Canada Resumes Summit Diplomacy with China

Canadian Prime Minister Stephan Harper concluded a much-anticipated visit to China in December 2009. The visit was significant because China was not on Harper’s foreign policy priority list when he came to office in early 2006, and he had in fact put off his China trip for nearly four years. For a year now, however, Canada’s Conservative Party-led government has been making major adjustments to its China policy. Four federal ministers, from International Trade, Foreign Affairs, Infrastructure and Transportation, and Finance, visited China over a span of four months in 2009, apparently to prepare for Harper’s maiden visit to Beijing. The Chinese side seems to have taken notice of such a policy shift in Ottawa, and received Harper warmly. The Chinese media described Harper’s trip as an attempt to warm up "cool to icy" ties between Ottawa and Beijing (People’s Daily, December 4, 2009). China’s well-endowed sovereign wealth funds and other companies have also picked up pace in investing in Canada’s energy, mining and resource sectors in recent months. The most notable example is PetroChina’s latest move to acquire a 60 percent, $1.7 billion stake in Athabasca Oil Sands Corp. in Alberta that was approved by the Canadian government.

The long learning curve

Until the Conservatives came to power in early 2006, Canada’s China policy was consistent under various Liberal governments, and during the years when the Conservative government of Prime Minister Brian Mulroney was in office for much of the 1980s and the early 1990s. Beijing had also viewed Canada as a friendly Western power and, in recent years, increasingly as a potential market for China’s dynamic modernization program.

It was just four years ago that China’s relations with Canada seemed to be at their peak. On a visit to former Prime Minister Paul Martin in Ottawa in the fall of 2005, President Hu Jintao declared that a bilateral “strategic partnership”—a term that Beijing uses to define key close relations with countries around the world—had been established. The two countries would cooperate in areas ranging from energy security to environment to trade and investment.

Since the Conservatives ousted the Liberals and formed a minority government in early 2006, however, Sino-Canadian relations entered into a period of uncertainty. In the first three years, Harper simply did not seek to engage China. Ottawa stopped using the term “strategic partnership” to describe bilateral relations and essentially removed China from the priority list of Canadian foreign policy.

Three factors prevented the Conservatives from articulating a China policy alternative. The first is ideology. Somehow, the Harper inner circle saw China as a communist country that is politically distant from Canada. Some viewed Canada’s relations with China through religious lenses while others sympathized with so-called "separatists" forces. The second barrier was partisan politics. The Conservatives loathed the Liberals and their China policy so they decided not to do anything the previous government had done when it came to engagement with China. The third problem was a combination of arrogance, ignorance and lack of China policy expertise. The Conservatives perceived that Canada could carry on a cold relationship with China at the political level while not suffering economically at the same time. Another idea floating around at the time was that China needs Canada more than the other way around.

Harper also decided not to go to the Beijing Olympics in the summer of 2008, an even more explicit message that he was not treating Canada-China relations as a priority. While the Harper government underwent a long learning curve in formulating its policy toward China, Beijing has displayed no urgency to adopt any fresh initiatives. It took a long time for the Harper Conservatives to realize that the “cold politics, warm economics” formula has been hurting Canada a lot more than China, and the continuous disengagement at the highest level would only put Canada in a more disadvantageous position. Yet, Harper’s recent trips to Asia, including the visits to India and South Korea, have put Asia back on Canada’s foreign policy agenda, and the urgency to engage China is being re-energized.

The much-delayed summit visit

During Harper’s first trip to China, he seemed to have finally realized that, in his own words, Canada is only scratching the surface of the Asian giant when it comes to potential economic benefits (CBC News, December 6). If this means Harper has recognized the importance of a rapidly rising China to the future of Canada’s wellbeing and world affairs, then the bilateral relations may see a warming-up process.

The prime minister’s China trip had some surprises, and the most noticeable was Chinese Premier Wen Jiabao’s “scolding” of Harper, in public, for taking too long to make his China trip. “Five years is too long a time for China-Canada relations, and that’s why there are comments in the media that your visit is one that should have taken place earlier,” Wen reportedly told Harper (People’s Daily, December 4, 2009). There has been much discussion about diplomatic protocol and the loss of face for Harper in the Canadian media over this episode.  

The visit, however, was not without substance, and the most important gift Harper took home, among others, was Canada’s “approved destination status” for Chinese tourists by the Chinese government. This is significant because in the next five years, China is projected to become the largest tourist nation in the world in terms of both inflow and outflow. Hundreds of millions of dollars will be injected into the Canadian economy as newly-rich middle class Chinese pour into tourist attractions across the country in the coming years and beyond. For those who had pushed for Harper’s China trip, the “approved destination” package is a clear example of how political engagement with China at the highest level can deliver tangible economic benefits, while the absence of such interaction represents missed opportunities. “Cold politics, warm economics,” once touted by the Conservatives as a possible way of dealing with China, is now no longer seen as a viable approach to dealing with China.

