Canada’s China policy check-in; MPs worry about the Arctic; Taiwan’s official plea for closer trade ties
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Dear China watchers, welcome to this week’s newsletter! A lot has happened in the space of Sino-Canada relations and many of these issues would have a significant bearing on Ottawa’s allies in the south and around the world. So, we decided to skip the world roundup this week and bring you a detailed overview of all the China discussions in Canada.
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Here’s what we are looking at this week:
Canada and China argue over human rights
Can you decode Ottawa’s foreign policy?
China’s zero-COVID policy costs Canada Goose big bucks
A semiconductor policy to counter China that doesn’t mention China at all
Three parliamentary committees examine China-Canada relations
A special committee looking into the mysterious firing of two Chinese scientists
Foreign policy; Human rights; Indo-Pacific;
Same old, same old
Canada’s done it again—another statement pointing fingers at Beijing in the can.
Canada has led 50 countries in criticizing China’s human rights violations on Monday. The country’s UN ambassador Bob Rae read a joint declaration calling on China to “uphold its international human rights obligations” at a UN committee meeting about social, humanitarian, and cultural issues. The statement expressed concerns over China’s refusal to discuss the findings of the UN Human Rights Commission’s report accusing the CCP of committing “crime against humanity”.
It also included a request to release all arbitrarily detained individuals (that would include the Uyghur Canadian Huseyin Celil) and clarify the fate of those missing. Points for clear demands that address the issue at heart. It makes one wonder how Canada signed this statement, let alone introduced it at the UN, given Minister Melanie Joly’s relatively conservative response to the damning report.
Human rights activists and journalists said this was so far the largest number of UN member states to denounce China’s mistreatment. The majority were European countries, with a few in Africa, Asia, and North America.
Last year, Canada made a similar move backed by 44 UN members, three of which dropped their support this year: Haiti, Honduras, and Bosnia and Herzegovina. Despite the loss, Canada and allies still got signatures from nine mostly small powers that weren’t on board in 2021: Andorra, Eswatini, Guatemala, Liberia, Montenegro, Nauru, North Macedonia, Somalia and Turkiye (Turkey).
The PRC’s response was almost identical to that in 2021. The Chinese embassy in Ottawa nullified Michelle Bachelet’s report while PRC ambassador to the UN, Zhang Jun, resorted to some whataboutism on Twitter, a classic move from the CCP playbook. Chinese state media rolled out the headline: Most UN member states oppose interference in China's internal affairs under the pretext of human rights.
A ball of contradictions
Differing voices on China in Trudeau’s cabinet.
We’re only getting more confused as we follow all the media reports on Canada’s official stance regarding China. On Sunday, an undisclosed senior government official said Canada’s anticipated Indo-Pacific strategy would stress Ottawa’s intention to keep working with China because of its position in the world. The official, who was not authorized to speak publicly on the matter, told The Globe and Mail that many people in government don’t realize how difficult cooperating with China will be.
Yet another official, who was also not named, said that Canada-China relations won’t return to the rosier pre-2018 era. He expects Ottawa to begin viewing Beijing as a rival and become increasingly cautious and skeptical, particularly regarding Chinese investments.
Late last month, Innovation Minister Francois-Philippe Champagne, said Ottawa wants to “decouple” from the communist state “and certainly from other regimes in the world which don’t share the same values.” (Worth noting that the statement was made in front of a business audience in Washington sponsored by groups including the Canadian embassy, the Canadian American Business Council and the U.S. Chamber of Commerce.)
About a week after Champagne’s “decouple” statement, Foreign Minister Melanie Joly told the CBC that the Canadian government needs to “engage” with the PRC. She suggested the two ideas aren’t out of step because Canadian businesses should be aware of the risks involved in dealing with China and should explore opportunities to diversify their trade partners.
The different tones of the two ministers signal a nuanced approach towards China going forward. One can expect Canada to have a tougher stance on issues that fall under Champagne’s innovation portfolio such as EVs and semiconductors (as we note below under the business section.) As for the Indo-pacific strategy, which falls on Joly’s lap, completely dissociating from China is very unlikely.
According to Paul Thoppil, a third official, the regional strategy will include a financial commitment to show allies that Canada is serious about engagement.
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China’s COVID restrictions; Foreign investment; Semiconductor; Critical minerals
China’s zero-COVID policy costs the Canadian retailer.
If we were to name one Canadian retailer that has an inextricable relationship with the Chinese market, it would be Canada Goose. The clothing company made a foray into the lucrative market in 2018 amid a nasty diplomatic brawl over Meng Wanzhou’s detention. The brand has been embraced by many Chinese customers since then.
