calls the ‘Thucydides trap’. Canada and others would be collateral damage, so we must collectively look for diplomatic solutions.

Given Chinese sensitivities, this means avoiding demonizing China, but this also means no free pass on its international obligations, especially its commitments of ‘one country, two systems’ for Hong Kong. The Chinese Communist Party does not share our values, and their agents actively engage in subversion and disinformation. We need to be firm in pushing back and equally firm in speaking out when China flouts its international obligations or takes aggressive action against Canadians and Canadian interests.

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A Menu of Options

China’s rise raises big questions for the West and for Canada. We needed China to grow, so that our own economies could continue to grow. This was the gift of globalization. But if China is now a competitor and adversary rather than a partner, then where does that leave us? We need to understand where China is at any given time on the spectrum from competition to crisis to conflict, and what those triggers and would responses look like. Are we prepared to continue to resource their continued growth? Can we afford not to?

‘Effective sanctions’ is too often an oxymoron. Tit for tat on trade will only harm Canadians. Naming and shaming are either water off the back of a duck or will potentially worsen the condition of the afflicted. But doing nothing looks weak or appears to be appeasement. So let’s think strategically and asymmetrically.

The lesson of the two Michaels and now COVID is western adherence to collective security is tenuous, especially without U.S. leadership. China’s aggressive behaviour will continue.

The words and actions of Donald Trump contribute to a kind of moral equivocation towards China and the U.S. Canadians do not like President Trump, and it colours their attitude to the U.S. But China and the U.S. are not the same. The U.S. is our ally. China is not. We have got to work with all our allies including President Trump, recognizing that for him it is all about ‘America First’. With this in mind, Mr. Trump’s musing about bringing Australia, Korea, and India (not Russia) into the “outdated” G7 makes sense. We should act on it.

We learned a lot about peaceful co-existence with the Soviet Union during the Cold War, and these lessons need to be applied again, mindful that, like Russia, China is probably never going to adopt or respect western values. Official re-engagement with China is likely years away. For now, it will have to be Track Two dialogue.

So what can we do? It starts with ideas translated into tangible options and actions. Fashioning a China policy will be complex and complicated. It means identifying issues of common interest: managing pandemics, migration, nuclear proliferation, climate change, terrorism. All of these issues and questions should be addressed by the House of Commons Special Committee on Canada-China relations. The menu of options that follows can help start those hearings:

Security and Sovereignty

Curtail interference in Canadian-Chinese communities by the Chinese embassy and consulates. We should enforce our own laws in this regard, and stop the infiltration and harassment of our citizens, landed immigrants, and students.
Ensure supply chain resiliency and redundancy. If the pandemic has taught us anything, it is the importance of sovereign capacity and capability. As a matter of urgency, our governments need to identify critical supplies and identify Canadian and North American suppliers. The overdependence on China resulted in unreliable supply, i.e., empty planes and inferior products. The identification of Canadian suppliers should be integral to a revised Canadian industrial strategy.
Update ‘Strong, Secure and Engaged’ – Canada’s defence strategy – to account for the militarization of the Indo-Pacific and the threats to our Arctic. The once open and consensual order in the Indo-Pacific is becoming defined more by Sino-U.S. competition and zero-sum politics. This will require more sea power and air support – the Indo-Pacific is primarily a maritime theatre. Is our Pacific Fleet fit for purpose? The updated defence strategy needs to get on with acquisition of our supply ships and our surface combatants; do we have enough? Critically, we need to start acquisition of our next generation of submarines. We should consider partnerships with allies like Japan and Australia to see about joint construction.
Focus on security cooperation, especially with NATO partners Japan, Korea, Australia, and New Zealand. In recent years, we have strengthened our security collaboration with Japan, and a Canadian served as deputy commander at the United Nations Command in South Korea. We participate in the biennial Rim of the Pacific exercise organized by the U.S. Pacific Fleet. We have been hot and cold about joining ASEAN’s East Asian Security Forum. Membership is not likely to do much for security or our profile. Better would be to increase our military attachés and Royal Canadian Navy port visits. We should do more with our core partners in terms of joint military exercises, military training, and in sea and air ‘freedom of navigation’ exercises in both the South China Sea and the East China Sea.
Draft a costed Arctic strategy based on exercising sovereignty and recognizing that the Arctic is changing because of climate and that economic development and militarization is taking place despite our efforts. The current framework (2019) is inadequate. The Arctic should be the pillar of NORAD renewal highlighting Canada’s unique leadership in the area. It will require Government commitment for funding.