The much-debated relationship between human rights and trade relations has also been reflected in a substantial and wide-ranging Canada-China joint statement released by the two governments [1]. The joint statement placed many bilateral issues back on the table and identified some priorities for improving bilateral relations, including the protracted negotiation of a bilateral investment pact. Yet the statement is also a clear indication of how Harper is treading on his human rights agenda while promoting better economic relations with China.

Some have characterized Canada’s China policy under Harper as value-based or emphasizing human rights. Yet the reality is that the Harper government has only made some general and occasional public statements regarding China’s human rights issues. It suspended the bilateral human rights dialogues in 2006 on the grounds that they were not effective, yet it has not replaced that mechanism with an alternative. Even Canada’s human rights groups are frustrated with such lack of initiatives. Harper himself even stated that he would not sell out Canadian values for the "almighty dollar" when it came to Canada-China relations. The new joint statement, however, declared that both sides “recognized that each country and its people have the right to choose their own path, and that all countries should respect each other’s choice of development model.” In addition, both sides “acknowledged that differing histories and national conditions can create some distinct points of view on issues such as human rights.” It is not clear if Harper is planning any initiatives on China’s human rights issues (People’s Daily, December 4, 2009).
On the economic and trade front, Canada has lost ground in China in recent years. While trade volumes with China have grown in absolute terms in recent years, Canada’s shares of both trade and investment in the world’s most dynamic economy have dropped. Australia, a country with a much smaller population and economy than Canada, is conducting almost twice as much trade as Canada does with China. Much credit goes to the non-partisan efforts by both the current Labor government of Prime Minister Kevin Rudd and the previous Conservative government under John Howard. If Harper’s China trip can re-position Canada, Ottawa may have to learn from Australia the right formula of pursuing both a trade agenda and a human rights agenda effectively.

One step forward, two steps back?

Yet a close reading of the Canada-China Joint Statement reveals that the Harper government may be backpedaling on Canada’s commitment to the nature of the bilateral relationship, instead of re-affirming the “strategic partnership” that was announced in 2005. The new joint statement says that the two sides would resume the “Strategic Working Group” initiative as a bilateral relations enhancement mechanism. According to the agreement, “Deputy Minister-level officials from both sides will meet early in 2010 to discuss the nature of this enhancement and likely subjects of focus, including trade and investment, energy and environment, health and governance.”

In other words, neither Beijing nor Ottawa possesses a vision or a clear guidance on where the two countries are taking their relationship in the next step. Harper made a trip to China, was possibly impressed by what he saw and learned a few things. However, Harper is yet to see a clearly articulated China strategy.

The Chinese side has also played a delicate game of using both stick and carrot in dealing with Canada. With the warming-up of bilateral relationship in recent months, many Chinese companies have expressed renewed interests in coming to Canada. Several months ago, the China Investment Corporation, the country’s multi-hundred billion dollar sovereign wealth fund arm, invested $1.5 billion in Canada’s Teck Resources Ltd., with a 17 percent stake. PetroChina’s $1.7 billion investment in Athabasca Oil Sands Corporation is currently going through the regulatory approval process. However, China has invested tens of billions in other countries such as Australia, Brazil, Kazakhstan and Iran. Canada has received very little large-scale investment from China so far. The recent deals point to the positive direction but it is far from clear that China will now make Canada one of its top investment destinations.

Even the two countries are taking a step back on the committed “strategic partnership,” Harper may still pursue a forward-looking China strategy. First, slowly and gradually, the Harper government has come to terms that China is Canada’s second largest trading partner, and that China has a deep pocket in terms of investment. China is also on its way to replacing Canada as the largest trading partner of the United States in the not long distant future, and it will do so in part at the expense of Canada. Canada’s China challenge is not bilateral and across the Pacific, but right here in North America. Second, the Harper inner circle appears to be moving away from treating human rights and trade promotion as mutually exclusive goals when it comes to China. If Harper proposes a sincere human rights dialogue with China on an equal basis, identifying the right mechanism to implement important human rights programs, Beijing may respond positively. At the same time, Ottawa may pursue economic relations with more vigor and give it serious attention at the highest level of the government.

These policy measures are yet to be taken by Ottawa. The United States has a comprehensive set of annual bilateral consultation arrangements with the participation of highest-ranking officials from both governments, far more extensive than anything in existence between Ottawa and Washington. Harper’s China trip may become the starting point for preparing a comprehensive China strategy. A sustained, regular summit level meeting between the two countries’ leaders may compensate for the growing asymmetrical relationship between Canada and China.

Notes

1. Canada-China Joint Statement, https://www.theglobeandmail.com/news/world/canada-china-joint-statement/article1386710/.