Trudeau's China problem starts at home -

Trudeau’s China problem starts at home

Canada’s awkward relationship with China and its money isn’t surprising given Ottawa’s incoherent, on-again, off-again China policy

Canada's Prime Minister Justin Trudeau, left, and China's Premier Li Keqiang walk together during a welcome ceremony in Beijing. (Mark Schiefelbein/AP)

Canada’s Prime Minister Justin Trudeau, left, and China’s Premier Li Keqiang walk together during a welcome ceremony in Beijing. (Mark Schiefelbein/AP)

Prime Minister Justin Trudeau faces a delicate task on this week’s China trip: convince Beijing it needs more Canada at a time when Canadians are questioning whether they want more China.

The history-laden trip—Trudeau’s father was the first Canadian prime minister to visit the People’s Republic of China in 1973—comes as Canada grapples with stubbornly slow economic growth, with GDP suffering its biggest drop since 2009 in the second quarter thanks to the wildfires that disrupted Alberta’s oil and gas operations (a backhanded reminder of oil’s importance to the Canadian economy and the potential opportunities afforded by China’s interest in taking it off our hands). So it’s no surprise Trudeau and Trade Minister Chrystia Freeland have agreed to launch a feasibility study on a China-Canada free trade deal, part of an overall commitment to deepen relations. China, after all, is already Canada’s second-largest trading partner behind the U.S. and, despite its slowing growth, remains on track to one day eclipse America as the world’s largest economy.

At the same time, however, polls repeatedly show Canadians’ enthusiasm for China is on the wane. A 2015 survey by Pew Research found the number of Canadians who held a favourable impression of China fell by 19 percentage points to 39 per cent, compared to 10 years earlier. A more recent Ekos poll, commissioned for the Asia Pacific Foundation of Canada, found Canadians are essentially split on the notion of a free trade deal with China and hold serious concerns about certain aspects of Chinese investment, particularly the flood of hot Chinese money that’s believed to be contributing to a housing affordability crisis in Vancouver and Toronto.

The competing viewpoints have led to some seemingly contradictory policies. In August, Immigration Minister John McCallum visited China to lobby for more visa application centres needed to lure tourists, temporary workers and university students, who often subsidize their Canadian peers by paying up to three times as much for tuition. That was the same month the B.C. government hastily slapped a 15 per cent tax on (mostly Chinese) foreigners who buy homes in Vancouver.

David Mulroney, a former Canadian ambassador to China from 2009 to 2012 and the current president of the University of St. Michael’s College at the University of Toronto, says Canada’s awkward relationship with China and its money isn’t surprising given Ottawa’s incoherent, on-again, off-again China policy over the past decade. “We’re getting caught now because we weren’t paying attention” he says of the current backlash to Chinese investment in the real estate sector. “There’s this great explosion of wealth coming out of China and people are looking to have a second address because they’re not confident they can protect their fortunes. Of course, some of that money was going to end up on Canada’s doorstep.”

Former prime minister Stephen Harper’s government has been blamed for allowing Canada’s “strategic partnership” with China to wither after first coming into power in 2006. But while Harper initially seemed to take a hard line on human rights with Beijing, his tone quickly changed in the wake of the 2008 financial crisis when it became clear that Canada had become increasingly reliant on China’s ravenous appetite for raw materials—including oil—to fuel growth. Even so, it was far from a consistent approach.

In addition to opening up new economic opportunities, Mulroney says Trudeau’s promise to “reset” Canada’s relationship with China may help smooth out some of the lumps that are currently giving Canadians indigestion. For example, he says a closer working relationship might be used to develop mechanisms to transfer money legally between the two countries, allowing authorities to track who’s buying what and where. By contrast, the B.C. government crafted its controversial foreign buyer tax after looking at a few weeks of data that suggested as many as one out of every 10 homes in the region were being purchased by people offshore.

Mulroney offers another example of an ill-informed China policy: Ottawa’s recently shuttered immigrant investor program, which essentially allowed wealthy Chinese to gain permanent resident status in exchange for an interest-free loan of $800,000 to the province where they planned to live. Many who took Canada up on the offer bought expensive real estate in Vancouver, parked their families there and paid little or no income tax because they continued to work and, ostensibly, reside overseas (at least for tax purposes). “We were putting our passport on sale and then complaining bitterly when people weren’t coming out of love or devotion [to Canada],” Mulroney says.

