Toward ‘eyes-open’ engagement with China

Date: Tuesday June 20, 2017

Project Background

Members of the Public Policy Forum’s China forum seek a balanced approach to engagement with China that is economically beneficial and politically acceptable to Canadians

Background

As the Canadian government embarks on its pledge to “open a new era in the Canada-China strategic partnership,” the conversation needs to become more nuanced than the polar choices of commerce versus human rights.

Canada is in its historical comfort zone when reaching south to the United States or across the Atlantic to Europe. Our Pacific window to Asia has engendered more ambiguity, especially where it comes to China. Successive governments have blown hot and cold on China. Two generations ago, Canadians were highly supportive, even proud, of Pierre Trudeau’s decision to recognize the People’s Republic of China in the midst of the Cultural Revolution. Canadians intuitively accepted that diplomatic engagement was better than isolation, as they earlier had when Canada supplied an isolated China with wheat to stave off famine. During the Harper years in Canada, China was treated with suspicion, which came to be reflected in public opinion as well.

Today’s China is a place of competing narratives in the Canadian imagination: a rising economic and strategic power that has lifted hundreds of millions out of poverty and removed many obstacles to its citizens studying and traveling abroad; a one-party state intolerant of dissent and prone to building competitive advantage through unfair practices, even economic espionage. Of course, both storylines contain an element of truth — as does the fact that China’s emergence as a superpower has been accompanied by a myriad of domestic challenges, including the need to make congested and polluted cities livable; convert its economy from export-led to consumer-based; build trust in its food and banking systems; and provide social and health security to aging parents of one-child families.

Canada’s approach to China must take account of the complexity of the most populous country in the world — and soon to be the largest economy, too. Relations are both well developed and under-developed. Canada already has an invisible bridge to and from China, with over $85 billion in commerce shuttling back and forth every year and some 500,000 tourists and 31,000 international students making Canada their destination. It was Chinese growth that provided a safety net to the world economy in the Great Recession, to the benefit most particularly of commodity-rich Canada. This country is also home to more than 1.5 million ethnic Chinese, some descendants of those who built the transcontinental railway and half a million arriving in the last 25 years. Many of our global champion companies are expanding into the Chinese market, and vice versa. Opportunity beckons for expansion-minded Small and Medium Enterprises (SMEs) as well.

Although our ties are substantial and enduring, Canada’s economic relations with China — and even formal political linkages — have not kept pace with countries such as Australia and New Zealand. While our interest has waxed and waned, they have forged ahead with free trade agreements and secured competitive advantages for their economies, universities and workers. Now Canada is looking at following their path.

Canada has tried to pursue Third Option policies before, ones aimed at diversifying trade reliance away from the United States. Often, there has not been a ready partner. Today, with the continued rise of Asia, the potential is greater than ever before. And given the unpredictability of politics in the United States, these efforts also have taken on added urgency. As the Canadian government embarks on its pledge to “open a new era in the Canada-China strategic partnership,” the conversation needs to become more nuanced than the polar choices of commerce versus human rights. It is incumbent on us to be creative in developing the policy mix that strikes a balance between the commercial and non-commercial aspects of the relationship. This requires a supple understanding of the internal political, economic and strategic dynamics of China and the ability to write a more sophisticated narrative for Canadians.

The political environment

In a poll, 46 percent agreed: “I could probably be persuaded to support a closer relationship with China if I knew more about what was involved and why it was in our interests.”

As part of any effort, the Canadian government must gain a firm grip on Canadian views toward China. Public opinion is, unsurprisingly, not fully formed, with a welcome and unusually high willingness to weigh arguments and counter-arguments. A 2016 public opinion survey by Abacus Research on behalf of Teck Resources showed that Canadians were as open to expanding economic relations with China as they were to what was then the Barack Obama-led United States. Thirty percent expressed support for Canada having a closer relationship with China versus 24 percent saying they do not think they “can get comfortable with Canada having a much closer relationship with China.” Most interestingly, the plurality occupied a middle position. Forty-six percent agreed: “I could probably be persuaded to support a closer relationship with China if I knew more about what was involved and why it was in our interests.” It should be the goal of policy to craft positions and approaches that allow Canadians to achieve their comfort level. Again, that will probably require a balanced approach.

An uptick in open-mindedness also can be discerned in the 2016 and 2017 editions of the Asia Pacific Foundation of Canada’s regular surveys on Canadian attitudes toward Asia. Support for a free trade agreement has grown from 36 percent in 2014 to 46 percent in 2016 to 55 percent in 2017, with a strong belief it will be good not just for Canadian business but also in creating future economic opportunities for Canadian youth. This shift in support is buttressed by concerns over protectionist sentiments in the U.S.

Yet these views remain conditional. Canadians worry about an influx of cheap goods and that free trade will lead to growing Chinese economic and political influence in Canada. And in a Nanos/Globe and Mail poll, “nearly nine in ten Canadians say they are uncomfortable or somewhat uncomfortable with allowing Chinese state-owned enterprises new access to the Canadian economy.” Canadians are also unconvinced the country is prepared to exploit deeper ties with China.

On the other hand, they see a number of areas where collaboration would be beneficial, starting with working together to address pollution and environmental protection. Interestingly, this green theme is almost twice as big a priority as human rights issues.

