Mon. Jan 30th, 2023

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

November 29, 2022

We are paraphrasing the conventional wisdom “a bull in the China shop” here. Canada is making some irritating noises against China. Canadian Foreign Minister Melanie Joly “released her nation’s Indo-Pacific Strategy Sunday morning, including nearly $1.7 billion (C$2.3 billion) in spending over the next five years sounded very strong. Indo-Pacific is a very large region with billons billons of people as compared to the Canada population around 40 million. Then on average, her investment amounts to about US$300 million per year. It is really a drop in the Pacific Ocean, no one in Indo-Pacific will pay much attention.

China is viewed by the US as an unprecedented challenger for global leadership, and Canada can take sides. But there is no sign that China is focused on challenging Canada. It appears that Canada is trying to get China’s attention by announcing a national strategy declaring that China is an “increasingly disruptive global power.”

China’s Foreign Affairs officer commented and denounced Canada’s strategy as a routine. However, China most likely leaves the issue as it is. Canadian government will have to get China’s attention and negotiate. While global leaders are visiting Beijing or organizing top-level summits, Canada will be on the sideline for a long while.

Businesses relieved as Trudeau’s $2.3-billion Asia strategy leaves room to deal with China

Naimul Karim Mon, November 28, 2022 at 6:40 AM

Prime Minister Justin Trudeau’s long-awaited Asia strategy will allow Canadian companies to continue to engage with China, alleviating fears in some corners of the business community that the West’s decision to go on the offensive against Beijing could force multi-national companies to abandon an economy that is on track to supplant the United States as the world’s biggest market.

“I will continue to support businesses that are operating in China, but we also want to diversify our supply chains,” Trade Minister Mary Ng said after she and three other cabinet ministers unveiled Canada’s first-ever Indo-Pacific Strategy at the Port of Vancouver on Nov. 27.

Ng added that the government would be “focused on making sure that Canadian businesses get the right advice about doing business in China.”

The Trudeau government said it will spend $2.3 billion over the next five years to deepen its ties with a region that’s expected to host a third of the world’s middle-income population by 2030 and half of the global gross domestic product by 2040. The biggest chunk of that money will fund defence and security initiatives, including $493 million so the Canadian navy has adequate resources to participate in regional military exercises.

Some $180 million was set aside for various trade initiatives, including $45 million to revive the Team Canada trade missions that were a feature of Jean Chrétien’s trade policy in the 1990s, and $32 million to create an Indo-Pacific Agriculture and Agri-Food Office that will have a mandate to get Canadian food into more markets.

The government aims to “increase the impact of Canadian businesses” in the region and support them in an “aggressive way,” Ng said.

An ‘A’ on China

While the document talks about engaging with the region’s 40 nations, a major portion of the strategy focuses on how Canada will negotiate with China, the largest trade partner for most of the countries in the region, at a time when the U.S., the bigger European economies and Canada are looking to shift their industries’ supply chains away from the Asian giant and towards friendlier nations.

The strategy states that China’s rise, “enabled by the same international rules and norms that it now increasingly disregards” has had an enormous impact on the region. But the country’s size and influence make “co-operation necessary” to address issues like climate change, biodiversity loss, global health and nuclear proliferation,” the document added.

Goldy Hyder, president of the Business Council of Canada, a lobby group made up of the leaders of the country’s biggest companies, said he was glad the government didn’t ask the business community to avoid specific nations. “That would have been counterproductive and harmful to our customers,” he said.

The Indo-Pacific Strategy states that Canada will “continue to strengthen” its defence against “foreign interference” while continuing dialogue with China, but “friendshoring” doesn’t appear.

Carlo Dade, trade director at the Canada West Foundation, a think-tank, said the government did the right thing by keeping China in the “centre” of its Asia strategy. Dade added: “It’s not about trying to sell stuff to China but it’s about trying to survive in a region where China is the dominant economic influence.”

‘Government has much more sway’

The Indo-Pacific Strategy contains a number of other initiatives aimed at helping Canadian businesses navigate a notoriously complex region, including an “India desk” and $24.1 million over five years to establish a “Canadian trade gateway” in Singapore.

“We want to make sure that Canadian businesses that are looking to access that market have a base to operate from in Southeast Asia,” said Ng.

While analysts described the strategy as a positive start, they were wary of the government’s willingness to see it through. Chrétien and former prime minister Stephen Harper both were inconsistent in their commitment to the region. Trudeau declared on the night he was elected in 2015 that Canada would return to the world stage, but when former president Donald Trump threatened to end the North American Free Trade Agreement, Ottawa focused on little else for two years.

