Canada-China Relations Committee on Jan. 29th, 2024

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Fragiskatos.

We'll now go to Mr. Bergeron for six minutes.

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you, Mr. Chair.

Good evening to our witnesses, I’m very pleased to have you here. Thank you for contributing to our consideration of Canada’s Indo-Pacific Strategy. I have some questions, which I invite either of you to answer.

In the Strategy, Canada asserts that it will continue to defend universal human rights, mentioning Uyghurs, Tibetans and other religious and ethnic minorities, though without saying how it will go about defending the rights of Uyghurs, Tibetans and other religious minorities. Presumably, the specific reference is to China.

The Strategy also raises the possibility of opening a dialogue with states that do not share our values. Do you see this as a contradiction between a firmer, more aggressive policy towards China and a more permissive one towards other countries in the region that might also be ambivalent about our values?

[Gordon Houlden]

It’s always tempting to only talk with countries that share our values, rather like a conversation that takes place between members of the same family. In my opinion, this is because the majority of the world is not democratic. Some one hundred countries have human rights policies that are distressing or, at least, less than stellar.

Curiously, in my opinion, it’s more important to have a dialogue with countries with shortcomings or difficulties, even if, at the end of the day, we’re not on the same wavelength. Simply engaging in a conversation with these countries at least provides an opportunity to advance the dialogue.

For its part, China is a country with a challenging culture. It’s a country with great international weight and a long tradition.

I have the bruises and scars.

This is due to years of interaction with the Chinese on difficult subjects such as human rights.

The fact remains that it’s necessary. From time to time, we find a way to communicate, even with the Chinese. For example, some twenty years ago, with the Canadian International Development Agency, there were discussions on prison management, in which I was not directly involved even though I was on the China mission. How was this possible? It turned out that part of the problem was a lack of knowledge. China was willing to consider improving certain aspects of its penal system. However, I’m not naive. The Chinese are still going to put people in jail who wouldn’t be incarcerated in Canada. The list of offences is long in China.

I am optimistic, however. Indeed, in the case of China, if we can change 1% or even a fraction of 1% of the policy, a very large number of people will be affected. That said, do I think that tomorrow or the next day, the situation will be much better for Uyghurs, Tibetans and religious minorities? Not at all.

On the other hand, we can at least maintain contact and keep the dialogue open, in the hope of seeing changes. If we don’t communicate, if we don’t engage, we surely won’t see improvements.

[Stéphane Bergeron, Bloc, Montarville, QC]

I understand your answer.

Mr. Hampson.

[Dr. Fen Osler Hampson]

Talking is not the same as capitulation, and sometimes the two get confused, particularly in public discourse.

I would agree with everything Gordon said, but I would add two caveats. One is that we shouldn't go soft. Diplomacy is about hard talk. It's not just sweet talk. I think that when it comes to China, as we saw with the declaration against arbitrary detention, we're much more effective when we engage in team talk, which is to say that we build coalitions, informal coalitions, and deliver the same message at the same time—in this case, to the Chinese, because they don't like to be called out in numbers.

That requires a very adroit diplomacy. It requires a strong diplomatic leadership, and it requires consistency. You don't deliver the message once. You have to deliver it many times over.

[Stéphane Bergeron, Bloc, Montarville, QC]

Going back to the answer you both provided, are we to understand that we need to show the same resolve towards states that we want to engage in dialogue?

[Dr. Fen Osler Hampson]

Yes.

[The Chair, Liberal, Ken Hardie]

With that, Mr. Bergeron, your six minutes have gone by.

We'll now go to Ms. McPherson for six minutes.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much, Mr. Chair.

Happy new year to all my colleagues, whom I am seeing for the first time this year.

Thank you very much to both of you for being here. Your comments have been very interesting.

One of the things I'm hearing from you is that China is increasing its influence around the world, both diplomatically in terms of development and in terms of utilizing the tools within the multilateral institutions. They're gaining more influence. This is happening at the same time that the influence Canada has in the world is diminishing.

