Canada-China Relations Committee on Feb. 5th, 2024

[The Chair, Liberal, Ken Hardie]

Thank you, Ms. Horton.

We'll now go to Director Fitz-Gerald for five minutes or less.

[Dr. Ann Fitz-Gerald, Director, Balsillie School of International Affairs]

Thank you very much, Mr. Chair and honourable members of the committee.

The world has changed profoundly. The multilateralism model based on the rules-based order that Canada has subscribed to over the years has been undermined by geopolitical rivalry and a winner-take-all set of rules. This leaves one question: What is the new playbook for middle economies? It's something that in my view, and because it cannot be the same multilateralist model, remains indetermined and undefined.

There's a Cold War 2, which concerns enmeshment rather than the decoupling witnessed in the Cold War. We are in a world where power is based on who owns and controls data and intellectual property, where people fight over IP and data in an arena defined by an intangibles versus tangibles marketplace and in a world where democracy becomes eroded due to private gain. We therefore need a playbook and a policy orientation to suit this reality, particularly in the context of a Canada-China relationship moving forward.

In the time I've been allocated, I'd like to emphasize that this position requires both de-risking in areas where we can engage and decoupling in areas where, due to rules, values and standards, we must limit our engagement. The need to continue trading with China and engaging with China around international tables means that our ability to de-risk depends entirely on our ability to understand what the risks are.

When we think about China, we should think, in my view, about intellectual property, data, AI, demographics and maritime and land-based corridors. Despite the demographic challenges facing China's current economic and political models, it has raced ahead with technology-related IP and its own data governance standards in order to reap longer-term benefits from others. Canada must compete in this very complex terrain by adding value to the global supply chain with its own IP-protected technology advancements. This would enable Canada to engage and negotiate with China with strength and remain a serious economic player in this changed global context.

Global powers have acknowledged the risks associated with narrow maritime corridors like the Strait of Hormuz and the Red Sea. Alternative corridors are now being developed. The U.S. seeks to win Saudi Arabia's support in a new land-sea corridor partnership running from the Indian Ocean to the Mediterranean, while China pushes billions into a new middle corridor trade route linking it to Europe. Cross-continental corridor competition is also being pursued on the African continent.

As these new routes develop, and based on the challenges that China will inevitably face in negotiating its middle corridor with Europe, China will be monitoring how climate trends will make parts of the Arctic inhabitable over the next 25 years and, with its Arctic vessel and icebreaking capability, will be planning accordingly. China will therefore come to Canada with its own ideas of ocean governance in the Arctic and will negotiate around these ideas. At the same time, China will maintain its capability to massively disrupt North America through data, AI, IP and cyber and even by way of TikTok algorithms.

The fact that we must work with China, buy things from China and co-operate with China on agendas like the climate makes for challenging and complex geopolitical terrain. This is even more acute for middle economies like Canada, which are more vulnerable in the face of the geopolitical tactics of others.

Sun Tzu said that when in doubt, go to higher ground. Maya Angelou said that when we know better, we do better. In terms of Canada's relationship with China, my view is that all roads lead to a priority consideration, which is national capacity building. This requires us to be honest about our civil service capacity to operate in an intangibles marketplace and to question whether or not we have the institutions required to defend our interests in this intangibles world. This priority, I feel, is a precondition for the execution of the government's Indo-Pacific strategy.

We need intellectual bilingualism across the national civil service and the security sector so that data science, big data, algorithms, AI, ICT, large language models, sensors and devices, all of which I would refer to as the core enablers of emerging transformative technologies, are standard parlance and knowledge across government. This would enable Canada to strongly advocate for international civil service capacity in this multidisciplinary domain.

In my engagements in Europe, Southeast Asia and the Middle East over the last 18 months, it is evident that we have some work to do to catch up on the global realities. We must also have a solid ocean governance framework firmly in place in order to be in a strong negotiating position when China starts building infrastructure and maritime corridors through the Arctic. Lastly, we must do everything we can to maximize the strength of our higher education system, which, in my view, remains one of the strongest national instruments of power here in Canada, and protect this central mechanism for thought leadership and intellectual property by having effective, relevant and centrally agreed strategies, such as a strong research security framework.

