Canada needs to communicate more with China’s leadership.
An argument for deeper engagement with China may seem out of place in the current climate of hostility and attendant vehement rhetoric that characterises Canada-China relations. Not at all. It is Canada’s only practical and successful strategy for dealing with China’s domestic and international difficulties.
This is especially true with trade.
Two-thirds of Canada’s gross domestic product comes from trade, which is higher than the global average, 2.5 times more than the US, and 50% more than Australia.
While the United States receives two-thirds of all exports, that percentage is closer to 50% for industries like agriculture. Thus, the worldwide market is equally significant to the American market.
Dependence on international markets exposes one to China’s effects outside of direct bilateral trade. China is the main purchaser and producer of most of what Canada exports, and depending on how you define it, the world’s largest or second-largest economy. Whether or whether they are sold in China, has an impact on international markets and thus affects Canadian exports. Entering markets where China is a dominant economic power frequently entails diversification from China. Western Canada has shown us that even if you leave China, you’ll still run into it.
Ignorance is a self-inflicted wound when dealing with a nation that is so important to Canadian economic interests. The situation is made worse by relying on the intelligence provided by the Americans, our main economic rivals, to direct the pursuit of our economic objectives.
So what does cooperation with China entail?
It requires reading what China shares, to start with. For instance, the Chinese government publishes plans for how it will run its economy every five years. But when asked what exactly is in this blueprint, Canadians who are negatively impacted by trade with China frequently can only say, “It’s a plan, it’s five years, and it has something to do with China.” The first stage is to replace ignorance with fundamental knowledge while making economic decisions. Fortunately, Canada’s Indo-Pacific Strategy includes a significant amount of “competency building” that builds on the efforts of the Canada China Business Council, Canada West Foundation, and others.
Second, increased trade deals with China result from interaction. Trade has risen steadily throughout COVID and despite the current political unrest. More laws are preferable to fewer rules if Canadian consumers and businesses are going to grow their trade with China.
By choosing multilateral agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to which China is applying, and the Regional Comprehensive Economic Partnership, a broader trade bloc that includes China, Canada can avoid taking this route alone. A safer approach to interact is to have agreements with allies who will assist enforce the regulations, like Australia, New Zealand, and Japan. While balancing security concerns with Washington, Australia, and New Zealand have signed numerous economic deals, including the RCEP, with China.
No reason exists for Canada not to follow suit. Even the United States, which advises Canada not to interact with China, has inked a trade agreement that has cost Canadian farmer’s market share. Everyone, except Canada, appears to have realized that entering into a trade agreement with China is not only a wise move but also a required one.
However, trade agreements alone are insufficient to safeguard Canadian interests. This has been the takeaway from Canada’s trade with the United States, which has caused more problems than its trade with China. Consider the morning in August 1971 when Canadians awoke to find that the U.S. had overnight slapped a 10% tax on all exports to the U.S. This was before the recent steel and aluminium tariffs. Recent examples of what can happen even with close allies include the continuing softwood lumber tariff conflict and the “national security” steel and aluminium tariff experience.
