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Canada-China Relations One Year on from the Release of the Indo-Pacific Strategy

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This commentary is published as part of ‘Charting New Waters: Assessing Canada’s Indo-Pacific Strategy One Year On’, a follow-up policy paper series to IPD’s 2023 Indo-Pacific Strategy Forum.

Introduction

In the Indo-Pacific Strategy (IPS) released in November 2022, China has been labelled an “increasingly disruptive global power”, encroaching on the rules-based international order and violating the values embraced by Canada and its allies. The reasons cited in the IPS for China’s growing disruption include its aggressive militarism, predatory lending of the Belt-and-Road Initiative (BRI), human rights abuses in Hong Kong and Xinjiang, its disregard of the UN’s rulings in the South China Sea, etc. The IPS outlines Canada’s efforts to counteract against China by building on key multilateral arrangements and forums in the Indo-Pacific, and drawing on its existing partnerships with key allies, such as the US, EU and its member states, Australia, and New Zealand. It however falls short on any specific strategy to deal with China, which is its major shortfall.

What is left unsaid in the IPS is the series of events that affected Canada-China bilateral relations leading up to its release that significantly hurt Canada’s national interests. Notably, the arbitrary detention of the “two Michaels”, and punitive trade measures imposed on Canadian imports following the arrest of Huawei’s CFO, Meng Wanzhou by Ottawa. These events that negatively impacted Canada’s interests directly which took place against the backdrop of China’s growing authoritarianism under President Xi Jinping and its increasingly aggressive foreign policies – likely explain the pronouncement of an “increasingly disruptive global power”.

One year after its release, this paper assesses whether and the extent to which Canada has achieved its main strategic objectives outlined in the IPS. The five main strategic objectives of the IPS are promoting peace and security, expanding trade, investment, and supply chain resilience, investing in, and connecting people, building a sustainable green future, and continuing to engage with partners in the Indo-Pacific. In short, this paper asks: has the IPS provided Canada with extra leverage to further its interests and preserve its values in its dealings with China?

China as an “Increasingly Disruptive Global Power”

After the RCMP’s arrest of Meng Wanzhou in Vancouver in 2018, Canada-China relations entered a new “freeze” phase, reversing the engagement policy of the Trudeau government in his first term. The arrest of the high-profile business executive for financial fraud committed in the US was seen by Beijing as Canada acting as a long arm of the US jurisdiction. Canada was seen as “aiding and abetting” the US-led collective effort to contain China’s inevitable rise. Beijing did not retaliate against the US directly, but Canada bore the brunt of a series of tit-for-tat measures. Though Beijing never admits it, China arrested two Canadians, the former diplomat Michael Kovrig and businessman Michael Spavor, as “hostages”, citing reasons of espionage.

Furthermore, Canadian exporters of canola oil, pork, and beef products, were kept out of the Chinese market due to their “failure” to meet health safety standards. These agri-business exporters have traditionally relied on China as a key export market. The “hostage diplomacy”1Donald Clarke, “China Is Holding Two Canadians as Hostages. It’s Not Even Denying It.,” Washington Post, December 17, 2018, https://www.washingtonpost.com/opinions/2018/12/17/china-is-holding-two-canadians-hostages-its-not-even-denying-it/. and punitive trade measures imposed by Beijing dented Canadians’ positive perception of China.2Lynette Ong, “Some Canadians Want to Work with China. Beijing Isn’t Helping Their Case,” The Globe and Mail, January 14, 2019, https://www.theglobeandmail.com/opinion/article-some-canadians-want-to-work-with-china-beijing-isnt-helping-their/. It did not help that Ottawa had limited room to maneuver in the face of Beijing’s bullying behavior given the fate of Meng rested in the hands of the US legal jurisdiction. Ottawa was compelled to adjust warnings to Canadians travelling to China, as well as to the business community, to account for the growing risk of arbitrary application of Chinese laws.

“Hostage diplomacy” and punitive trade measures imposed by Beijing dented Canadians’ positive perception of China. It did not help that Ottawa had limited room to maneuver in the face of Beijing’s bullying behavior given the fate of Meng rested in the hands of the US legal jurisdiction.