“Our reputation globally is like Casper the annoying ghost: we show up and disappear,” said Dade. “For this strategy to be taken seriously, there has to be an indication that they will outlast changes in government at the provincial and federal level.”

IMF and WTO leaders warn don’t ‘pull the plug’ on global trade

Andreas Rinke

Tue, November 29, 2022 at 10:33 AM

By Andreas Rinke

(Reuters) – The leaders of the International Monetary Fund and the World Trade Organization on Tuesday warned against the negative impact of deglobalization for the global economy, arguing instead for smart moves to diversify supply chains.

‘Disruptive’ China Prompts Canadian Tilt Toward Indo-Pacific

Brian Platt Mon, November 28, 2022 at 2:18 AM

(Bloomberg) — Prime Minister Justin Trudeau’s government is boosting military spending and expanding Canadian trade ties in the Indo-Pacific region as part of a “generational” policy shift aimed at countering China’s influence.

Foreign Minister Melanie Joly released her nation’s Indo-Pacific Strategy Sunday morning, including nearly $1.7 billion (C$2.3 billion) in spending. That money is being used for more navy patrols in the region, better intelligence and cybersecurity measures, and increased cooperation with regional partners in the East and South China Seas.

The 26-page document — unveiled by Joly and a trio of other ministers in Vancouver, with Trudeau’s defense chief holding a virtual briefing later Sunday — includes a lengthy section on China, which it refers to as an “increasingly disruptive global power.”

It cites multiple military, security and economic threats posed by the country, while acknowledging the need to work with it on issues such as climate change, global health, biodiversity and nuclear non-proliferation.

Joly, in an hour-long interview with Bloomberg News ahead of the strategy statement’s release, said the world’s geopolitical “tectonic plates” are shifting. That’s threatening international norms that have kept the world safe since World War Two, as well as creating supply chain uncertainty and inflation.

“When it comes to China, we know that there’s a battle of influence happening in the region,” she said Friday in Montreal. “So we have to step up our game.”

“You saw what we see happening normally,” she said. “You just had a glimpse of the political reality.” She also said crafting an Indo-Pacific strategy would have been fruitless without addressing China’s growing influence, “the elephant in the room.”

Canada will increase its diplomatic and trade presence to create a more predictable environment for business investment in Asia, Joly said. It will invest C$750 million in sustainable infrastructure projects, which it hopes will attract further capital from Canadian pension funds.

At the same time, increased military cooperation with regional partners will protect the country’s Pacific interests, just as alliances with Europe through the North Atlantic Treaty Organization, and the US through the North American Aerospace Defense Command, have historically protected its Arctic and Atlantic interests, she said. Canada will invest almost half a billion Canadian dollars over five years on enhanced defense in the region.

“For a long time we’ve defined ourselves through the relationship we have with Europe,” Joly said. “It is time to look towards the Pacific.”

The strategy contains a section devoted to deepening economic ties with India, and another devoted to Japan and South Korea — a neighborhood it dubs the North Pacific.

The “so-called strategy released by Canada, especially the context related to China, smacks of ideological bias,” Chinese Foreign Ministry spokesman Zhao Lijian said Monday afternoon in Beijing at a regular press briefing. “It hypes up the so-called China threat,” he added, and said China has already made representations with the Canadian side.

Canada has struggled to diversify its Pacific trading relationships beyond China, its second largest trade partner after the US. Merchandise trade with China totaled C$125.8 billion in the last 12 months to September, representing about 8.6% of trade flows, according to Statistics Canada data. That compares to less than 7% from all other major Indo-Pacific countries combined — a proportion that is little changed since 1997, a time when Canada-China trade was minimal.

There are numerous planks in the strategy meant to grow Canada’s trade relationships, including a new series of “Team Canada” trade missions to bring business leaders to Indo-Pacific countries, and a C$65.1 million program to increase Canada’s science and research partnerships with South Korea, India, Japan, Singapore and Taiwan.

The C$750 million infrastructure program is the largest ticket item in the plan, and is part of Canada’s contribution to the $600 billion Group of Seven infrastructure plan announced earlier this year to counter China’s Belt and Road program. Joly said she met with major Canadian pension funds on Thursday– including the Ontario Teachers’ Pension Plan Board and the Caisse de Depot et Placement du Quebec — to start promoting the plan.

–With assistance from Erik Hertzberg, Mathieu Dion, Iain Marlow, Lucille Liu and Rebecca Choong Wilkins.

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