Such missteps are inexcusable for a country that now counts ethnic Chinese as its largest immigrant group and China as its fastest-growing trading partner. Mulroney blames it on a lack of China competency. While countries like Australia, New Zealand and even the U.S.  put increased emphasis on Mandarin language training, in-China work experience programs and even ensuring a degree of China knowledge within the senior ranks of the public service and on corporate boards, Canada’s understanding of China and its myriad nuances still appears to be guided by happenstance and the occasional trade mission. Even in Vancouver, Canada’s Asia-Pacific Gateway, there’s concern that local businesses are missing out on a potentially huge opportunity overseas. “The local businesses don’t really have a clue of how to deal with business in China, especially when it comes to digital marketing,” Kevin Li told China’s Xinhua news agency when asked why he helped put together a recent e-commerce-themed Canada China Trade Conference. “They don’t know how to generate interest, or get attention, and communicate with the Chinese consumers.”

There are, of course, legitimate reasons to be wary of China. Beijing has repeatedly ignored calls to improve its record on human rights and appears to be in the process of militarizing the contested Spratly Islands after an international court ruled against its territorial claims in the South China Sea. On the economic front, meanwhile, there are concerns about allowing unfettered investment by Chinese state-owned companies given that China has been accused of cyberattacks that have targeted Canadian government departments and Canadian firms. China’s foreign minister also embarrassed the Trudeau government by lashing out at a journalist who asked a question about China’s human rights record at press conference in Ottawa, all while foreign minister Stéphane Dion limply looked on.

Yet, as the concern over China’s influence on Canada’s all-important housing market demonstrates, we can no longer afford to engage China only when it suits us. Says Mulroney: “They’re going to engage us whether we want it to happen or not.”





Trudeau’s China problem starts at home

  1. Trudeau doesn’t HAVE a ‘China problem’

    You watch

  2. Canada should have such problems as China.

    You would think that, after a century or two drawing water and hewing wood for the Brits, and then running a branch plant economy for the Yanks, that Canadians would have gotten used to being used by foreign investors. When it comes to those, the Chinese seem to have been singularly undemanding. Just wanting to buy a share rather than buying it all.

    If realty is our big bugaboo let’s not forget that the million-dollar class of immigrant was our idea, as was a building boom. That the Chinese saw a way to invest in property, the best kind of investment, as well as have a ‘nest’ for coming ‘home’ – or sending their offspring for a decently-subsidized education – well what Royal Canadian wouldn’t if he could? We were laughing at the silly Americans when their subprime mortgages almost ‘blew’ the national edifice, but we were doing much the same thing but had a ton of Chinese money flowing in to take up the slack.

    When you look at it objectively China allowed a number of Canadian forms into their market. the vestige of Norther Telecom still exists …in China. They’ve actually treated us more fairly in all sorts of ways than our litigating cousins down south. The reason more of us don’t like them is because our American cousins don’t. You could probably say the same thing about Cubans, or Russians, or Iranians, or Libyans, Yemenis Syrians, ‘Norks’ or anybody else who have run afoul the US media – we don’t like ’em – ‘the skeer’ percolates northward.

    Rather than make a trade deal with the EU – they could cram us like Uncle Sammy could, or with some of those iffy democracies in South East Asia, why not go for a deal with the largest economy on earth – they actually did that last year – pulled ahead of the US in a couple of world class bench marks.

    The Chinese won’t be ‘allying’ us into any expensive wars.

    • Good post!

      Totally agree

    • Part of the problem is we sold them some of the oil sands and now it is land locked and we don’t seem to be able to get a pipeline built. It must be very confusing to them because the US is having no problem ramping up oil production (largest producer in the world), building pipelines, fracking Bakken crude even though it has blown up a Canadian town and even managing their own tar sands. Yet Canada with its insignificant global emissions (less than 2 percent) can’t get that Chinese oil to a harbour and on a tanker. No wonder they are testing JT with the canola. Why can he get canola on a ship but not their oil?

  3. A shrewd politician will see that plainly we have two superpowers clamoring for our resources and use that as a negotiating point to get the best possible trade deals for Canada. If USA doesn’t want our oil. . we should straight away court China’s offer. I’m sure China would even fund and help build the pipelines required. For too long we have been too close to USA. What is more we can trade with China without the requirements to join them on foreign military misadventures.

