Canada-China Relations Committee on Oct. 4th, 2022

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I think it shows a commitment to that relationship. Not having an ambassador in place shows a lack of commitment to that relationship, certainly.

Here is another area I'm quite concerned with. We have seen the increase in China playing a key role in development in sub-Saharan Africa. At the same time, we've seen a reduction in Canada's investment and involvement in sub-Saharan Africa, whether that's through peacekeeping, international development or diplomatic ties.

Could you speak about what the impacts or the risks are to Canada and to global stability, I guess, when you see situations like the increase of China in sub-Saharan Africa at the same time that Canada is decreasing its efforts there?

[The Chair, Liberal, Ken Hardie]

Again, we would ask people to direct questions to the individual.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I'm sorry. That was just continuing on with what Dr. Holden had said.

[Gordon Houlden]

At a time in my long past, I worked on Africa for what is now Global Affairs, and I've been to Africa. I follow it very closely, looking at it from a Chinese lens. The Chinese are all over Africa. They're the number one trading partner for most African states.

Africans will tell you, however, that it's not as if the colonial powers covered themselves with glory in their work in Africa. Africans are often a bit uneasy with that experience.

Canada comes with an advantage. We had no colonial experience in Africa. We're seen as a good partner, but it takes a lot of time and senior-level attention. It takes development funding, and it takes active commercial relationships. We will not be able to play a role as high-profile as that of China, but we can play our part. If we don't do that, we just leave the field free for the Chinese and for other non-democratic actors who don't necessarily share our values.

Absolutely, we need to be there with spurs on to make sure that we're at least noticed and that we can play a role, but not exaggerating the potential for us.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much.

Dr. Ong, do you have anything that you would like to add to that?

[Dr. Lynette Ong]

No.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

Ms. Calverley, first of all, I want to reassure you that this committee has agreed to do a study looking at investment that will, hopefully, be undertaken soon. Hopefully, we will be able to bring you back at that point.

You did talk a bit during your testimony about threats to Canadians and foreign influence. I would be interested in hearing your perspective on the news that we have heard about the police stations that have opened up. What do you expect from the Canadian government as a response?

[Aileen Calverley]

It is very shocking news. Actually, quite a few have opened up in Ontario—one in Markham where I lived.

The Chinese agents have been around, but I think openly. That it's actually the Chinese police, I think this really the first time we've heard that. I think they are openly doing that because there's no legislation. There's nothing to deter them, nothing to punish them.

I think that Canada should have some new legislation. As police from China, they should be agents or government officials. They cannot just open offices in Canada.

They claim that they just help Chinese citizens to renew their passports. They don't need that because they have their own embassy. They have used that to intimidate Chinese citizens in the past to scare them to go back to China to face trial, and then they threaten their families. Now I think, with the police station in Markham, they can intimidate people like us. I have been living in Canada for many decades. Now I feel frightened. I need to install a camera in my house.

I think the Canadian government needs to really look into this because they are Chinese police. They should be considered as agents. There should be legislation that says they need to inform the Canadian government that they are agents.

[Gordon Houlden]

We have a very large cohort of Canadians of Chinese heritage. They would normally, and do, start up businesses. They often have or come to Canada with trade contacts, but it's not just those. The officers of not just Asian private companies, but CEOs and CFOs of large Canadian companies would normally be filling those business seats in aircraft between Shanghai and Vancouver, between Toronto and Hong Kong, etc.

Much of the trade is on autopilot and can be done remotely, as I am speaking today virtually, but particularly when it comes to investment, particularly when it comes to a company deciding that they're going to spend a lot of money developing the Chinese market for their products, there is nothing that substitutes for face to face. With COVID restrictions, which are still in place—hopefully for 2023 it will be in a different place—it's a bit like the shoe that didn't drop. You don't know what you've missed if it hasn't happened.

The trade has been maintained more or less on a stable basis, but we can't know what might have happened if we could have had a more normal exchange of business people in both directions. You can't quantify that. I am confident, though, that there are deals that have been missed and that there are exports that could have taken place that did not because of the COVID restrictions, which have also slowed the Chinese economy as well.

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

Ms. Ong.

[Dr. Lynette Ong]

I think very stringent COVID restrictions have had various impacts on the Chinese economy. I think, number one, it sends bad signals to foreign investors, such as the president of the European Union Chamber of Commerce, who has been making almost weekly press statements saying how it has actually impacted European businesses and their business confidence in China.

Over the last decade, due to rising labour costs and various costs such as economic decoupling, companies have been moving their factories abroad and away from China, and that has happened constantly. I think with zero-COVID restrictions and how enduring that has been, the trend has definitely been accelerated.