Any agreement with China will require a broad social and political consensus built on a solid foundation of support from different quarters. Policy should also aim to make Canadians more familiar with the world’s largest and fastest-growing continent, and its largest nation. Attention must be paid to everything from language skills to educational exchanges. Only 16 per cent of Canadians have lived, worked or traveled in Asia. While distressingly small, this still constitutes an influential vanguard in building a bridge between policy and public opinion.

For Canada to muster persuasive arguments at home in an age in which elites do not enjoy a monopoly over the national conversation means facing up squarely to the obstacles to a fully flowered relationship while working to mitigate them. It is in this spirit of an ‘Eyes-Open’ holistic engagement that the Public Policy Forum (PPF) is establishing this Consultative Forum on China.

The prime audience for this initiative will be this roughly half of Canadians who have not made up their minds and are open to weighing the arguments. Such a receptivity to facts and trade-offs does not exist as prominently in other public policy issues and will undergird the work of the PPF’s Consultative Forum on China.

The PPF believes these free and frank discussions will provide a valuable injection of fresh ideas for those engaged in shaping the future of our relationship with China. We also foresee that the Consultative Forum could spawn a series of deliberative citizen assemblies on relations with China.

A broad engagement portfolio

The underlying concept of this initiative is the need to get beyond discussions of only human rights or only free trade and consider engagement on a number of fronts, including commercial opportunities, rights issues, security matters and the potential for collaboration around social, educational and governance issues.

Business, and especially big business, cannot be the only basis of support of greater engagement. SMEs must also be involved in the dialogue, as well as provinces and municipalities, universities and colleges, academics, security experts, NGOs, Indigenous representatives, diaspora communities, etc. Any sustainable deepening of relations will need to be constructed upon a broader foundation than free trade alone, embracing investment and people movements as well as partnerships in social, environmental and legal-judicial realms, among others. A mature and enduring relationship begins government-to-government, but grows through other societal players and a web of mutual interests — as with the Canada-Europe and Canada-U.S. relationships.

The Consultative Forum on China will deal both with a breadth of issues and their intersection points. The underlying concept of this initiative is the need to get beyond discussions of only human rights or only free trade and consider engagement on a number of fronts, including commercial opportunities, rights issues, security matters and the potential for collaboration around social, educational and governance issues.

China is obviously much larger than Canada. But Canada can be of great assistance to Chinese development in a myriad of ways. A deepening of relations must be considered through a spectrum of approaches in which Canada helps China succeed on its economic, environmental, governance and social objectives. Canada has in the past, for example, supported legal and judicial reforms to help China improve trial procedures and train judges, investigate public service corruption and strengthen due process. There is much Canada does well from which China can benefit and that would assist in achieving the desired balanced approach.

Project plan and structure

The Consultative Forum is not an advocacy group (of which there are others in place), but a diverse forum of leaders who want to find a workable path forward that is acceptable to Canadians seeking to understand the potentials and pitfalls of greater engagement.

The PPF was encouraged to find major support for the concept during a late April meeting co-led by President and CEO Edward Greenspon and Kevin Lynch, Vice-Chair of BMO Financial Group and former Clerk of the Privy Council. They will co-chair the Consultative Forum. The meeting included representatives involved with China from the corporate and university sectors, and was attended by Dominic Barton, Global Managing Partner of McKinsey & Co., John Manley, President and CEO of the Business Council of Canada, and Tim Sargent, Canada’s Deputy Minister of International Trade. All welcomed the initiative. The deputy minister made it clear the government itself will serve as an audience and partner for the Consultative Forum as its negotiators seek insight, ideas and feedback around the nexus of issues and management of risks. This would include strategic consideration of where Canada-China relations need to be in the long term — and what must be done to get there.

The PPF views the undertaking initially as a two-year effort. The Consultative Forum on China is comprised of more than 30 members (and designates) who meet every quarter. We imagine that each session of the Consultative Forum will include a briefing on the state of talks between the two countries and then focus on one or two aspects of the relationship. The core membership would be supplemented at these meetings by additional experts/speakers relevant to the particular topic for that session. Early topics could include public opinion, security, investment rules, non-commercial engagement programs, sectoral approaches, etc. Partners would help shape the agenda.

The Public Policy Form will act as the Secretariat for the Consultative Forum and organize each of the meetings. The PPF would commit to commissioning a ‘white paper’ in advance of each meeting that would serve as a kick-off for the discussion. The PPF will partner with the Asia-Pacific Foundation as well as drawing on academics and others with specific areas of knowledge.

Partners will play a leadership role in the initiative in external communications, speaking roles and public events. In all cases, the PPF will ensure that the foremost experts are at the table and that a diversity of voices are represented.

What does success look like?

  1. A broadening of the Canada-China conversation from a narrow focus to its many points of engagement;
  2. A strong flow of information and understanding between government officials and a diverse yet inter-connected group of interested parties;
  3. Ultimately, a better informed public opinion environment in which decisions about Canada-China engagement will take place.

About the PPF

The Public Policy Forum works with all levels of government and the public service, the private sector, labour, post-secondary institutions, NGOs and Indigenous groups to improve policy outcomes for Canadians. As a non-partisan, member-based organization, we work from “inclusion to conclusion,” by convening discussions on fundamental policy issues and by identifying new options and paths forward. For 30 years, the Public Policy Forum has broken down barriers among sectors, contributing to meaningful change that builds a better Canada.

The PPF is well positioned to host such an initiative given the diversity of our membership, the inclusive nature of our dialogues, our convening and research capacities, and a long-standing and trusting relationship with a variety of constituencies, including the public service.

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