Pandemic is an opportunity for Canada to reduce economic dependence on China
This column is an opinion by Ethan Lou, the author of Field Notes from a Pandemic: A Journey Through a World Suspended. He is a former Reuters reporter and has served as a visiting journalist at the University of British Columbia. For more information about CBC’s Opinion section, please see the FAQ.
There is no time more apt than now for Canada to re-examine its economic relationship with China.
Increasingly, signs are showing that China is taking advantage of the COVID-19 chaos to extend its influence globally. Post-pandemic, it will likely only get more powerful and assertive against a Western world mired in social and economic mayhem.
Both Canada and the world have allowed the pursuit of profit to gradually force dependence on a sometimes hostile market — that is the bedrock of China’s power. Now that COVID-19 has disrupted international supply chains, when Canada rebuilds, it should be toward an economy less integrated with China’s.
Middle powers like Canada, which have long been dancing between the majors, are increasingly impotent against tactics such as China’s detention of this country’s citizens, for example. China detained Canadians Michael Kovrig and Michael Spavor in 2019 on spying charges — widely considered to be retaliation over the Vancouver arrest of Huawei executive Meng Wanzhou under an extradition request by the U.S.
So began a new era in bilateral relations, calling into question decades of diplomacy. That boldness by China would have been unthinkable just a decade or so ago.
It’s a new boldness, born from China’s economic rise and the increasing chaos in the West — and the pandemic is accelerating both.
China was hit badly by COVID-19, but it was hit first and it recovered first. And it recovered shrewdly — from outshining the United States at the World Health Organization, to its face-mask and vaccine diplomacy, to its alleged disinformation operations, to its bearing down on Hong Kong while the world’s attention is divided, to restarting its economy while others’ are suspended.
Meanwhile, harsh pandemic lockdowns threaten to return to Europe and Canada. The United States, China’s chief counterweight, is beset by all manner of instability.
In 2017, Finance Minister Chrystia Freeland, then foreign affairs minister, told Parliament the rules-based international order the West has upheld since the end of the Second World War is becoming less stable, and that Canada needs to chart its “clear and sovereign course.” Post-pandemic, that could prove to be particularly prescient.
Heavy price of trade
Canada recently abandoned free-trade talks with China, a move revealed Sept. 18 by Foreign Affairs Minister Francois Philipe-Champagne. That revelation is largely symbolic, however, as free trade was never close to realization to begin with.
And on the same day, Canada’s ambassador to China, Dominic Barton, said this country needs to “do more in China.”
What Canada needs to realize is the heavy price of the trade it already has.
Since Prime Minister Pierre Trudeau, the father of Canada’s current leader, established diplomatic relations with China, bilateral trade has become a torrent — that cheap manufacturing, that vast market of 1.3 billion people. Thus Canada enriched itself.
But while China has become Canada’s second-biggest trading partner, this country is only the Asian giant’s 16th-largest trading partner. When China stymied Canadian canola seed and soybean imports in 2019, it hurt major industries in this country. But for China, the lack of such grains from Canada was insignificant.
That asymmetrical relationship has also made the affair over Huawei’s Meng Wanzhou all the worse. There is little Canada can do to pressure China, but an arsenal of options in terms of what China can do, has done and will continue to do to Canada. China recently blocked an experimental COVID-19 vaccine shipment bound for Canada, for example.
Profit at the cost ot resilience
Pandemic lockdowns have devastated economies because companies had sourced parts and labour from all over the world based on where they were the cheapest, and did not stockpile so as to maintain efficiency by eliminating warehouse costs. That lesson is the same one to be learned from Canada’s current troubles with China: prioritizing profit has come at the cost of resiliency.
As Canada restarts its economy, the government would be wise to guide companies toward diversified markets. It needs to further cultivate alternative trading partners, such as fast-growing India and Brazil, and those with similar values, such as the European Union. And it needs to do so actively and aggressively.
The goal is not to replace China, which is impossible, and this is also not an argument for disengagement. This is about reducing dependence and, in doing so, patching a vulnerability.
This is also about loosening the hold China has over others, a tiny step to steering it toward a more constructive international role.
Post-pandemic, the world needs more engagement with China, not less — but not through asymmetrical relationships — and it needs a rule-abiding China mindful of the adage that with great power comes great responsibility.