On a much broader scale, I think foreign businesses read that as emblematic of the economic policies that are coming out from Xi Jinping's regime, economic policies that are no longer pro-business, which are becoming more and more nonsensical just for the sake of maintaining social control. That is coming as a trade-off to business friendliness.

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

You do not see these COVID restrictions lifting any time soon, whether it's for social control or for health.

[Dr. Lynette Ong]

No. I think a year ago, if you had taken a straw poll of China observers, people would have said that those restrictions might be lifted after the party congress, but I think the consensus now is that, more or less, the restrictions wouldn't be lifted any time soon.

I think these COVID restrictions are just a sign of the nature of policies that have been formulated and implemented by Xi's regime lately.

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

In your opening statement you mentioned that President Xi was reducing the role of entrepreneurs. Why is that?

[Dr. Lynette Ong]

In very simple terms, it's also for the reason of increasing state control.

In China it has always been described as one of state advancement, with the private sector's role being reduced. This is for increasing political control, maintaining social control, and then the party being suspicious of the outsized role of entrepreneurs, particularly tech entrepreneurs.

We have seen Jack Ma and various IPOs of big tech firms from China, and how they have been delisted over the past year.

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

Thank you.

Ms. Calverley, would you like to finish the rest of your opening statement?

[Aileen Calverley]

This is what we saw in the recent federal election, where the United Front used WeChat to spread misinformation regarding parliamentarians critical of the CCP in a number of ridings to influence the outcome of the election.

Canada must stand firm in our resolve in providing Hong Kongers with a safe route out of the city and to safeguard their rights, freedoms and security once they are on Canadian soil.

Thank you.

[Gordon Houlden]

Thank you.

I would say just grosso modo—and I'm simplifying—the dependency declines as you move east. It's most severe in western Canada, British Columbia and the prairie provinces, where the percentage of trade with China is higher and most notable in certain sectors, particularly agriculture but also pulp and forestry.

There would be an exception for the Atlantic provinces. If that seafood trade were to disappear overnight, that would be a big issue, but as in my response to Mr. Chong, the overall dependency of Canada in supply chains on China is very high.

It's not just phones. It's auto parts and electronic goods. Chips may be coming from Taiwan, but the chips from Taiwan go largely into Chinese factories and then we get the laptops and phones. That's a very complex dance of inputs and outputs. We are at a high level of vulnerability, and western Canada in particular.

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

Thank you, sir.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Fragiskatos.

We now go to Monsieur Bergeron for two and a half minutes.

[Stéphane Bergeron, Bloc, Montarville, QC]

If I may, Mr. Chair, I would just like to follow up on the question Mr. Chong asked.

This is for all three witnesses. If Minister Joly were sitting at the table this evening and she asked you what you would like to see in Canadian policy on the Indo-Pacific region, what would you recommend?

[Gordon Houlden]

I think in fairness I should allow Madam Ong to go first, please.

[Dr. Lynette Ong]

That is a great question.

If I had the privilege to be in the presence of Minister Joly, I would say that we should double down and probably triple down on our investment on China endowments. We need to understand China inside out.

In my very modest view, on the term “Indo-Pacific”, we talk about the Indo-Pacific because we don't really have a China strategy. The Indo-Pacific is about encircling China from the outside, but we are not getting to the root of the problem. The root of the problem is how we actually tackle China. To me, I haven't seen any detail regarding an Indo-Pacific strategy. I think it's dancing around the question, and the question is how we deal with this rising monster.

[Aileen Calverley]

I want to take on this question.

I think a lot of us forget that our pension funds, a lot of the major market funds and all world funds, except U.S., are actually inside that. For example, you mentioned market funds. Over 30% are actually Chinese stocks. If anything happens to Taiwan.... We can see the experience from Russia and Ukraine. Russian stock is down to zero. It's just wiped out.

What happens if China invades Taiwan and Chinese stock is actually under sanctions? Chinese stocks would be wiped out. What happens to our pensions? The amount is huge. It's not only pensions and not only stocks. We also talk about Chinese bonds. Actually, in our pensions, in our asset management, we have a lot of Chinese bonds. What happens if all of these bonds default?

That's why it's very important when we can see the Indo-Pacific strategy.... I think we need to look at our pensions and Canadian investments in Chinese companies and Chinese bonds. The number will be quite terrifying.

[The Chair, Liberal, Ken Hardie]

That brings your time to a close, Mr. Bergeron.

Now it's Ms. McPherson for two and a half minutes.