We've seen—and I don't blame the current administration solely—in the last 20 years a diminishment in our diplomatic resources, in what we do with our diplomacy. We've seen a diminishment within our development dollars, in how we spend money and what that looks like, and even, as you mentioned, in our participation in multilateral institutions like the United Nations, in those areas where Canada can't even get a Security Council seat any longer. I'd like to get a better sense of what the implications are of that.

I'm going to pass that to both of you. Then, if you wouldn't mind, just touch upon the idea that this is the current context we are in, but we are in a context now where we could have a Trump presidency, which pulls the U.S. even further back. Also, to be honest, we have a potential federal government in Canada that has spoken about pulling back from the world stage in multiple ways. What are the implications of that? What does China see when these things are happening?

Perhaps I could start with you, Dr. Houlden.

I'm sorry, Professor, but as an Albertan I have to nod to my fellow Albertans despite the hat, the cow and the beef part.

[Gordon Houlden]

You can take me out of Alberta, but you can't take the Alberta out of me. It's very true.

The world is shifting in profound ways. The fact that it's rather gradual doesn't mean that it isn't happening swiftly. When I left Beijing in 2004 to go to Taiwan, and it feels like forever now, the Chinese economy was roughly one-twelfth of what it is today. Twelve times in roughly 20 years. While there are a lot of serious doubts about the Chinese economy going forward, the idea that it's going to collapse and that it's not going to grow, assuming the global economy is stable, is something that's just not going to occur.

We have seen a relative diminution in U.S. strength and in the strength of western countries, generally. If you just look at the percentage of GDP in the G7, there's no sign that this change is going to.... We're going to be in a different world. We are in a different world of diminution, plus the Asia-Pacific region doesn't have a NATO. The groups we belong to, be it Francophonie or Commonwealth, don't have as much clout there. We have influence, but our cultural mindset, in my opinion, is still very much oriented toward Europe and the United States. It's easy to say, as it says in the IPS, two-thirds of operations in Asia are growing quickly, but it understates, in my view, the growth of China.

Yes, we can send our business people to southeast Asia and to ASEAN countries if we wish, but when they arrive there, they're going to find the infrastructure is often built by China. For the great majority of those Indo-Pacific countries, excluding the United States, China is the number one trading partner. Therefore, you can move from Burlington to Kuala Lumpur to open an office there, and you may be doing way more China business than you were doing back home.

China has half of the Asian economy. The reality, for anybody who's been an adult since 1945, has been that the west, the United States, has been in a dominant leading position, and I don't think we can automatically assume that. China is not going to go away. China is not going to be all-powerful, but we're now in a place where the U.S. can be challenged. The U.S. may choose not to engage. That creates real difficulties for us who live snugly along that U.S. border and are deeply dependent on the U.S. market. The idea that we cannot engage, as an option, is not there.

The U.S. is about 24% dependent on foreign trade. We're closer to 60%. China is somewhere in between. The idea that you can maintain the prosperity without being engaged globally is just not there. If that's where the growth is, that's where we need to be.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

Dr. Hampson.

[Dr. Fen Osler Hampson]

Canada got a tremendous boost during the unipolar moment after the Cold War ended. Our soft power, if I can use that term, travelled well, because it didn't encounter much resistance.

International institutions today have become arenas of great power and soft power competition. I tried to underscore that in my comments—how the Chinese are extending their influence in those institutions. Simply put, we have to invest in our hard power in response to the first question I got, but we also have to invest in our soft power. We need to get much smarter about it. It's not one or the other. It's both. It's driven by, as I said, geopolitical forces. Yes, we're a middle-sized power, but many countries still look to us for leadership, because there is a legacy there.

To come back to something Gordon said, our economic fortunes are in those parts of the world where we traditionally didn't play, the Indo-Pacific region being one of them. Those countries expect us to be an active partner, not just in the new and emerging institutions of the Indo-Pacific region but particularly in southeast Asia, where I'd say there are enormous opportunities for Canada. They're democracies we can work with, imperfect democracies but democracies nonetheless.