Trends in National Research and Development

Diplomacy

Ensure that the science-based investigation through the WHO of COVID-19 is rigorous and includes actionable recommendations.
Negotiate a Geneva Convention on Cyber, as we did after the First World War in prohibiting chemical warfare and biological weapons.
Ensure that we have a skilled and experienced cadre of diplomats who speak Chinese and understand its history and culture.
Support Canadian centres for the study of China at our universities, including the Asia-Pacific Foundation and Canada-West Foundation, and encourage their Track Two activities.
Reinvest and redevelop expertise in governance and human rights (there is a role here for the promised new Centre for Peace, Order and Good Government), arms control and Law of the Sea, especially as it applies to our Arctic. In advancing human rights we can learn from the Helsinki process and the Organization for Security and Cooperation in Europe.
Boycott the 2022 Winter Olympics? Some have suggested Canada boycott the February, 2022 Beijing Winter Olympics. Think long and hard and then think some more. Sporting boycotts should be applied with care as the cost is born by our athletes. The Olympic movement is designed to create bonds between peoples through sporting excellence. For a boycott to be effective it would have to include a significant group of nations (e.g. G7 + NATO and partners). Did boycotting the Moscow Olympics in 1980 get the Soviets out of Afghanistan? It led to the tit-for-tat boycott of the 1984 Los Angeles Olympics. Better to adopt the approach of then Prime Minister Stephen Harper to the 2008 Beijing Olympics. He did not attend although Foreign Minister David Emerson did.

Trade

Base any closer economic relations with China on the Comprehensive and Progressive Trans-Pacific Partnership agreement. It's a high-quality agreement with provisions on anti-corruption and transparency and includes disciplines on state-owned enterprises. We should be encouraging its ratification by partners and expansion to others, including Taiwan. Rather than seek a closer economic relationship with China, we should tell China that it will need to meet the standards of the CPTPP. If that happens, then we need to learn a lesson from China’s WTO accession and ensure that compliance is monitored and enforced.
5G: The government should announce regulations for Canada’s 5G network. It has had lots of time to weigh criteria including efficiency, cost and the implications for national security including our vital Five Eyes intelligence-sharing network. Our telecommunications companies, e.g. Telus, Bell, and Rogers are already making their decisions and their political risk analysis appears to rule out Huawei.
Remain in the China-created and Beijing-based Asia Infrastructure and Investment Bank. Canada joined in 2018, and Canadian firms are beginning to benefit. We joined to promote inclusive economic growth and address the estimated $8 trillion USD infrastructure gap in Asia. The U.S. did not join, actively discouraging allies from membership; most joined including Britain, France and Germany, and the AIIB now includes 102 members.
Ensure compliance with our anti-fraud accounting rules for all Chinese companies, especially state-owned enterprises, listed on the Toronto Stock Exchange. If they do not meet their obligations, they should be delisted, as U.S. authorities are now planning to do.
Clarify rules for state-owned enterprise investments. While maintaining the national security override, we can come up with a relatively clear set of rules. Both the Harper and Trudeau governments have grappled with regulation of Chinese SOEs. We demand transparency of SOE investment benefits (even if some leading economists have doubts about them). We should be equally transparent about the regulations that apply to SOEs. The AECON decision was likely the correct decision, but it would have saved a lot of money and aggravation if our rules had been more clearly defined. The ideal would be an OECD-generated code of conduct.
Examine the benefits of Canadian trade offices that were opened in China in expectation of closer economic relations. Consider redeploying our trade commissioners to CPTPP markets, India, and ASEAN members.
Ensure that ‘Made in Canada’ is recognized as a quality brand. This means that our farmers and food processors must meet norms of the highest quality and that our food inspection practises are best in class. We have the potential to be a food provider of choice in the Indo-Pacific.

Source: Canada West Foundation 2018

Human Rights

Apply the Magnitsky sanctions on those individuals responsible for abusing the human rights of Michael Spavor and Michael Kovrig. Based on the advice of our Embassy and intelligence from our allies, apply Magnitsky sanctions to those responsible for the human rights abuses of the Uighurs and Falun Gong, and for the crackdown in Hong Kong.
Apply visa sanctions on students and visitors from the families of senior Chinese Communist Party officials involved in trade sanctions, as well as the abuses against Michael Spavor and Michael Kovrig. A Canadian education is highly prized, and denying entry to family members will send a message that other family members will ensure is not forgotten.
Ramp up social media messaging using Weibo, WeChat, and other vehicles to inform and educate on issues like extradition and the rule of law. Our Embassy has used this tool with effect and, while it can be blocked, it is our alternative to Chinese state media as Radio Free Europe was during the Cold War.
Commission documentaries by the National Film Board and Telefilm that bring a Canadian lens to the situation in Hong Kong, the plight of the two Michaels, and other human rights issues – Uighurs, Falun Gong, Tibet – that are well-documented by human rights organizations.

