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Globe and Mail columnist Doug Saunders.
Globe and Mail columnist Doug Saunders.

Doug Saunders

Thanks to Trump, China is poised to dominate Add to ...

This has been a very good month for Xi Jinping. The Chinese president appointed a new finance minister, who immediately began a crackdown on the hidden incomes of the country’s superrich. He struck a deal in which Facebook agreed to censor its content.

And most importantly, on Nov. 8, Mr. Xi learned that his country was about to become unchallenged as the economic leader of at least half the world’s people.

The election of Donald Trump could not have been better news for the economic and political ambitions of China. Suddenly, across most of Asia, Africa and much of South America and Europe, all economic, energy, diplomatic and non-metaphorical infrastructure roads lead to Beijing.

Read more: China to Trump: Co-operation is the only choice

Analysis: The countries that will gain and lose from Trump's presidency

Read more: Trump's protectionist trade stance sparks concerns of global trade war (subscribers)

Or so it seems. For countries like Canada with carefully negotiated links to both superpowers, this is a delicate moment requiring considerable care. The U.S. retreat has the potential to make China considerably more important and more influential internationally, but also more controversial to be engaged with politically, even if the gains are considerable.

And it’s happening now: The world order has shifted even before the presidency has changed. Mr. Trump’s announcement this week that on his first day in office he will “withdraw from” the Trans-Pacific Partnership, the huge and not-yet-ratified trade and investment deal between the Americas and Asia (but not with China), was one of the least surprising things he has done. The letters TPP have become a little more than an easily-spat curse among protectionist Republicans and Democrats, seen widely as a corporate sop that offers little to working people.

Politically, walking away from the deal is almost cost-free for Americans. Economically, the United States was projected to gain only slightly in growth and jobs as a result of the deal, as was Canada. On the other hand, the people of Japan and Southeast Asian countries such as Vietnam and Malaysia were gambling their futures on it: The TPP promised to improve the lives of hundreds of millions of people in the eastern hemisphere by clearing a tariff-clogged pathway between the world’s largest economies. Without it, they are solely dependent on China.

The response has been almost immediate: Days after the U.S. election, countries lept into action to make deals with China. Vietnam, Malaysia, Chile and Peru announced last week that they would turn away from the U.S.-led deal and instead work on joining China’s 16-country trade bloc, the Regional Comprehensive Economic Partnership – a less stringent pact that affects three billion people. Australia announced plans to tighten its pacts with China, Japan, India and Southeast Asia (but not the U.S.).

And Beijing is preparing to step into the vacuum with an unprecedented bid to build a world economy around itself. China’s “One Belt, One Road” infrastructure-investment strategy resembles nothing so much as the Marshall Plan pursued by the United States after the Second World War. Chinese-led institutions, including the newly created Infrastructure Investment Bank, have pledged to spend $1.2-trillion in 60 countries to create railway lines, oil and gas pipelines, highways and major ports to link China with central and Southeast Asia, Russia, parts of Europe, and potentially much of Africa.

On top of that, China this week pledged to take over leadership of climate-change reduction and green-energy infrastructure if the U.S. follows Mr. Trump’s pledge to walk away from the Paris Agreement, potentially making it a post-fossil-energy superpower.

For countries like Canada, there are great opportunities to take advantage of this situation financially – but these carry serious political risks. The suggestion that Prime Minister Justin Trudeau used ties to Chinese businessmen to attract donations to his late father’s foundation – even if they prove to be innocent of conflict – create an image, not just at home but across the eastern hemisphere, that Canada is willing to betray its principles to gain from this geopolitical disaster.

The Prime Minister, quite reasonably, wants Canada to become less solely dependent on a much more volatile United States. But the power vacuum in Asia is a tragedy, not a victory: Japan and Southeast Asia aren’t eagerly rushing to China; they’re abandoned by the U.S. and fear a dominant, increasingly authoritarian superpower. If we aren’t careful, Canada will look like part of the problem.

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Follow on Twitter: @dougsaunders

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