Thank you.
Evidence of meeting #23 for Canada-China Relations in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was need.
A video is available from Parliament.
Evidence of meeting #23 for Canada-China Relations in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was need.
A video is available from Parliament.
9:10 p.m.
Liberal
The Chair Liberal Geoff Regan
Thank you very much, Mr. Harris. We'll now go to the second round.
We will move on to Mr. Williamson for five minutes.
9:10 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
Thank you very much.
Gentlemen, you both paint a rather disturbing picture in terms of challenges, and I take the point that I often think that Beijing's attempt to censor news and shut down debate is not a kind of strength but a sign of weakness.
Have you both considered the case for a slow divergence away from China? Since the open democracy and the open economy we operate in today have too many vulnerable points, plus with the United States advocating more nearshoring and onshoring and Japan doing the same thing and going so far as to fund its companies to repatriate home, is there a long-term strategic case for doing that as a way to minimize the numerous security threats to our institutions, our technology, our research centres, etc.? What say you to that argument or that line of thinking?
9:10 p.m.
Professor, Department of Political Science, Royal Military College of Canada, As an Individual
We don't see the economic decoupling that people had intended, and we saw the harm done, for instance, by some of the Trump tariffs to the U.S.'s own economy. What we need to do is be much more realistic about the challenges that some areas of Chinese technology, intervention and the strong persistent threat that China's ambitions present, and we need to posture ourselves accordingly, instead of taking these homeopathic sort of approaches with our heads in the sand, hoping that somehow we can turn China into a responsible actor.
9:10 p.m.
Conservative
9:10 p.m.
Captain (ret'd), Former Information Systems Security Officer, Department of National Defence and Cybersecurity Specialist, As an Individual
It's a different landscape than what it was 20 or 30 years ago, when the economy was favourable to bringing business back to China, and they were very favourable to that idea. People were working over there. We had very cheap pricing, and this is how the economy was rolling big time for us here, but the game has changed, and now we have clear paths that are just set by China, just like “Made in China 2025”, in which their main goal is to bring everything to be manufactured in China, and they'll become the world's manufacturer.
If we keep that in mind, we can see it means they don't care where they they get the information, and especially in the case of manufacturing, they will bring it over to China, and when it's all over, we're going to be left standing without anything. The only thing we'll be able to do is call China to buy things at a very high price.
That said, we have to acknowledge that the same economy that was driving us to go to China to manufacture everything has changed. Big manufacturers, especially of semiconductors, are changing their game plans and are now planning to make smart phones, tablets and electronics back in the U.S. or in Vietnam, as an example, or other places in Asia, because there is a real risk that at some point there won't be the flexibility to go back to China to do this.
On a second front, the big chip manufacturers in Taiwan are considering a plan B, because if overnight China wants to take over the island, as they have threatened to do, it will have a big impact on the electronic market.
9:15 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
That's absolutely right, particularly with Taiwan and their focus on chips.
Professor Leuprecht, you said you think we can still influence mainland China. You're not prepared to throw in the towel and say that this is a Communist country and they're going to use every resource they have.
I think the hope that WTO admission would transform China, whether through the one country-two systems route or the trade regimes of the last 20 year, has not been borne out, but you seem to suggest that you still think there's a way to change China.
9:15 p.m.
Professor, Department of Political Science, Royal Military College of Canada, As an Individual
I think we certainly have a number of tools available, in particular when acting with our allies, to raise the cost of certain types of Chinese behaviour in order to incentivize them.
I think we can also influence China through its society, by being seen as good actors. There are lots of opportunities, for instance, in such areas as air quality and water safety, as well as educational opportunities, because if we're seen by the Chinese people as a good actor, it's going to be much costlier for the Chinese leadership to take actions that undermine Canada's relationship with China.
We need, then, a more a nuanced approach.
9:15 p.m.
Liberal
The Chair Liberal Geoff Regan
Thank you, Mr. Williamson.
Now we'll go on to Ms. Yip for five minutes.
9:15 p.m.
Liberal
Jean Yip Liberal Scarborough—Agincourt, ON
I am going to expand on Mr. Williamson's point and go back to your opening statement, Mr. Leuprecht, wherein you talked about image and reality and said that China has lots of vulnerabilities and that we need to bolster our own Canadian dynamicism. I like the positive statement and the support for Canada.
What are China's vulnerabilities? What can be done to bolster our own Canadian dynamicism in innovation?
9:15 p.m.
Professor, Department of Political Science, Royal Military College of Canada, As an Individual
I'll give you a quick overview of a few matters.
Looking at demographic change, China is going to hit peak labour by 2025. It has already maxed out in its productivity gains. Currently there are eight working Chinese per retiree; by 2050 there will be two. China has a real challenge with growing old before it grows wealthy.
It has rising debt levels—300% of GDP in 2019—and so China can't buy its way up the ladder in the way, for instance, that South Korea or Taiwan did. China is running out of runway to catch up, which is why President Xi is doubling down. He knows he has only so much time to catch up.