After China’s mishandling of the “Wuhan outbreak” in the initial stages of the Covid-19 pandemic, public opinion in Canada towards China, along with those of many other democracies worldwide, slide into negative territory – in dramatic reversal of the majority favorable view in the pre-pandemic era.3Laura Silver, Christine Huang, and Laura Clancy, “1. Views of China,” Pew Research Center’s Global Attitudes Project, July 27, 2023, https://www.pewresearch.org/global/2023/07/27/views-of-china/. This took place in the backdrop of growing harsh crackdown in Xinjiang and Hong Kong with media exposé of internment camps in Xinjiang and the passing of the National Security Law in Hong Kong following violent protests in 2019-2020. Overall, China under Xi Jinping’s rule was becoming a belligerent power that posed a threat to the liberal world order – a growing sentiment across the democracies, including Canada – after the onset of the pandemic.

Officially, the IPS cited reasons such as China’s aggressive militarism, human rights abuses in Hong Kong and Xinjiang, its disregard for UN rulings on disputes in the South China Sea, and predatory BRI lending practices – for its framing of China as a “disruptive global power”. However, the series of preceding events that hurt Canada’s interests directly, especially the “hostage diplomacy” and trade coercion – had likely shaped the framing. The IPS’ language is compatible with but also stronger than the US’ Indo-Pacific Strategy released nine months earlier, in February 2022. China is seen as an emerging peer competitor to the US, and one that undermines its vital interests and weakens the US-led alliance in the region through the use of gray-zone coercive tactics, military force, political interference, and economic pressure.4Richard C. Bush et al., “An American Strategy for the Indo-Pacific in an Age of US-China Competition,” Brookings, November 2022, https://www.brookings.edu/articles/an-american-strategy-for-the-indo-pacific-in-an-age-of-us-china-competition/. Even though there is seeming coordination between the two governments in their official stance, Canada is excluded from the various US-led initiatives and arrangements in the Indo-Pacific, which hampers its capacity to stand firm against China, as this paper will illustrate.

Regional and Minilateral Arrangements in the Indo-Pacific

Since a year ago, the greatest achievement to date of Canada’s engagement with regional institutions is the elevation of its status to a “strategic partner” by the Association of Southeast Asian Nations (ASEAN), alongside the US and EU that similarly enjoy the status. This reflects ASEAN’s recognition of the benefits of trade engagements with Canada. It has significant implications for Canada’s relationship with China, particularly on trade diversification, even though China was never explicitly spelt out in the official readout.

Justin Trudeau and Joko Widodo, the host of the ASEAN Summit in September 2023, acknowledged the growing business ties between Canada and Indonesia, particularly in agri-food sector. The trade sanctions on agri-products, namely canola oil, pork, and beef, have hurt Canadian exporters given their reliance on the Chinese market. China banned Canada’s beef products for nearly two years citing arbitrary health concerns.5Amanda Stephenson, “China’s Been Blocking Canadian Beef for 17 Months — and Industry Has No Idea Why,” CBC, May 11, 2023, https://www.cbc.ca/news/canada/calgary/china-s-ban-on-canadian-beef-still-in-place-1.6839624. Improved access to the Indonesian agri-business market, particularly in beef products, provides a great diversification strategy away from China. Canada’s merchandise trade with ASEAN grew by nearly 29 percent in 2022, with agri-products being one of the largest exports. Canada has announced plans for a Team Canada Trade Mission to Indonesia and Vietnam in 2024 and opening of an agri-food office in the Philippines.6Lu Xu, “Trudeau’s China Talk in Asia,” MiddlePowers, September 10, 2023, https://middlepowers.substack.com/p/trudeaus-china-talk-in-asia. Canada has also pledged to deepen collaboration with other ASEAN members on renewable energy, infrastructure, clean and advanced technologies, and to expand people-to-people ties with the Canada-ASEAN scholarships and educational exchanges.7Office of the Prime Minister, “Prime Minister Justin Trudeau Meets with Prime Minister of Malaysia Anwar Ibrahim,” Office of the Prime Minister, September 6, 2023, http://www.pm.gc.ca/en/news/readouts/2023/09/06/prime-minister-justin-trudeau-meets-prime-minister-malaysia-anwar-ibrahim; Office of the Prime Minister, “Prime Minister Justin Trudeau Meets with Prime Minister of Vietnam Pham Minh Chinh,” Office of the Prime Minister, September 6, 2023, http://www.pm.gc.ca/en/news/readouts/2023/09/06/prime-minister-justin-trudeau-meets-prime-minister-vietnam-pham-minh-chinh. While visiting Singapore, Trudeau spoke on the expansion of bilateral trade and investment to create good middle-class jobs.8Office of the Prime Minister, “Prime Minister Justin Trudeau Meets with Prime Minister of Singapore Lee Hsien Loong,” Office of the Prime Minister, September 8, 2023, http://www.pm.gc.ca/en/news/readouts/2023/09/08/prime-minister-justin-trudeau-meets-prime-minister-singapore-lee-hsien.