But on Wednesday, the company found itself yet again trampled by the regime’s political stance. Canada Goose has cut its total revenue and profit forecast for the 2023 fiscal year, citing China’s COVID restrictions and “significant uncertainty” in the global economy and political environment. The Canadian manufacturer of high-end winter apparel reported revenue growth for the second quarter in all regions except Asia Pacific, where it dropped by 0.7 per cent compared to 2021.
The company lowered its revenue outlook by $73M.
Despite all the setbacks in the China market, CEO Dani Reiss said the company still considers the country as a “long-term growth market” while continuing to seek leases in “the most important malls, in the most important places” in China.
The elephant in the room?
New guidelines for foreign investments in the critical minerals sector
On Wednesday, the federal government ordered Chinese state-owned companies to immediately divest their investments in three Canadian critical minerals companies, citing national security concerns. Sinomine (Hong Kong) Rare Metals Resources, Chengze Lithium International and Zangge Mining Investment (Chengdu) must sell their stakes in Power Metals, Lithium Chile, and Ultra Lithium respectively.
Interestingly, the order didn’t come from the natural resources department, but rather from François-Philippe Champagne, minister of innovation, science and industry. To make sense of that, you might want to skim this readout from Champagne and U.S. Secretary of Commerce Gina Raimondo released on Oct. 21. The two met in Washington and mainly discussed the U.S. CHIPS Act and collaborations on critical minerals.
A week after meeting with Raimondo, Champagne issued a joint statement with Natural Resources Minister Jonathan Wilkinson that stipulates investments of any size (not just takeovers) by state-owned firms will only be approved on an “exceptional basis.” “As well, should a foreign state-owned company participate in these types of transactions, it could constitute reasonable grounds to believe that the investment could be injurious to Canada’s national security…”
The new rules set out by the federal government have made it considerably harder for foreign government-owned firms to invest in Canada’s private sector. (contrary to Ottawa’s previously softer position.)
Not once was China mentioned in last week’s 400-word statement. Regardless, many believe this is a response to the harsh criticism earlier this year after allowing too much Chinese investment into domestic resource firms. The Globe and Mail went with the headline: Ottawa cracks down on foreign state-owned investments into Canadian critical minerals industry after facing criticism it went too easy on China.
Note this analysis from the Canadian publication: “Canada is drawing a distinct line between investments from foreign jurisdictions it deems friendly to the country’s interests, such as the United States, Europe and Australia, and those from hostile regimes such as Russia and China.”
The toughened stance on foreign investment in critical minerals might dispel worries that Canada, as a middle power, might become a passage to circumvent U.S. semiconductor export controls via illicit acquisition.
Mike Crabtree, CEO of the Saskatchewan Research Council (SRC), a Crown research corporation, said the council is looking to compete in the China-dominated rare earth mining market. The SRC hopes to develop a competitive edge by offering investors and customers a product free of environmental, social and governance baggage.
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Arctic; Ex-pilot; Taiwan; Foreign interference; G7
China’s relationship with Russia takes centre stage.
First, we have the National Defence Committee, which has embarked on a study on Canada’s security posture in the Arctic. The parliamentary committee has been quite busy for the past two weeks amid growing concerns over Canada’s ability to fulfill its commitment to its allies in defending the far north.
The matter has become a security and sovereignty issue for Canada as MP Christine Normandin (Bloc Quebecois, Quebec) states, “most people identify the Arctic as being intrinsically Canadian.” And China declaring itself as a near-Arctic state is worrisome to Canadian politicians. Foreign Minister Mélanie Joly highlighted the issue in her recent visit to the U.S.. The Arctic is expected to play an important role in the U.S.-Canada-China relationship going forward.
Back to the committee. Most Conservative MPs at the meeting expressed disquiet over the lack of training and recruitment in the military contributing to Canada’s inability to protect the Arctic.
Two takeaways for China watchers. One, China’s interest in the region and its relationship with Russia was mentioned multiple times during the last three sessions as a few China hawks on the panel are curious about Beijing’s motives.
From MP Darren Fisher (Liberal, Nova Scotia), “Why Canada should be concerned about China's presence and activity in the Arctic? [We’re] interested in their intentions. What factors are driving their interest?”
To which professor Aurel Braun from the University of Toronto said, “China needs energy. China needs to trade. China understands the importance of the Arctic because there are so many fossil fuels in that region, and it has been supporting Russian exploration. It has become involved directly. And China wants to see if they can develop the northern sea route because that will cut down 30% of time and the distance of shipping things from Asia to Europe. That will dramatically increase the export potential of China. China has resources. China has a large economy. China has funds to spare and they have become increasingly involved.”
The second point is the changing relationship between Moscow and Beijing. Braun said while Russia has a powerful, growing military presence in the Arctic, it’s working with a “rather small economy” that needs China’s help. Both Braun and Gen. Wayne Eyre, the chief of the defence staff, told the committee Russia, weakened by its invasion of Ukraine, could become a “vassal state” of China.
