Science and Research Committee on April 16th, 2026

[The Chair, Liberal, Salma Zahid]

Good morning, everybody. I call to order meeting number 31 of the Standing Committee on Science and Research.

Today we are commencing our study on the implications of the Canada-China preliminary joint agreement on Canada's electric vehicle sector.

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

Please wait until I recognize you by name before speaking. For those on Zoom, at the bottom of your screen, you can select the appropriate channel for interpretation: English, the floor or French. I remind you that all comments should be addressed through the chair.

With that, I would like to welcome our witnesses for the first panel today.

Today we are joined by Guy Saint-Jacques, former ambassador of Canada to the People's Republic of China. He's joining us by video conference. We are also joined by Michael Kovrig, the founder of the Global Network for Strategic Effects.

All witnesses will have five minutes for their opening remarks. Then we will go to the rounds of questioning.

With that, we will start with Mr. Saint-Jacques.

You will have five minutes. The floor is yours. Please go ahead.

[Guy Saint-Jacques, Former Ambassador of Canada to the People's Republic of China, As an Individual]

Good morning, Madam Chair.

Good morning, ladies and gentlemen. Thank you for inviting me.

Today I would like to discuss three topics: first, the fact that China has become a major source of high-tech products; second, Chinese electric vehicles in Canada; and third, lessons we should learn.

President Xi Jinping hopes to complete China's great rejuvenation in 2049, the Chinese Communist Party's centennial. Recognizing that the country was facing a demographic crisis with a shrinking workforce, he launched the sweeping “Made in China 2025” strategy in 2015, which aimed to increase manufacturing productivity in 10 technology sectors. The goal was to end dependence on foreign countries, become a net exporter of these technologies and even eliminate foreign competition.

A 2024 study by the South China Morning Post confirmed that 84% of the targets had been met. These sectors include renewable energy, high-speed rail, telecommunications, aerospace, robotics, new materials, biomedicine, and, of course, electric vehicles and batteries. These achievements were attained through a combination of tax breaks, tax holidays, subsidies, forced technology transfers, and, of course, technology theft, including here in Canada.

The issue is that this policy has led to industrial overcapacity, particularly in the battery and semiconductor sectors. Heavily subsidized overproduction is now fuelling a massive trade surplus and exacerbating tensions with China's trading partners. For example, of the roughly 50 vehicle manufacturers in China, only three or four are profitable. In the first three months of this year, Chinese EV exports rose by more than 77%.

We have to recognize that China now makes high-quality products at very competitive prices. The decision of the previous government to follow blindly the Americans by putting 100% tariffs on Chinese EVs was ill-advised. We should have followed WTO rules and done a full study of the subsidies provided by the Chinese government. The result would have been tariffs more similar to those applied by the EU.

I can understand why Mr. Carney wanted to improve the relationship with China. It is too important a player to ignore. Getting rid of the Chinese tariffs on canola and seafood, two of our important exports to China, was important. The counterpart decision to allow 49,000 Chinese EVs per year into Canada makes sense and will also help to reduce our emissions of greenhouse gases.

Furthermore, attracting Chinese EV manufacturers to Canada will help to compensate for the loss of jobs resulting from U.S. car manufacturers moving their production to the U.S., following pressure by President Trump. When GM Canada went to Shanghai in 2009 to manufacture Buick Regal automobiles, China insisted that the Chinese content in those cars would have to gradually increase to 100% after 10 years. The Canadian government should impose a similar requirement on Chinese manufacturers that are willing to set up shop in Canada.

In terms of the lessons for Canada, the five-year plan adopted by the National People's Congress at its annual meeting last month calls for more investment in new productive forces like robotics, quantum physics, new drugs and manufacturing. This means that by 2030, 45% of the world's manufacturing capacity will be in China. This will lead to more trade friction and the gradual erosion of our own manufacturing capacity if we are not careful.

The government should therefore work with allies to make joint démarches to force the Chinese to open more of their markets to foreigners, as promised when they joined the WTO in 2001. We should also oppose the dumping of Chinese products here and launch WTO inquiries as required.