However, the IPS has not provided much leverage to Canada to participate in other regional mini-lateral arrangements, such as the Quadrilateral Security Dialogue (Quad) or AUKUS – if membership in these regional arrangements is indeed desirable from the Canadian perspective. The Quad is a strategic security dialogue between Australia, India, Japan, and the US, where the member countries hold joint military exercises regularly. The arrangement is widely seen as a response to defend the international rules-based order threatened by China’s increasing military power. Aside from security cooperation, the Quad also announced a vaccine partnership in May 2021 to deliver over a billion Covid-19 vaccines to the region – an attempt to match China’s vaccine diplomacy during the pandemic. The Quad also established the Indo-Pacific Partnership for Maritime Domain Awareness aimed at strengthening maritime security by providing real-time data from commercial satellites to countries across the region.9Dominique Fraser, “The Quad: A Backgrounder,” Asia Society, May 16, 2023, https://asiasociety.org/policy-institute/quad-backgrounder.

Exclusion from the Quad may suggest that Canada has limited means of participating in security cooperation with the western allies against China. Yet, in pragmatic terms, Canada’s meagre defence spending of 1.29 percent of GDP (C$29.1 billion) in 2021-22 hampers its capacity to take part in security cooperation in the Indo-Pacific meaningfully. Canada’s below-the-average defence spending — well below 2.16 percent of the UK, 1.64 percent of the Netherlands, and 3.46 percent of the US – has invited criticisms from its allies.10Mark Gollom, “Canada Pledged to Spend 2% of GDP on Its Military. Would That Transform It? Is It Affordable?,” CBC, July 24, 2023, https://www.cbc.ca/news/canada/gdp-nato-military-spending-canada-1.6912028; Stephen Nagy, “Quad Plus?: Carving out Canada’s Middle-Power Role,” Journal of Indo-Pacific Affairs 3, no. 5 (December 2020): 179–95. Thus, realistically speaking, an increase in defence spending by Canada must precede establishment of further security commitments and alliances in the region.

Canada’s meagre defence spending of 1.29 percent of GDP (C$29.1 billion) in 2021-22 hampers its capacity to take part in security cooperation in the Indo-Pacific meaningfully... an increase in defence spending by Canada must precede establishment of further security commitments and alliances in the region.

In other regional security arrangements, Canada is part of the Five Eyes partnership, which is an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom, and the US. The multidimensional nature of intelligence sharing among the member countries have imposed pressure across the countries to uniformly resist the use of Chinese technologies, notably Huawei’s 5G network. Individual countries, such as New Zealand and Canada, to some extent, have resisted the pressure. Analysts observe that Canada is a net benefactor of intelligence sharing among the Five Eyes alliance.11Stephanie Carvin and Thomas Juneau, “Why AUKUS and Not CAUKUS? It’s a Potluck, Not a Party,” International Journal 78, no. 3 (September 1, 2023): 359–74, https://doi.org/10.1177/00207020231195109. More recently, intelligence provided by the network has revealed the alleged murder of a Sikh separatist activist by the Indian government on Canadian soil.12Helen Regan, Sahar Akbarzai, and Rhea Mogul, “Western Intelligence Led to Canada Accusing India of Sikh Activist’s Assassination, US Ambassador Says,” CNN, September 25, 2023, https://www.cnn.com/2023/09/24/americas/canada-five-eyes-india-hardeep-singh-nijjar-intl-hnk/index.html.