Indonesia is one where, at one point, we were one of its largest aid partners. It hasn't forgotten that, but we sure have. There's opportunity there, but we've got to up our game—hard power and soft power. That means investing in both at a time when Canadians don't want to invest in them. Part of political leadership is to say, as Gordon said, that the world really matters to us in our prosperity and our security.

[The Chair, Liberal, Ken Hardie]

Thank you, Professor Hampson.

I'm being a bit, shall we say, generous on time today, because we have a fair amount of time. We'll go to our second round now.

Mr. Chong, go ahead for five minutes.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for appearing.

I want to ask a counterintuitive question and get both of your reactions.

The narrative over the last two decades has been the ascendancy of the PRC and the relative decline of the United States. However, what if we are entering an era where the opposite is happening?

This past year, China's population dropped by 2.1 million people, and we know demographic decline is impossible to reverse. We've seen this in country after country. When you enter into that kind of population decline—particularly in a country like the PRC, which is not open to newcomers and is somewhat xenophobic in terms of its racial composition—that decline is almost impossible to reverse. In seven short years, the population will be down by 1% and in 15 years by 2%. That's a pretty difficult demographic wave to counter economically.

In addition to that, according to the World Bank, U.S. GDP per capita was $76,000 this past year. In the PRC, it was $12,720. On those relative two bases, the U.S. economy in the last year grew at a breakneck pace off that much higher base. According to the recent data I've seen, on a nominal basis, U.S. GDP grew last year by 6.3% and China's nominal GDP grew by 4.6%. Youth unemployment is skyrocketing. It is now higher than it is in southern Europe—breaking through 20%, I believe. In fact, it was so high that, last August, officials in Beijing said they were no longer going to publish the data on youth unemployment.

When we put all that together.... Perhaps we are entering an era where the PRC is economically declining, which may result in domestic instability. In that context, what should western countries' position be relative to the PRC? We've been in something of a defensive position for the better part of a decade because of the increasing threats. We may be facing a China that is inwardly focused, as it was in the fifties, sixties and seventies, and vulnerable to domestic instability.

What should our position be relative to that, if that's the era we're about to embark on?

[Gordon Houlden]

Do you mind if I go first?

I'm thinking of a recent column by Mr. Ibbitson, which touched on those things. I agreed with his description of the problem. I'm not sure I entirely agreed with the conclusions.

It is certainly true that the Chinese population is irrevocably going to decline. There's no factory churning out 18-year-olds. The percentage of the economically unproductive group, aged over 64 or below 15.... That bothers me a bit, because I'm over 64. Am I economically unproductive? However, over half of the monies being spent on robots is being spent in China. Can that compensate? Only partially.

However, if I look at Japan, which is a bit further along that curve, I don't see the Japanese economy collapsing. What I see are a couple of decades of very slow growth. The idea that China is going to outproduce.... There was that time, you will recall, when Japan was expected to own the world and real estate in Tokyo would be worth more than all the real estate in the United States on paper. That's not true. What you've seen is slow growth and a flattening.

China's not going to disappear. Things like youth unemployment and the declining population of those of working age can be brought into balance. They're teaching the wrong skills. The parents want them to do certain things. Those aren't the jobs that necessarily are there for them. That's a mismatch of the labour market with the economy, and that can be fixed.

The U.S. economy is not about to collapse. It will have the largest economy for the foreseeable future. There will be two great economies. I am skeptical about the decline, but we must be ready for whatever comes. Beware of the unexpected. The Chinese political system seems remarkably stable. It is remarkably stable, but to me—and I've lived in communist countries on three different continents—it's that strength of iron, not of steel. It can crack. I served in eastern Europe at the onset of the collapse of the Soviet Union. I didn't see it coming. My job was to follow the dissident movements in politics, and I got it all wrong. I'm wary now about getting things badly wrong again, but I'm skeptical of collapse.