Finally, the government should also take more measures to prevent the theft of technology and adopt strategies to help our high-technology sector to progress. We also need to clarify rules on Chinese investment in Canada.

I would be happy to answer your questions.

[The Chair, Liberal, Salma Zahid]

Thank you.

With that, we will now move to Mr. Kovrig.

Please go ahead. You will have five minutes for your opening remarks.

[Michael Kovrig, Founder, Global Network for Strategic Effects]

Thank you for this opportunity to advise the committee.

Opening Canada's market to electric vehicles from the People's Republic of China should be assessed not as a normal trade agreement, but rather as a tactical gamble that risks deep entanglement with an increasingly totalitarian one-party state. Unless this trade is tightly constrained, it's likely to undermine Canada's industrial base and technological development and weaken national security and policy-making autonomy.

EVs and batteries are a strategic industry. The Chinese Communist Party knows that very well and has been pouring enormous resources into the sector in a bid to achieve global dominance of advanced technology and manufacturing. Behind every Chinese-built EV is a state-directed financing model of over 300 billion Canadian dollars' worth of subsidies, tax breaks, cheap land and suppressed wages.

Distorted political incentives create far more firms than the domestic market can sustain and enable them to operate without profit for years, saturating the domestic market with chronic oversupply, unbalancing the economy and generating epic trade surpluses. Many EV makers in this environment will fail eventually, but a few could become international giants, and their dominance will increase the PRC's geo-economic leverage, control of key technologies, and power to set standards and shape global governance.

The pattern is to flood, consolidate and weaponize. In stage one, Chinese firms flood markets and undercut and out-scale rivals. In stage two, profit margins collapse, competitors exit or never enter and Chinese companies consolidate market share. In stage three, the Communist Party can use control of inputs, production, exports and supply chains and pricing power for geopolitical leverage.

We've already seen variations of this playbook: solar panels, where PRC oversupply drove the collapse of western industry; steel, where China has created global overcapacity; and rare earths, where the party-state is wielding export controls in negotiations.

In several other countries, EVs are already racing through stage one and capturing significant market share. As China's overproduction gains increasing access to the Canadian market, it risks sabotaging the government's new automotive strategy.

A quota can limit import volumes, but it doesn't address the risk of connected vehicles running untrusted software or the entrenchment of imported Chinese brands that foster consumer loyalty and political pressure to expand the quota. Meanwhile, Canada will struggle to attract substantial investment, joint ventures or technology transfer. Instead, Chinese automakers are likely to use complete knockdown or CKD car kit assembly to circumvent trade barriers and create structural dependency, while Canadian consumers bear the moral cost of complicity in harmful environmental practices and human rights violations such as forced labour.

Canadians need to think strategically. The auto sector both sustains and depends on an advanced manufacturing ecosystem that in turn supports a defence industrial base and stable employment. If Chinese EVs achieve rapid growth in market share, it could trigger a rapid and irreversible collapse or capture of that ecosystem. In time, China's industrial gravity would pull Canada into stage three, in which economic subordination and ritualized political deference compound to create strategic risk. The economy could slide back down the value chain until Canadians are relegated to being suppliers of raw materials dependent on a predatory great power for imports of the technologies that are shaping the future.

I appreciate and share aspirations to accelerate the green transition, lower consumer prices, acquire technology and hedge an unreliable Trump administration, but deeper economic entanglement with China is not a long-term route to achieving any of those goals. It is a dead end, because that trade is inseparable from expanding the attack surface for the CCP's coercive economic statecraft.

To mitigate those risks and preserve options, the government should keep market access limited, conditional and reversible with snap-back provisions; conduct WTO-compliant anti-subsidy investigations to justify further countervailing measures; count any imports of CKD-assembled vehicles toward quotas; protect and develop domestic capacity in strategic sectors, including battery supply chains and critical minerals processing; and align with reliable partners on trade measures, forced labour bans, investment-screening criteria, cybersecurity regulations and technology standards.

Canada's automotive sector is at a fork in the road. If we take a wrong turn, an entire industrial ecosystem could be hollowed out or captured, which could lead to a dependency that erodes economic security, sovereignty and democratic values.

