Canada-China Relations Committee on April 24th, 2023

[The Chair, Liberal, Ken Hardie]

I call this meeting to order.

Welcome to meeting number 18 of the House of Commons Special Committee on the Canada–People’s Republic of China Relationship. Pursuant to the order of reference of May 16, 2022, the committee is meeting for its study of Canada-People's Republic of China relations, with a focus on investment funds.

I would like to make a few comments for the benefit of the witnesses and members.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you are not speaking.

For interpretation for those on Zoom, you have the choice at the bottom of your screen—a little planet earth—of floor, English or French. For those in the room, of course, you can use the earpiece and select the desired channel.

I remind you that all comments should be addressed through the chair.

For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

In accordance with the committee's routine motion concerning connection tests for witnesses, I am informing the committee that all witnesses completed the required connection tests in advance of the meeting. We'll do our best to make sure the technical quality remains high, but it's something we are certainly watchful for out of deference to our interpreters, who can sometimes have a very difficult time dealing with things when the audio quality goes bad on us.

We have some visitors. MP John McKay is substituting for MP Serge Cormier. MP Emmanuel Dubourg is a participant on the screen, so he is appearing as Emmanuel Dubourg. MP Sonia Sidhu will be substituting for MP Serge Cormier a bit later. We are expecting MP Ed Fast a bit later in place of Mr. Seeback. I'd also like to welcome Mr. Dowdall to the committee tonight. It's good to have you all here.

Now it's time to begin hearing from our witnesses. We have Dr. Mathieu Arès, full professor at the Université de Sherbrooke.

Go ahead, Mr. Trudel.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Mr. Chair, shouldn't we be seeing people's faces in the meeting through Zoom? I see that Mr. Dubourg is present but we can't see this face. Isn't that in the committee rules?

[The Chair, Liberal, Ken Hardie]

I'm sorry. I'm going to have to plug in my earpiece to pick that up.

Say that once again. I'm sorry, Mr. Trudel.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Am I wrong to say that we should see people's faces at the meeting through Zoom? For example, I can see that Mr. Dubourg is present, but we can't see his face. Is that not an issue?

[The Chair, Liberal, Ken Hardie]

I think it would be proper for Mr. Dubourg to turn his camera on so we know it's really him.

Mr. Dubourg, if you're listening in, if you can at least click your camera on so that we can see you, that would be good.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

That's not a rule.

[The Chair, Liberal, Ken Hardie]

It's not a rule, no, but still....

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Sometimes we can't see it on our screens, but they can see it on their screens over there.

[The Chair, Liberal, Ken Hardie]

On the screen I'm looking at right now, Mr. Dubourg's camera is still off.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Okay. We don't even see Mr. Dubourg's screen on our side.

[The Chair, Liberal, Ken Hardie]

Yes, you wouldn't because he's—

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

It's because it's always that way.

[The Chair, Liberal, Ken Hardie]

Yes, that's right.

Please contact him.

That was a good catch, Mr. Trudel. Thank you for that.

We will continue, and hopefully Mr. Dubourg will catch up with us. The clerk will try to get in touch with him to make sure he's online.

Again, we'd like to welcome to the Canada-China committee Dr. Mathieu Arès, full professor at the Université de Sherbrooke. From the Cercius Group Limited, we have Dr. Alex Payette, chief executive officer.

We'll start with Dr. Arès. You have five minutes to deliver some opening remarks.

[Dr. Mathieu Arès, Full Professor, Université de Sherbrooke, As an Individual]

I would first like to thank the committee for having me.

I'm part of a group of four faculty members who have undertaken research on disengagement with China. We're essentially studying the political reaction, but also how businesses are reacting to the discourse that we're increasingly hearing about disengagement with China. The countries chosen for the study are obviously representative: the United States, Japan, Korea, Taiwan, Australia, Canada and Germany. However, the study also includes countries that might receive investments that would come out of China or no longer go to China: Mexico, India and Vietnam.