I think there will be slower growth and difficult growth. Quite frankly—and I've had this conversation with many Chinese—a China that has 700 million people would be a much more livable place than a place with 1.4 billion, and most Chinese agree. It would be easier on the environment and have more space and a higher quality of living, so let it be less dynamic—not overtaking us all, but perhaps relatively stable at a level where the gross GDP remains number two in the world.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Chong. Your five minutes and change are up.

We'll now go to Ms. Yip for five minutes or less.

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

Thank you for coming.

Professor Hampson, in your opening statement you mentioned that China is one of the largest contributors to the UN peacekeeping team. China has been participating in these missions for over 30 years. Why do you think they have taken such a role?

[Dr. Fen Osler Hampson]

They have taken that role in part for geographical reasons. Many of those peacekeeping missions have been in sub-Saharan Africa, which is a key, shall we say, area of investment for China under its development programs, its belt and road initiative and its desire to acquire bases, not just on the eastern side of Africa but now also on the western side of Africa. It's been driven very much by self-interest. They have an interest as well in stability in the sub-Saharan continent. By the way, that serves our interests as well, but it's on their terms, not ours.

It also comes back to the proposition about the Chinese desire for influence. Look at the influence and the reputational bounce that we got when we were the big peacekeepers in the world back in the 1950s and 1960s. It defined us as a middle power. Guess what. It's doing exactly the same thing for China today, not as a middle power but as a great power.

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

Do you think that they can maintain this level of participation in the current climate?

[Dr. Fen Osler Hampson]

Notwithstanding the comments about China's population decline, absolutely. They can underwrite the missions. We decided long ago that peacekeeping was too expensive for us and that there were others who could do it more cheaply. Well, it's expensive for the Chinese, but they are prepared to write the cheques, for obvious reasons.

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

Thank you.

Professor Houlden, you mentioned that Canada should invest more in soft power. Could you elaborate on that?

[Gordon Houlden]

It might have been....

[Dr. Fen Osler Hampson]

I used that term, but you said the same things.

[Gordon Houlden]

That's fair enough.

The influence comes in different ways. We are but 40 million people. Again, the heavy battalions are in Asia, where provinces of China have, in some cases, triple that. India obviously as well, and Indonesia.... We have what we call the physics of power, that scale issue. It doesn't apply quite as much to western Europe, necessarily, but it applies in spades to Asia.

Also, you have the tyranny of distance. You have that great distance with a fainter footprint, and then you have the size. That means expense to overcome that distance, and spending sufficiently on exerting influence at a distance is great. We're going to be more affected by Asia than we will affect them, but that is not an excuse for inaction and not making the effort. There is support—a bit of a bias here—for our academic institutions operating abroad, and it isn't and shouldn't be all about government. Business as well can have an important role internationally. We are more or less invisible in the United States, but we're present, our firms, in a particular, in large numbers. That's not quite so true in Asia.

Distance is only an excuse sometimes. People look at a globe, and Australia is right next door. I spoke to some Australians today at their high commission. Sydney is further from Shanghai than Vancouver is, but the difference is that, for Australians, the psychological distance is much shorter. In other words, they have made a decision that Asia is important to them, so they engage and they expect that to be the case. They are present on the ground in large numbers throughout southeast Asia in particular but also in east Asia.

For us sitting in Toronto or even in my home province of Alberta, China doesn't loom large. For the diaspora community it does, of course, but that shouldn't be the only place where expertise on Asia, interest in Asia or a role in Asia should apply. It takes money and sustained effort. The key thing there, I'd say, would be sustained effort.

Some of the issues in the past decades have been that we have had these episodic enthusiasms for Asia, and then some other crisis or some other situation comes along, and we move. That is noticed in those countries. If you visit a couple of times, and then it's six years since you were there, that will diminish any impact you have, whether it's soft power or just in terms of commercial promotion.

[The Chair, Liberal, Ken Hardie]

Thank you, Ms. Yip. That's five minutes for you.

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