In conclusion, I recognize this is complex terrain and a wicked problem. As a research professor of international security, I have had to learn and adapt my knowledge, research and teaching pedagogy to these realities. I will just leave off by saying that we must all learn, develop mechanisms for this knowledge and capacity building, and seek to become better.

Thank you very much.

[The Chair, Liberal, Ken Hardie]

Thank you very much.

We'll now go to our questions.

We'll begin with Mr. Chong for six minutes or less, please.

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

Since supply chains came up—and I don't know if any of our witnesses have expertise in or knowledge of this—I'm wondering if any of our witnesses know about LOGINK, the People's Republic of China's data logistics port management system, which is now being used worldwide. Fifty per cent of cargo container equivalents are being shipped via this logistics system the PRC controls.

I don't know if any of our witnesses are familiar with the system. If not, I'll move on to other questions.

[Dr. Ann Fitz-Gerald]

I have familiarity with its imposition in Africa and propping up its strategy in Africa, which is driven by infrastructural development and a very predatory financial model.

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

Maybe you could speak a bit to it, then.

As I understand it, this system was created some two decades ago. It was an initiative of the Ministry of Transport of the People's Republic of China. It was initially only available to PRC ports, had users in those ports, and since then, it has spread globally. Apparently there are half a million users of the system. Two dozen ports outside of the PRC are linked into it now, and 50% of global container traffic now travels via the data logistics of that system.

Some have suggested that this is a huge issue. I'm wondering if you could comment on how much of a risk that system is, and whether or not there needs to be an alternative to that system, seeing how the pandemic supply chain disruptions demonstrated how vulnerable we are if we rely on a single point of failure.

[Dr. Ann Fitz-Gerald]

It's akin to a bolstered threat vector, I would say, because the PRC has made a logistical system functional for national interests in a data-driven and digitalized world. It's laying down standards for the governance of the AI, data and algorithms that are making that network function, and it's spreading. That's an issue because these threats and new threat vectors are difficult to surround because they're spreading through data and digital means.

I think the committee is well aware of the strategy of the BRI in Africa. It's a long commitment that involves receipts for technology and IP and the infrastructure that's laid down. That relationship is further entrenched by the data-driven digitalized capability within this.

I see this as bolstering the threat vector, not reducing it, and showing the predatory financial nature of the logistical arrangement.

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

Thank you.

I think the chair has indicated some other witnesses would like to jump in on this.

Go ahead.

[Deanna Horton]

Thank you very much.

I would like to add that I've seen a demonstration from Maersk. They obviously have a system of their own.

I entirely agree that one of our biggest challenges is countering China's activity in the digital sphere. I have written about this. I think one thing Canada should be doing—we can't do it alone—is aligning with other partners. I think we should also be ensuring that digital technologies are transmitted as part of development assistance, because right now often it's only the Chinese who are offering this.

We have a lot of expertise we can share. I think this should be, really, a part of what we are doing not only in Asia but in other parts of the global south.

[The Chair, Liberal, Ken Hardie]

Ms. Paskal, go ahead.

[Cleo Paskal]

This is very consistent with the comprehensive national power approach, where you try to get into everywhere you can on the systems. The thing that we've been tracking more are the ship-to-shore cranes. China has a company, ZPMC, that has about 80% of the ship-to-shore crane market in ports around the world. It's now been declassified that these things have sensors so they can spy on military-related cargo. They can potentially be remotely controlled.

We know that deep within the seemingly mechanical systems of the ports, you have potential Chinese control. This is symptomatic of the way that Chinese companies have embedded themselves across critical infrastructure, including, obviously, water, electricity, traffic and everything else.

The logistics are part of the problem you're talking about. Even if you just look at the physical infrastructure on the ports, there's the potential for remote control and for using them as intelligence-gathering platforms.