To avoid that, Canadians need to be resolute about setting terms and limiting the extent of trade with China in this strategic sector.

Thank you.

[The Chair, Liberal, Salma Zahid]

Thank you.

With that, we will start our first round of questioning. We will begin with MP Baldinelli for six minutes.

Please go ahead.

[Tony Baldinelli, Conservative, Niagara Falls—Niagara-on-the-Lake, ON]

Thank you, Madam Chair.

Thank you to the witnesses for being here this morning.

Mr. Kovrig, it's good to see you again. Thank you for being here before our committee.

In January of this year, Canada's Prime Minister travelled to China to forge a new strategic partnership with the People's Republic of China, focused on energy, agri-food and trade. During that visit the Prime Minister said, “I believe the progress that we have made in the partnership sets us up well for the new world order.”

What's your reaction to those comments?

[Michael Kovrig]

It's deep concern at the potential implications of that statement.

If it's simply short-term, tactical temporizing, I think that's understandable in a complex situation, but I would not support that particular choice of words. In effect, the critical thing to understand about that kind of scenario is that western countries, particularly democracies, may have policies and plans. The Chinese Communist Party has narratives. The narrative it is trying to build is of inevitable pre-eminence and centrality in shaping both its region and ultimately world order. Contributing to that narrative is essentially making a concession in negotiations without receiving anything in return. It's a very dangerous concession to make.

[Tony Baldinelli, Conservative, Niagara Falls—Niagara-on-the-Lake, ON]

You've talked about the tactical gamble and thinking strategically. In your view, is it a mistake by the Liberal government to be moving Canada closer to China and the Chinese Communist Party at this time, considering its abhorrent track record in its neglect of human rights, its use of forced labour and the unjust imprisonment of not only yourself but others, including freedom and democracy advocate Jimmy Lai, who has family and hotel operations not only in my community of Niagara-on-the-Lake but throughout the province of Ontario?

[Michael Kovrig]

I think it's understandable tactically in a situation of geopolitical uncertainty and extreme pressure. I understand why the Canadian government is doing it. In fact, many governments are trying to do that.

I would distinguish between.... Trying to stabilize relations with China by establishing diplomatic mechanisms and channels to manage those relations in as orderly a means as possible, and using face-to-face communication to deepen understanding of Chinese and Communist Party perspectives, I think that is necessary diplomacy. The risk is that stabilization slides into normalization and leads to deeper entanglement, which in turn magnifies and increases the risks of the many things that the Hogue inquiry and many other Canadian reports and analyses, for example from our security agencies, have already made clear.

The fundamental problem is that the Chinese Communist Party has an agenda that is hostile to western democracies because it seeks to weaken our governance and our societies and divide us from each other. It is particularly interested in driving wedges between the United States and its allies. Currently, it's capitalizing on the obviously fraught relations. We shouldn't be leaning into that dynamic. We should be looking for ways to strategically resist it.

Hedging uncertainty with the United States by tilting toward China is a risky bet that is likely to carry more negative costs for Canada than the positive benefits that it could potentially bring. It magnifies risks rather than reduces them. Instead, Canada should be diversifying to other economies more.

[Tony Baldinelli, Conservative, Niagara Falls—Niagara-on-the-Lake, ON]

During the last federal election, the Prime Minister indicated that China was Canada's biggest security threat. In fact, just the week after that, he was at a news conference in my community of Niagara Falls, and he said that Canada has to counter Chinese foreign interference threats. He also criticized China for being a partner with Russia in the war with Ukraine and said that it is a “threat” to broader Asia and to Taiwan, in particular. Carney said that China is the biggest threat “from a geopolitical sense” and that “we're taking action to address this.”

Do you know what he means when he says that Canada is taking action to address this? What has changed?

[Michael Kovrig]

I think that's a question to direct to the government in terms of what policies they are pursuing, but my impression—and this is where you see different simultaneous activities—is that, for example, on the one hand, it's deeper economic entanglement in some areas. I think the measures would include being judicious about in which sectors trade and investment are allowed to increase. Secondly, it's increased spending and investment in defence, defence procurement and strengthening things.