Beyond the Five Eyes, Canada is ostensibly excluded from AUKUS, a security partnership between Australia, the United Kingdom, and the US, focusing on nuclear-powered submarines. It is intended to help boost Australia’s defence capacity in nuclear submarines. The exclusion is seen as a snub for Canada, with Trudeau facing sharp domestic criticism from the opposition parties when the alliance was announced in 2021. Even though Australia incurs high financial costs from AUKUS, and Canada will similarly have to pay a high price tag for its inclusion, its absence from the alliance is symbolic of marginalization by its traditional allies in the Indo-Pacific region. This is detrimental to the perception of Canada’s capacity to stand firm against China’s aggressiveness.13Christopher Hernandez-Roy, Vincent Rigby, and Henry Ziemer, “Canadian Membership in AUKUS: A Time for Action,” Center for Strategic and International Studies, May 9, 2023, https://www.csis.org/analysis/canadian-membership-aukus-time-action. If AUKUS remains a nuclear submarine-focused security alliance, being excluded incurs limited costs to Canada. However, as it is becoming more evident that cooperation in nuclear submarines may presage deeper cooperation among the partner countries in technology sharing, integration of security- and defence-related science and technology, including undersea capabilities, quantum technologies, electronic warfare, and building industrial bases and supply chains, Canada’s absence in the regional security alliance will incur increasingly high cost.14Carvin and Juneau, “Why AUKUS and Not CAUKUS? It’s a Potluck, Not a Party.”

Recent Developments

The recent diplomatic dispute with India emanating from the alleged murder of Sikh separatist leader, Hardeep Singh Nijjar, has further imperiled Canada’s position in the Indo-Pacific. As a rapidly developing economy and a democracy, India has been seen as a hedge against the Chinese market. India’s involvement in the Quad and its recent hosting of the G20 also elevate the country’s prominence in the region. Following the announcement of the assassination, an Indian diplomat was expelled by Ottawa, and India similarly expelled Canadian diplomats and suspended all visa services in Canada in a tit-for-tat move.

There seems to be no end in sight for the worsening Canada-India relationship. Bilateral relations have always been fraught with the support of the separatist Khalistan movement by Sikh Canadians. New Delhi has framed the Khalistan movement abroad as a national security threat.15Kim Richard Nossal, “India–Canada Relations Are Trapped in a Doom Loop,” East Asia Forum, October 15, 2023, https://www.eastasiaforum.org/2023/10/15/india-canada-relations-are-trapped-in-a-doom-loop/. India has accused Canada of harboring Sikh separatists and turning a blind eye to their terrorist activities, including the bombing of an Air India flight in 1985 bound for New Delhi from Montreal that killed 329 people on board, mostly Indian Hindus.16Manjari Chatterjee Miller, “Canada-India Tensions over Killing of Sikh Separatist: What to Know,” Council on Foreign Relations, September 25, 2023, https://www.cfr.org/in-brief/canada-india-tensions-over-killing-sikh-separatist-what-know. India has long accused Ottawa of pandering to the Sikh diaspora due to electoral consideration. There are 770,000 citizens of Sikh origins in Canada, constituting 2.1 percent of the total population, and the largest concentration of the Sikh population outside of India. Their concentration in suburban Toronto and Vancouver delivers critical votes to several ridings during the elections.17Nossal, “India–Canada Relations Are Trapped in a Doom Loop.”

A series of intelligence leaks that suggest the Chinese government’s interference in the Canadian national elections in 2019 and 2021 by funding certain candidates and campaigns to yield more pro-Beijing elected politicians have further damaged the Canada-China bilateral relationship. It has also been revealed that the family of an ethnic-Chinese Conservative MP, Michael Chong, has been harassed for being outspoken on China’s human rights abuses in the Parliament. Following intelligence reports of the involvement of Chinese diplomats in gathering information on Canadian politicians, Ottawa expelled a Chinese diplomat and triggered the retaliatory expulsion of a Canadian diplomat in China.18Chloe Kim and Kelly Ng, “China Expels Canadian Diplomat in Tit-For-Tat Move,” BBC News, May 8, 2023, sec. US & Canada, https://www.bbc.com/news/world-us-canada-65529185. These revelations by the Canadian intelligence agency has put further pressure on the Trudeau government to take tough actions against Beijing’s interference, which led to the establishment of a public inquiry to investigate foreign interference in September 2023 after some delay.19Rob Gilles, “Canada Announces Public Inquiry into Whether China, Russia and Others Interfered in Elections,” AP News, September 7, 2023, https://apnews.com/article/public-inquiry-canada-foreign-interference-china-a630eef29379e8c93a5a52caa3ddd059.