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

Thank you, Mr. Chair.

[The Chair, Liberal, Ken Hardie]

Thank you.

We'll now go to Mr. Fragiskatos for six minutes or less.

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

Thank you, Chair.

Thank you to all of you for being here.

Professor Fitz-Gerald, let's start with you. You used the term “enmeshment” in your opening testimony with respect to China. Can you go over again what you mean by that?

[Dr. Ann Fitz-Gerald]

Yes. I'm using it for interactions. It's not complete divorce and decoupling, but social, economic, political and military interactions. That is why I suggested that a dual-track strategy needs to be taken forward. That is characterized by de-risking and decoupling, but in order to manage that approach, knowledge of the risks that we need to de-risk is necessary.

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

What are those risks, fundamentally, to you?

[Dr. Ann Fitz-Gerald]

I believe the risks involve looking at core enablers of emerging transformative technology to see how they are applied to existing technology to enhance them further. There's a dual-usage nature of the resulting technologies. The rosy side of that transformation needs to be embraced, and the dark side needs to be guarded against.

It's my view that we are lacking governance, accountability and legal and ethical frameworks to manage the technology that becomes created, and we do not have a response to answer the question “Should we make it?” instead of “Can we make it?”

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

Give me an example of a technology that you're particularly concerned about given that Canada can't do this on its own. Forgive me if I'm being presumptuous, but I think you're arguing that. It will have to do it in concert with others. What technology would you focus on as a particular concern?

[Dr. Ann Fitz-Gerald]

Some examples are the ways in which data devices, sensors, AI and large language models come together in different ways and in different combinations to produce new inventions and innovations. The knowledge to write policy and legislation guiding those developments is critical. That is why I'm focusing on national capacity building that promotes intellectual bilingualism.

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

That's very interesting.

[Dr. Ann Fitz-Gerald]

You even have end products, which should be embraced. They're very good for climate, good for higher education and good for zero carbons and zero hunger. It's those global goals that unite us all: the STEM community, the social sciences and the humanities. However, without the proper governance filters that the transition takes end products through, some undermine global goals and miss entirely. Some have a direct path to them.

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

Do you think that the Indo-Pacific strategy offers a general framework for Canada to join with other partners and meet the challenge you're talking about of offering a response?

[Dr. Ann Fitz-Gerald]

Canada has to have something quite powerful to bring to the table. It's better to sometimes drill down and say, “Let's focus on these three things because we can offer weight in these areas” instead of spreading too thinly.

I would like to focus in this regard on the armed forces. This is not the first time that Canada has had to confront a time when it can't develop conventional strength in all areas of the military. It has to drill down and focus on niche areas to have something to bring to its like-minded partners and to not be left out of any seat at any table.

One thing we do very well in this country is higher education. We've had founders of Google, Meta and other companies publicly thank Canada for providing them with their leadership cadre. If we built a military capability based on our great cyber and AI strengths and our ability to perform in a data- and digital-driven world, then we would be bringing something to the table, because that remains a foreign and security priority of all our like-minded allies. Equally, the higher education system could bring a lot to science diplomacy, and we could help influence standards to operate in this data- and digital-driven world.

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

Thank you very much.

Professor Horton, I have a limited amount of time—about a minute and a half, or maybe less—but I was quite interested in the point you raised about diasporas.

Could you expand on that a bit with respect to the Indo-Pacific strategy and what Canada could do to encourage the participation of diasporas towards the fulfillment of that strategy writ large?

[Deanna Horton]

In my response, I was referring in particular to Canadians who are already in Asia. We have a lot of Canadians in all the major markets. My personal experience and that of others confirm that, unlike some other countries—I wouldn't say competitors—with large diasporas, we don't do nearly enough to take advantage of the people who are already on the ground.

This would be important for going ahead. If we want to encourage further investment, we need more knowledge. The more knowledge that's already there that we can use, the better.