Diplomatic expulsions give Canada new cause to steer away from China on trade policy, experts say

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Christian missionaries from Canada laid some of the first building blocks of this country’s relations with China, creating schools and hospitals there more than a century ago. Canada’s first ambassador to communist China was born in the country to missionary parents.

Canadian wheat sales to China began within a decade of Mao Zedong’s revolutionary victory. For many years, the Canadian International Development Agency, which administered foreign aid programs, was a pillar of Ottawa’s engagement with Beijing.

“We were Boy Scoutish from the outset,” said Stewart Beck, a former Canadian diplomat who served in Asia and later led the Asia Pacific Foundation of Canada. Ottawa offered Beijing help “without defining what we wanted to get in return,” he said.

That approach, he added, has run its course. In recent years, China has made Canada a target of hostage diplomacy, trade aggression and political interference.

This has been “a wake-up call,” Mr. Beck said. Canada, he believes, would be better served by more closely aligning itself with the White House’s foreign and trade policy, which it is retooling with the aim of breaking what it calls a “perilous” dependence on authoritarian countries such as China and Russia.

“Let’s be hard-headed and work with the U.S. when it is in our interest,” Mr. Beck said.

Prime Minister Justin Trudeau’s government has been openly critical of China, condemning its human-rights abuses and, in an Indo-Pacific strategy released earlier this year, calling it an “increasingly disruptive global power” that flouts international rules and norms.

But Ottawa has been reluctant to act against Beijing. It made no substantive response to China’s blocking of Canadian agricultural exports following the arrest of Huawei executive Meng Wanzhou, and it spent nearly a week weighing any possible blowback from China before expelling Chinese diplomat Zhao Wei.

Canada’s security services had identified Mr. Zhao as being part of an effort by Beijing to target MP Michael Chong and his family. China said this week it will boot a Canadian diplomat from Shanghai in response.

Less than two weeks before the mutual expulsions, White House national security adviser Jake Sullivan called on the U.S. to “forge a new consensus” – one in which the country works with partners and its own heavy-spending industrial strategy to lessen reliance on China in areas such as semi-conductors and critical minerals.

Ian Bremmer, the founder and president of Eurasia Group, a political risk consultancy with close ties to Ottawa, said there is a need for North American interdependence that is “becoming more obvious every day.”

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Not only should Canada join the AUKUS security arrangement between the U.S., Australia and Britain, he said, Ottawa should also engage with The Quad, the security dialogue that includes Australia, India, Japan and the U.S.

“Canada should be working with the United States to help frame a joint policy toward China,” he said.

That doesn’t mean rejecting China. President Joe Biden has explicitly denied that the U.S. seeks a new “Cold War” with Beijing.

But that is precisely what the emerging U.S. posture amounts to, said Robert Daly, director of the Kissinger Institute on China and the United States at the Woodrow Wilson Center, a think tank. Thinking of it as a new Cold War, he said, “is the key to understanding how long term this is going to be, how dangerous, how costly, how pervasive.”

Canada, he added, “has been so subject to Chinese attacks and coercion in so many ways over the past several years that I think it is going to remain largely aligned with the United States.”

That’s not to say the U.S. and Canada are perfectly aligned on China. “America’s hostility to China is mostly driven by Chinese actions – but it’s also driven by America’s desire to retain primacy, and its fears of losing primacy,” Mr. Daly said.

Canada does not share that concern, and has long sought to navigate its own way with China, all while championing an adherence to multilateralism and a rules-based international order that is falling out of favour in the White House. Changes in American priorities have also threatened Canada. Ottawa has fought the repercussions of buy-American policies and watched U.S. trade with China increase despite the heated rhetoric toward Beijing.

That growth has occasionally come at Canada’s expense. Last year, for example, the U.S. finalized an agreement allowing it to export pet food with avian ingredients to China. Since then, U.S. pet food sales in China have soared and Canada’s have plummeted, according to Sarah Kutulakos, executive director of the Canada China Business Council.

“The Americans are very good at looking out for their own interest,” she said. “We should be as well.”

It is vital for Beijing and Ottawa to maintain talks and engagement, she said, adding that this should include reviving an economic and financial strategic dialogue, even if other discussions remain frozen.

The growing U.S. focus on distancing itself from China in critical areas offers Canada new opportunities at home, said Scotty Greenwood, chief executive of the Canadian-American Business Council. One of the key vulnerabilities that worries Washington is China’s dominance in the processing of critical minerals, which are essential to addressing climate change and building new technologies. Canada’s mineral resources, engineering talent and proximity to the U.S. position it to build its own processing industry.

Ms. Greenwood urged Ottawa to encourage investment in this area by creating certainty around permitting requirements and timeframes.

“That’s the way to deal with China. Because they can’t punish you for building your own processing facility,” she said.

With the scale of U.S. investment in electric vehicles and semi-conductor manufacturing, “it just makes sense for Canada, which has been the industrial partner of the United States, to turn its attention south and make sure that it is part of that supply chain going forward,” said Robbie Diamond, founder of Securing America’s Future Energy, an advocacy group.

“We need to take the supply chain away from Chinese control.”