In November 2023, Chinese aircraft intercepted, and fired flares at, a Canadian helicopter flying in international airspace in the South China Sea.20David Baxter, “Chinese Jets Intercept, Fire Flares near Canadian Helicopter in ‘Significantly Unsafe’ Moves,” Global News, November 23, 2023, https://globalnews.ca/news/10069025/chinese-intercept-helicopter-flare/. Despite Beijing’s allegation of Canadian violation of “Chinese and international laws”, the incident is widely seen as another instance of aggressive Chinese militarism against smaller nations, including the operations of the Philippine Navy. Suffice it to say that China has become increasingly aggressive in the international arenas – be it military or navy operations, holding civilians as hostages, or in trade coercion – against smaller nations and middle powers, including Canada. This renders a rapprochement with Beijing challenging, if not impossible, in the near future, and cooperation with it is similarly fraught with risks.

Recommendations

The IPS has set the right tone for Canada’s relationship with China in this uncertain and hostile geopolitical environment. It however falls short on specific strategies or commitments to deepen Canada’s relationship with other like-minded nations in the region. Thus far, Ottawa has made some progress in diversifying trade away from China with its strategic partnership with ASEAN. However, Canada’s collaboration with Indo-Pacific nations in security and defence remain weak, as evidenced in its exclusion from the Quad and AUKUS. This will weaken Canada’s capacity to become a meaningful partner in the region, and to counteract aggressive behavior of Beijing as an “increasingly disruptive global power”. Therefore, it is crucial for Ottawa to actively engage in mini-lateral arrangements within the region and to strengthen diplomatic and security ties, as well as trade and people-to-people alliances, with our Indo-Pacific partners. Until Ottawa takes concrete steps to bolster our alliances in the region, the objectives articulated in the IPS will largely remain rhetorical.

Written By:
Lynette Ong
Dr. Lynette Ong is Professor of Political Science at the University of Toronto, jointly appointed to the Munk School of Global Affairs and Public Policy’s Asian Institute, a Faculty Fellow at the Schwartz Reisman Institute for Technology and Society, and Senior Fellow at Asia Society’s Center for China Analysis.
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Peggy Mason: Canada’s former Ambassador to the UN for Disarmament

Mark Fitzpatrick: Associate Fellow & Former Executive Director, International Institute for Strategic Studies (IISS)

Ali Vaez: Iran Project Director, International Crisis Group

Negar Mortazavi: Journalist and Political Analyst, Host of Iran Podcast

David Albright: Founder and President of the Institute for Science and International Security

 

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Hon. Sergio Marchi: Canada’s Former Minister of International Trade

Scott Jolliffe: Chairperson, Canada Arab Business Council

Esfandyar Batmanghelidj: Founder and Publisher of Bourse & Bazaar

Nizar Ghanem: Director of Research and Co-founder at Triangle

Nicki Siamaki: Researcher at Control Risks

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Luciano Zaccara: Assistant Professor, Qatar University

Dania Thafer: Executive Director, Gulf International Forum

Kayhan Barzegar: Professor and Chair of the Department of Political Science and International Relations at the Science and Research Branch of Azad University

Barbara Slavin: Director of Iran Initiative, Atlantic Council

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Jon Allen: Canada’s Former Ambassador to Israel

Elizabeth Hagedorn: Washington correspondent for Al-Monitor

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Erica Di Ruggiero: Director of Centre for Global Health, University of Toronto

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Catherine Gribbin: Senior Legal Advisor for International and Humanitarian Law, Canadian Red Cross

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Ferry de Kerckhove: Canada’s Former Ambassador to Egypt

Dennis Horak: Canada’s Former Ambassador to Saudi Arabia

Chris Kilford: Former Canadian Defence Attaché in Turkey, member of the national board of the Canadian International Council (CIC)

David Dewitt: University Professor Emeritus, York University

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Dmitri Trenin: Director of Carnegie Moscow Center

Joost R. Hiltermann: Director of MENA Programme, International Crisis Group

Roxane Farmanfarmaian: Affiliated Lecturer in International Relations of the Middle East and North Africa, University of Cambridge

Andrew A. Michta: Dean of the College of International and Security Studies at Marshall Center

Kelley Vlahos: Senior Advisor, Quincy Institute

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Sanam Vakil: Deputy Director of MENA Programme at Chatham House

Denise Natali: Acting Director, Institute for National Strategic Studies & Director of the Center for Strategic Research, National Defense University

Hassan Ahmadian: Professor of the Middle East and North Africa Studies, University of Tehran

Abdulaziz Sagar: Chairman, Gulf Research Center

Andrew Parasiliti: President, Al-Monitor