Shawn Barber is a former foreign service officer and Canadian ambassador. Until June of this year he was the head of the economic security task force for Public Safety Canada. He lives in Washington.
Canada’s new Indo-Pacific Strategy offers an opportunity for the federal government to take the urgent action required to respond to the threats China poses to our economic security, particularly our innovative technology sector. But while it is a good start, it’s not enough.
Canada’s strategy needs to go much further. Failure to act now could not only have dire consequences for our national security but also erode our long-term economic competitiveness. As Canadian Security Intelligence Service director David Vigneault said in 2021 about Chinese industrial espionage: “It is our country’s future that is being stolen.”
The Chinese drive for global technology supremacy began in earnest with a strategic pivot by President Xi Jinping almost a decade ago with the adoption in 2015 of a state-led industrial policy called Made in China 2025. Its objective is to achieve dominance in 10 advanced manufacturing sectors, including artificial intelligence, by 2049, the 100th anniversary of the founding of the People’s Republic of China. A companion initiative called Military-Civil Fusion seeks to use these technologies to make the Chinese military the most advanced in the world, able to exert the will of Beijing’s leaders in geopolitical conflicts such as the future of Taiwan.
In addition to its own formidable capabilities, China is using state-owned enterprises, individuals and entities linked to its military to acquire cutting-edge technology under development in startups, government laboratories and universities around the world, including Canada. Its methods are well known. These include foreign investment, cyberespionage, programs to recruit scientists and professors, the manipulation of exports and imports, forced technology transfers from foreign firms operating in China, and research partnerships with academics and universities.
Canada’s open and vibrant innovation ecosystem is an appealing target. The Stanford University 2022 AI Index ranks Canada fourth in the race to innovate and develop artificial-intelligence technologies, behind the United States, China and Britain and ahead of South Korea, Germany, Australia and Japan. Yet policy makers in Ottawa have only recently grasped the seriousness of this threat, and Canada’s innovation ecosystem remains extremely vulnerable.
These same threats have prompted robust responses from our most important trade and security partners. The recent passage through the U.S. Congress of the CHIPS and Science Act, a US$52-billion initiative to restore American dominance in the semi-conductor industry, is just the latest example of the rare bipartisan co-operation in Washington to confront these threats. Within the past five years all our Five Eyes security partners have understood the gravity of this challenge and made significant policy shifts to confront it. In Canada, we’ve tinkered at the margins.
From an economic competitiveness and national security perspective, this is not a contest Canada can afford to lose. The Indo-Pacific Strategy announced by Foreign Affairs Minister Mélanie Joly offers an opportunity to act now to better protect our economic security. Here are three broad areas that need urgent attention.
First, we need better policy tools, starting with the development of a public list of sensitive technologies critical to our competitiveness and national security. The Minister of Innovation, Science and Industry, François-Philippe Champagne, must strengthen the Investment Canada Act including with a requirement for the preapproval of foreign investments in these key technologies, as is the practice in the U.S. and Britain. A review of the Patent Act is required to determine how we can ensure transparency and awareness when sensitive IP is transferred out of Canada. Ms. Joly needs to work with the U.S., the European Union and Japan to ensure new co-operative approaches on export controls for key technologies. We also need a national data strategy to set the rules to govern ownership, access to and use of the vast quantities of data that will power the connected, artificial-intelligence-driven economy of the future.
Second, the federal government needs to enlist the active support of all domestic stakeholders if the magnitude and complexity of these threats are going to be met. Focused partnerships with universities and provinces are critical to share information and establish rules on research security. Progress on this front is happening too slowly and without the active participation of the provincial authorities who have jurisdiction. Similarly, the federal government must use its existing Economic Strategy Tables and its array of innovation support programs including the new $1-billion Canada Advanced Research Projects Agency (CARPA) to ensure entrepreneurs and technology startups are engaged and aware of the risks posed by external threat actors.
Finally, Canada needs to robustly engage in international diplomacy to avoid being left behind. In key forums where these issues are being discussed including the Quad (U.S., India, Australia and Japan), the AUKUS defence partnership, and the EU-US Trade and Technology Council, Canada is on the outside looking in. We need to ensure that our voice is heard and our interests are defended. A regular bilateral consultative forum with the Americans at the ministerial level could be a good place to start.
Canadians have established themselves at the forefront in many of the most important emerging technologies including AI, quantum computing, biotechnology, and advanced materials manufacturing. If we are to ensure that can continue, we need to act now. After all, 2049 is not that far away.