“[China has] an unbridled exploration for resources in the Arctic, which would be very dangerous for us, ecologically, ultimately, strategically… This is why I think it is so essential that we look at the danger coming in that area in a sophisticated way, rather than just define it in terms of a standard military operation,” said Braun.
Probe into ex-pilots hired by Beijing
The witness dispersed most of the responsibility to the police and the Department of Justice.
The defence committee met again on Thursday, in part to tackle reports that ex-RCAF pilots are training the People’s Liberation Army. The committee wasn’t able to invite the Minister of National Defence as planned. The only witness, Brig.-Gen.Denis Boucher, Director General of Defence Security, stressed that the investigation falls under the purview of the Royal Canadian Mounted Police and the Department of Justice.
Boucher’s claim was rebuked by MP James Bezan (Conservative, Manitoba) who said the military is “passing the buck” on this issue because of Ottawa’s influence.
“The non-disclosure agreements that are signed by RCAF pilots as they are leaving the forces is between National Defence and the individual, not CSIS, not the RCMP; for them to abdicate their responsibility here is in my opinion laughable,” said Bezan.
Admittedly, Canada’s response has been a little bit out of step with its allies facing the same challenge. Australian Defence Minister Richard Marles announced a probe into the matter and U.K. government officials said they want to change the law to prevent former RAF pilots from training the Chinese military.
However, Thursday’s meeting won’t be the end of the parliamentary inquiry. We’ll keep you updated on further developments.
So let me be blunt
Taiwan is demanding a ‘real talk’ with Canada on trade relations
The Canada-China committee invited Harry Tseng, Taiwan’s de-facto ambassador, and two executives from his office to talk about Ottawa-Taipei relations. Tseng was the only one speaking. He sat in the centre flanked by his two aides who helped confirm facts as needed.
At the end of his opening remarks, Tseng asked the Canadian government for three things it could do to support Taiwan: One, support the development of peaceful relations across the Taiwan Strait through constructive bilateral and multilateral mechanisms. Two, urge the PRC to refrain from further military actions across the Taiwan Strait. And three, continue helping Taiwan participate in international organizations and promote cross-strait dialogue that contributes to peace, stability, and prosperity.
MP Stéphane Bergeron (Bloc Quebecois, Quebec) brought up the Star interview from last week where Tseng urged Canada to talk less and act more for the sake of Taiwan.
From Bergeron: “…when you say, talk less and act more, what are you expecting from Canada?”
To which Tseng responded: “[The Taiwanese government] are pragmatic people. And we know where your policy stands now. … We know we cannot expect you to do what the U.S. is doing with us. … When I say less talk and more action, I hope it is not … mistaken by our friends here. I don't mean to criticize the Canadian government. But I think there are more that can be done… I'm actually referring to the trade FIPA. … I'm actually not referring to security issues.”
Three MPs asked Tseng about FIPA (Foreign Investment Promotion and Protection Agreement): Michael Chong (Conservative, Ontario), Bergeron, and Kyle Seeback (Conservative, Ontario). Tseng said negotiations were going in the right direction but there’s a need for political will to continue talks.
From Seeback: “… It seems to me that you have the political will, that you want this to move forward expeditiously. Is there a lack of urgency on the part of Canada to get that agreement done?”
To which Tseng responded: “ … We are waiting to move on to the next phase. And that is why we think that there must be some kind of determination … for this to go through. And I understand that trade matters need to go through different sectoral concern, and that, you want to make sure you are not signing some agreement at the expense of your business community, we understand that. …What we are asking from Taiwan is that we sit down and have a real talk.”
Taipei is also asking Ottawa to support its bid to join the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) without comparing its application to Beijing’s—they both applied within a week of each other last year. To maintain peace in the Taiwan Strait, Tseng asked the Canadian government to speak up at the coming G7 summit.
Tseng’s request seems to have been largely ignored at the Nov. 3-4 meeting, as expected. G7 foreign ministers issued a joint statement Friday in which they called for the peaceful resolution of cross-strait issues and said there was no change in the basic positions of G7 members on Taiwan, including stated one-China policies.
Tseng suggested two avenues for collaboration with Canada:
Electric vehicles and microchip manufacturing
From Tseng: “While you are very good at … AI ecology—to combine different AIS in a very nice design—, we are very good at making chips ... That potential for cooperation is so high if we can work together using the strengths of Taiwan's chip-making and then your strengths of AI designing, and we can really bring our economic relations to a new height.”
Tseng highlighted the Taiwan FactCheck Center, one of several NGOs established to verify claims circulating on social and traditional media or those submitted by the public. He added that Taipei is willing to share the expertise accumulated over the years with partners like Canada.
