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.