At the same time, there is the sclerotic political system, this Leninist rigidity. There is shrinking room for innovation and top-down decision-making. Bad news is never tolerated at the top. This is why we saw the challenges coming out of Wuhan in reporting on the virus.
We see the rising negative views of China, which are at historic highs across a diverse set of partner and allied countries, including Canada. There are budgetary constraints with a cooling economy. There are rising demands from its population and an aging society. There are serious risks of default on some of the loans from the belt and road Initiative, which would have serious legitimacy implications for the Chinese leadership, which has really sold this idea as the future of China. They're also vulnerable on food and energy security: China can't grow enough food for its population, and it imports half its oil from the Middle East.
I can go on, if you'd like.
9:20 p.m.
Liberal
9:20 p.m.
Professor, Department of Political Science, Royal Military College of Canada, As an Individual
The belt and road Initiative is of course an opportunity to influence in particular the neighbourhood, but it also provides global reach. It comes at very high risk, however, because China has sold this to its population by saying that this money will be repaid, that this is a worthwhile investment. If some of these investments—some of the bigger ones, especially—start going sour, then the whole narrative around which social cohesion in China is now built, which is on the one hand the ideological narrative around nationalism and on the other hand one of economic prosperity, will ultimately be undermined.
I think the belt and road Initiative, then, presents considerable risk as much as it presents opportunity for China, especially in the aftermath of the pandemic and the economic uncertainties across many of the countries to which China has lent massive amounts of money.
9:20 p.m.
Liberal
Jean Yip Liberal Scarborough—Agincourt, ON
Thank you.
Mr. Waterhouse, I have a question about the increase of hostile threats towards Canada's research, biopharmaceutical and life science sector during the COVID-19 pandemic. Also, NSICOP stated that research networks in Canada, among other countries, “...have been targeted by intelligence collection efforts of China, Russia and Iran.”
What additional security measures have organizations in these targeted sectors had to take during the pandemic?
9:20 p.m.
Captain (ret'd), Former Information Systems Security Officer, Department of National Defence and Cybersecurity Specialist, As an Individual
First of all, it was to acknowledge the threat that was knocking on their door without them knowing about it. In a few instances, CSIS went along and just informed them and counselled them on the best course of action to take to protect their network, but that was it.
Compare that to the U.S. response. We saw recently that the FBI was not even asking companies. They got an authorization from the justice department and entered those vulnerable servers and corrected the vulnerability that was found there.
The big difference here is that here they were just notified and then left on their own to fix it, and if not, to protect their infrastructure without even knowing what was to be protected. I'm pretty sure a few got hit hard, and what “hard” means is that the research they had done was just siphoned out of there and back to China, to their advantage and not ours.
9:20 p.m.
Liberal
9:20 p.m.
Liberal
The Chair Liberal Geoff Regan
Thank you very much, Ms. Yip.
Mr. Bergeron, you now have the floor for two and a half minutes.
9:20 p.m.
Bloc
Stéphane Bergeron Bloc Montarville, QC
Gentlemen, in your opinion, is China the main threat to Canada's security right now?
9:20 p.m.
Professor, Department of Political Science, Royal Military College of Canada, As an Individual
China poses the most significant threat to Canada's security in decades. However, I don't believe that China poses an existential threat to Canada.
The assertion that China poses an existential threat would make it more difficult to build a coalition of allies to impose constraints on China.
9:20 p.m.
Captain (ret'd), Former Information Systems Security Officer, Department of National Defence and Cybersecurity Specialist, As an Individual
In its 2020 report, CSIS identified China as a clear threat to Canada's security. Mr. Vigneault, the director of CSIS, made this clear in a speech on April 9. You may not be interested in geopolitics, but geopolitics is interested in you. There's always a threat to Canada's security outside the country.
For example, if the proposed takeover of the TMAC mining company by a Chinese company had been accepted, China would have had a foothold in the Arctic. It would have been able to set up its Huawei telecommunications network in the northwest passage exchange line, which is in NORAD's area of responsibility and is very close to mass hydroelectric facilities.
The answer to your question is yes, and China still wants more.
9:20 p.m.
Bloc
Stéphane Bergeron Bloc Montarville, QC
Mr. Waterhouse, what are your thoughts on Mr. Leuprecht's assertion that China doesn't pose an existential threat to Canada, unlike the Soviet Union, which once did?
9:20 p.m.
Captain (ret'd), Former Information Systems Security Officer, Department of National Defence and Cybersecurity Specialist, As an Individual
We were an obstacle that prevented the Soviet Union from reaching the United States.
As Professor Leuprecht said earlier, China comes to Canada to buy groceries, so to speak, because we have the material that they need for their production. We have plenty of clean water and we have enough food for their population. So Canada is a source of raw material for this country of processing.