MP Heather McPherson (NDP, Alberta) said she’s had regular meetings with Tseng and made a point to acknowledge Taiwan as a like-minded democracy. Bergeron requested that the committee take a photo with the Taiwanese representatives.
Like a broken record
Parliamentarians heard about China’s interference in the Canadian elections at two meetings this week.
Michelle Tessier, deputy director of operations at the Canadian Security Intelligence Service (CSIS), shared the agency’s increasing concerns during an appearance at the standing committee on procedure and House affairs Tuesday. The agency had warned MPs and senators from all parties about interference operations carried out by PRC and other states before the 2021 elections.
The foreign interference tactics disclosed by the CSIS include using proxy agents with no clear relationship to foreign governments and making threats to local communities. (If the overseas service stations are any indication, China is becoming more blatant with its approach.)
MP Michael Cooper (Conservative, Alberta) asked Tessier whether China manipulated the 2021 federal election. She said she could not get into operational details of the agency’s investigations.
“But what I will say is we know the Chinese Communist Party is involved and interested in promoting their own national interests,” she said.
The conservatives seemed particularly bitter about the alleged campaigns. Last June, former Conservative leader Erin O’Toole claimed his party lost seats as a result of the Chinese state’s influence. In 2021, former Conservative MP Kenny Chiu said he was targeted in a misinformation campaign that framed him as “anti-Chinese” for introducing a bill establishing a foreign agent registry—both the U.S. and Australia have it in place.
CSIS declined to provide detailed comment on O’Toole’s claims at the time but a report from NGO Disinfowatch concluded the incidents are likely a coordinated operation targeting Chinese-Canadian voters.
On Thursday, the committee listened to Marcus Kolga, director of DisinfoWatch, who said it was difficult to gauge the consequences of foreign misinformation campaigns on election results. Kolga seemed warier of Russia’s influence compared to China.
The CSIS had previously criticized Ottawa’s weak countermeasures against the threat. A national security review from 2020 found that Canada is an “attractive and permissive target” for Chinese interference that endangers the “foundations of our fundamental institutions, including our system of democracy itself.”
Kolga called for continued efforts to “expose,” “analyze,” and “explain” narratives to the public. He added that to counter the evolving threats, Ottawa should expand its Critical Election Incident Public Protocol, which was established in 2019, to “a full-time organization” that includes civil society, academia, media and representatives from all political parties. MP Marie-Hélène Gaudreau (Bloc Quebecois, Quebec) deduced that the current policy is inadequate.
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From the Hill
Wuhan Institute of Virology; Falun Gong; Climate change
Ad hoc committee
The special committee will look into the firing of two Chinese scientists at a Canadian lab.
On Tuesday, the government announced a special committee to look into the dismissal of two infectious disease scientists from the National Microbiology Laboratory in Winnipeg. The panel will learn why Xiangguo Qiu and her husband, Keding Cheng, were let go last January and review all classified documents involving the transfer of Ebola and Nipah viruses to China’s Wuhan Institute of Virology in March 2019, which was overseen by Qiu.
Government House Leader Mark Holland said: “Mr. Speaker, I rise on a point of order. Pursuant to Standing Order 32(2), I have the honour to table, in both official languages, a memorandum of understanding, signed by the House leaders of all recognized parties in the House of Commons, to create an ad hoc committee of parliamentarians to examine documents from the Public Health Agency of Canada relating to the National Microbiology Lab in Winnipeg.”
Peeling back the political jargon, this means the panel does not have the same level of authority and investigative powers that a parliamentary committee has. It does, however, give the selected MPs unfettered access to all national security documents related to the firing. The committee is the product of a compromise between the government and the opposition parties.
Other eye-catching questions
From MP Mark Gerretsen (Liberal, Ontario) on Tuesday:
“Madam Speaker, I am pleased to rise to present a petition, like so many others who have stood before the House, asking the government to establish a resolution to stop the Chinese communist regime from systematically murdering Falun Gong practitioners for their organs, to amend Canadian legislation to combat forced organ harvesting and to publicly call for an end to the persecution of Falun Gong in China.”
From MP Tako Van Popta (Conservative, British Columbia) on Monday:
“ Madam Speaker, climate change is a global phenomenon. Canada cannot solve it on its own but we can contribute. We have natural gas, which burns much cleaner than coal. Let us pump more natural gas and deliver it to China and other developing countries so they can get themselves off dirtier coal.”
Did you know?
Justin Trudeau has a popular nickname among Chinese citizens. They call him “little potato”. Yes, you read that right. The name Trudeau, if you say it fast, sounds like 土豆(potato) in Mandarin. And the word “little”（小）doesn’t really mean small in size—it’s an endearing way of addressing someone (typically someone who’s younger and/or cute.)
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