Hong Kong

Create a foreign minister level contact group on Hong Kong, analogous to the Lima Group effort on Venezuela. This would build on the joint statement by foreign ministers from Australia, Canada, United Kingdom, and the U.S. on the Chinese new security law for Hong Kong and the initiative of seven former British foreign secretaries to form a global alliance to co-ordinate the response to the China-Hong Kong crisis.
More Canadian parliamentarians and policymakers should join the coalition from 23 countries condemning Beijing’s ‘unilateral introduction of national security legislation in Hong Kong’ and its ‘flagrant breach of the Sino-British Joint Declaration’.
Work with democracy groups in Hong Kong to support the freedoms guaranteed under the Basic Law and Joint Declaration. In the years leading to 1997, there were a series of Canadian initiatives to support representative government in Hong Kong.
The House of Commons Committee on Canada-China relations needs to resume its hearings, with a sub-committee on Hong Kong. Global Affairs Canada should keep parliamentarians informed of the situation in Hong Kong and on Chinese compliance with its international obligations. A very good resource is the U.K. Foreign Office reports (every six months) on Hong Kong and the U.S. State Department reports.
Support the appointment of a UN Envoy for Human Rights for Hong Kong, as recommended by leading parliamentarians in Canada, the United Kingdom, Australia, and New Zealand, recognizing that China will likely veto this effort.

Taiwan

Increase ‘unofficial’ ministerial visits and upgrade other exchanges. Canada’s one China policy “takes note” of the PRC claim to Taiwan, but it does not acknowledge it.
Support the reinstatement of observer status for Taiwan into the World Health Organization and other multilateral bodies where they can make a functional contribution.
Follow the lead of other trading partners and change the name of our office from ‘Canadian Trade Office in Taipei’ to ‘Canadian Office Taipei’ to be more inclusive in terms of bilateral cooperation. Taiwan has become a vibrant democracy that deserves our support.

Re-engagement (when possible)

Resurrect the annual dialogues – between prime ministers, national security advisors, ministers – that the Chinese had agreed to but have recently ignored. Start with areas of mutual interest – climate, pandemics, terrorism – where we can find common ground. Use them for frank discussion, especially on items like human rights.
Reinvigorate sister-province (e.g., Alberta-Heilongjiang, B.C.-Guangzhou) and sister-city relationships. Over the years, we have developed dozens of these relationships. The Chinese officials, all members of the CCP, that participate in these situations often advance to higher positions within the Chinese government.
Resume cultural and educational exchanges, and encourage friendly sports competitions. We have deep and historical people-to-people ties and the Chinese put value on them. Look at the tourists who visit Gravenhurst each year to see the birthplace of Norman Bethune.

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About the Author

A former Canadian diplomat, Colin Robertson is Vice President and Fellow at the Canadian Global Affairs Institute and hosts its regular Global Exchange podcast. He is an Executive Fellow at the University of Calgary’s School of Public Policy and a Distinguished Senior Fellow at the Norman Paterson School of International Affairs at Carleton University. A member of the Department of National Defence’s Defence Advisory Board, Robertson sits on the advisory councils of the Johnson-Shoyama School of Public Policy, North American Research Partnership, The Winston Churchill Society of Ottawa and the Conference of Defence Associations Institute and the North American Forum. He is an Honorary Captain (Royal Canadian Navy) assigned to the Strategic Communications Directorate. During his foreign service career, he served as first Head of the Advocacy Secretariat and Minister at the Canadian Embassy in Washington and Consul General in Los Angeles, as Consul and Counsellor in Hong Kong and in New York at the UN and Consulate General. A member of the teams that negotiated the Canada-U.S. FTA and then the NAFTA, he is a member of the Deputy Minister of International Trade’s Trade Advisory Council. He writes on foreign affairs for the Globe and Mail and he is a frequent contributor to other media. The Hill Times has named named him as one of those that influence Canadian foreign policy.

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Canadian Global Affairs Institute

The Canadian Global Affairs Institute focuses on the entire range of Canada’s international relations in all its forms including (in partnership with the University of Calgary’s School of Public Policy), trade investment and international capacity building. Successor to the Canadian Defence and Foreign Affairs Institute (CDFAI, which was established in 2001), the Institute works to inform Canadians about the importance of having a respected and influential voice in those parts of the globe where Canada has significant interests due to trade and investment, origins of Canada’s population, geographic security (and especially security of North America in conjunction with the United States), social development, or the peace and freedom of allied nations. The Institute aims to demonstrate to Canadians the importance of comprehensive foreign, defence and trade policies which both express our values and represent our interests.

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