    • There is one important problem; many Canadians (including the indigenous people) do not want the pipelines.

      • Pipelines are the least carbon intensive and the safest way statistically to move oil. Unfortunately, 5000 products we use are made from petroleum including every pharmaceutical from Aspirin to cancer drugs. Your sneakers are made from petroleum. Your computer key board and the kayaks the environmentalists use are made from petroleum, not to mention the canoe our PM rides around in. The technology in the tarsands has improved so vastly since 1990 that extraction produces only 1/2 the emissions it did at that time. Due to the type of extraction they use, Cenovus has been able to use far less Natural gas. There is no more open mining and no more tailing ponds. The technology will keep improving. In fact, it so good, Obama is emulating it with his tarsands in UTAH. When shipping on a tanker or a train car, we have to count those emissions. A pipeline creates no emissions so this crude we are getting from other countries via tanker has environmental risks (a oil in English Bay off Vancouver) and it is as emission intensive as the bitumen from Alberta. We Canadians are alright with consuming petroleum products, just as long as the petroleum isn’t from Canada and we can pretend it arrives risk free. Well, it doesn’t. How in a global world, does that make sense. Let other countries take the risk of leaks and clean up and we’ll keep on consuming because that makes us “better”. Who really believes that? Montreal just had a huge protest but Quebec is running a cement plant Pauline Marcois okay end that is based on 1996 environmental rules that is spewing more emissions than Shell in the tarsands and the plant has yet to make money. They gave Bombardier 1 billion and now 7,000 jobs are being outsourced or eliminated by the company…Canadian foreign aid? Meanwhile Coderre threw raw sewage in the St. Lawrence. I don’t believe he owns that waterway. Why aren’t those environmentalists all over him like a cheap suit?

        • As Rex Murphy so eloquently put it

          The environmental protesters who are determined to throttle Alberta’s oil industry are so invested in the narrow, regressive world of their own doom-laden vision of the future, and the fanatic, narcissistic righteousness that is the hallmark of that vision, that they see themselves as having a licence to to do just about anything, no matter how morally reprehensible, in the pursuit of their cause.

          Environmentalists like all progressive Liberals will not let facts get in the way of a good argument.

  4. This Trudeau vacation means absolutely nothing to Canada or its economy. China dictates the rules and anything that Trudeau mumbles is totally what is sounds like, incoherent babble. For Christ sake the man child is on the cover of an effing comic book, time to wake up to your 4 year mistake Canada.

    • You mean like ‘before we make it’, (or he makes it) or after 8 years like the Harper fiasco? You, my friend, sound like a doctrinaire icehhole.

  5. I wish that we would reduce the use of the term ‘South China Sea’ (It isn’t a legal term) and, instead refer to the Seas of Japan and Korea, or the Seas of Viet Nam and the Philippines.

    The Spratly Islands are approximately 200 miles off the coast of the Philippines but approximately 800 miles from the nearest Chinese mainland,

    • I think it has been generally accepted, at least in most civilized maritime nations, as being called the South China Sea since first a real navigator recorded it on his chart.

      Should we start to call it one of it’s, probably many, local appellations – where would we know where to bomb?

  6. Trudeau’s china problem is similar to his Father’s. The man is there on a tourist visa looking for a family picture on the wall. As for the great economic boom in trade between our two countries it was ignited due to the change of USA implementing ” favored nation trade” status to China in the 90’s. Canada had to assimilate or be left behind by USA / China trade relations. Canada opened up its trade because as with all consumer products other than autos, the manufacturing is now in Asia. Trudeau has nothing to offer China that they can’t get from any number of “beggar” suitors trying to sell raw materials. As for our trade exchange rate, 33 million consumers do not add up to a significant anything on China’s radar. China will toss a few bones to Trudeau, in exchange for him softening his rhetoric on human rights violations. Other then that this is a Trudeau family vacation on our dime.

    • Now who wouldn’t do that – with the family even – on their first trip to China? Are you one of those ‘tourists’ who experiences foreign lands through the bar fridge in your hotel room?

      Canada, despite the last ‘guvermint’s’ polarization of the world, still has a passing relationship with the Chinese. At least we haven’t dispatched the RCN to uphold America’s ‘pivot’ to the South China Sea.