Why did we start looking into this? President Obama launching the pivot to Asia policy led the U.S. to rethink things. Mr. Trump preferred direct confrontation and started a trade war, which has soured relations between the two giants. President Biden has revived some initiatives, including the Quad, as well as a much-talked-about Indo-Pacific policy. Recently, Canada announced its own openness to reviving this policy.

It's important to understand that China currently produces 27.8% of the world's manufacturing output, while the U.S. is at 17% and Japan is at 7.5%. It's no news to anyone that China has become the world's workshop. However, it's important to note that China is a sort of hub that receives parts from all over Asia, does the final assembly and sends the products to global markets.

We're faced with a situation that politicians call complex interdependence. In simpler terms, on the one hand, we have extensive, intense and beneficial economic and trade relationships with each of the countries in our study, but on the other, we also have significant political tensions with them.

First of all, only the United States and Japan currently have assertive aid policies to encourage their businesses to leave China. The other countries have adopted a wait-and-see policy that aims to pool their diplomacy in managing this very complex relationship. Canada has been rather naive when it comes to China. We shouldn't hold that against Canada; I believe all Western nations have been a bit naive.

Since a much more assertive policy has been introduced, particularly with the current president Xi Jinping, we see China trying to be kind by using—to put it mildly—strong-arm diplomacy, ranging from shows of force to widespread neo-mercantilist policies.

In our view, Canada needs to stop being naive and start being very vigilant about cooperation on technical matters in particular, whether with academics or industry.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, was also ratified. This policy continued after the Trudeau government took office. It's an initiative that links Canada with some key countries in the region. I think it's a good policy and we need to continue to be part of the CPTPP. Canada needs more initiatives like this.

In general, we shouldn't be afraid to assert our values vis-à-vis China. Those in power right now in China only understand relationships based on force. So if we show any weakness, China will simply take advantage of it, and that will go against our interests and our values as a country.

I only had five minutes to open the discussion. I could go more into detail if you have any questions.

[The Chair, Liberal, Ken Hardie]

Thank you very much. We appreciate that Dr. Arès.

Now we'll turn to Dr. Payette. You have five minutes or less, sir.

[Dr. Alex Payette, Chief Executive Officer, Cercius Group Ltd.]

Thank you.

I will speak in French, if I may.

I'd like to thank the committee for inviting me to appear at this meeting on the exposure of Canadian pension funds or investment funds to human rights violations—

[The Chair, Liberal, Ken Hardie]

Excuse me, Dr. Payette. Where is your microphone? Is the microphone on your headset up?

[Dr. Alex Payette]

No, I have the other one. It was on the approved list.

[The Chair, Liberal, Ken Hardie]

Maybe move a bit closer to it because it's a little muffled and our interpreters might be—

[Dr. Alex Payette]

How about that?

[The Chair, Liberal, Ken Hardie]

That might be a lot better.

I'm going to stop this and give you another start here.

Go ahead. You have your five minutes. Thank you.

[Dr. Alex Payette]

Okay, thank you.

Today, I'd like to underscore certain things that guided our reflection.

First, investing in a non-Western, non-democratic country, whether China or any other, always comes with its share of unforeseen challenges in terms of adherence to the standards and values of democratic Western countries like Canada. This must always be taken into account.

Then you have to talk about the opacity of the Chinese regime. My colleague perhaps has a more external view, whereas we work much more internally. We're interested in the structure of the party-state, how people think, how the structure reacts, what happens inside the party. It's a slightly different view.

The way we see it, it's always going to be fundamentally impossible to control all the risks associated with the values aspect or to fully guard against the risks associated with the central issue of today's topic, which is human rights.

That leaves us with two broad avenues. We can avoid investing, which shields us from the entire risk—

[Peter Fragiskatos, Liberal, London North Centre, ON]

I have a point of order.

[The Chair, Liberal, Ken Hardie]

Yes, Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

The interpreter is unable to translate.