The problem from a scientific and technological perspective for this committee is that more entanglement with China creates more risks, which in turn imposes costs on the government and the taxpayer to mitigate. It's questionable whether the economic benefits, which are likely to be narrowly concentrated in a few firms, and frankly a few individuals, are not outweighed by the cost of having to mitigate all those challenges and in particular by the risk of interfering with negotiations with the United States, which is still a vastly more significant relationship. The Americans have made it quite clear that they take a dim view of a deeper entanglement with China by Canada and its allies.

I think we need to take a longer view, keep calm and be more strategic in terms of the likely implications of that balance of power and not make moves that would jeopardize relations and negotiations with the United States for the sake of short-term economic benefits that are likely to prove ephemeral.

[Tony Baldinelli, Conservative, Niagara Falls—Niagara-on-the-Lake, ON]

Thank you for your time.

[The Chair, Liberal, Salma Zahid]

Thank you, MP Baldinelli.

We will go to MP Noormohamed for six minutes.

Please go ahead.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

Thank you, Madam Chair.

Thank you to both our witnesses for being here.

Perhaps I can begin with you, Ambassador. One thing that I think is an important framing for all of us is that the Prime Minister described this moment in China-Canada relations as a “turning point”. From your experience as the ambassador in Beijing, how significant is this reset? What doors does it open that have been closed? What safeguards and guardrails do you see are in place now to help make sure this relationship is one that respects the way in which Canada works to see the world right now?

[Guy Saint-Jacques]

I would say that the visit of Mr. Carney was a very important one. I can understand that he is driven by a sense of urgency. He knows that the relationship with the United States could further deteriorate.

There's one thing I would like to clarify. Many people question this idea that we have entered into a strategic partnership with China. In fact, we are just resuming a strategic partnership. The strategic partnership was established when Mr. Harper was prime minister. Therefore, we are just going back to where we were. Furthermore, I would add that you have to engage with China. We know how close they are to Russia, to Iran and to North Korea. We have to use all opportunities to impress on them that, for instance, they have to speak with President Putin to agree on a ceasefire in Ukraine.

As well, I think the good news is that Mr. Carney is perceived by the Chinese leaders as a technocrat and a serious and competent leader. He is a technocrat as they are technocrats. They grew up managing villages, then provinces and then ministries back in Beijing. I think he has the capacity to raise difficult issues with them. I think he has chosen to raise cases like human rights and forced labour in Xinjiang and the case of Jimmy Lai. I think he has raised that in private. He doesn't want to antagonize the Chinese leadership by speaking publicly, but I think he has the capacity to speak the truth to the Chinese leader. They accept someone who is firm, and I think Mr. Carney can be firm with them.

China is already a much more important trade partner to us than most people believe. If you listen to Statistics Canada, our exports went up last year by 13% to reach some $34 billion. In fact, if you look at the Chinese figures, it's closer to $60 billion. Why is that? Well, the Bank of China has been buying Canadian gold in the last few years, but they have been buying this gold on the London market or the Zurich market. We have a challenge to capture the exports that go through third markets.

I think there's still very good potential to increase our exports, but at the same time, we have to do more domestically to counter Chinese interference and spying operations.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

Ambassador, if I could, I'll turn to the issue of the EV sector.

One thing we've come to accept is that, thanks to the way the U.S. has taken decisions, there's been a massive impact on the auto industry in this country. Auto production, as my friends from Ontario would know, has gone from three million vehicles in 2000 to just shy of 1.3 million in 2025.

What are the ways to attract Chinese EV joint ventures? You're hearing some of the comments out of Magna and others. How is that going to potentially help employment and manufacturing in this country? How does it help bolster our manufacturing sector at a time when the reliability of the United States as a partner is diminished and may or may not return to the level it used to be?

[Guy Saint-Jacques]

You're right. We have to take Donald Trump at his word when he says that he doesn't want to buy Canadian cars. We know about all the pressure he is putting on U.S. car manufacturers operating in Canada. In fact, we are at the stage where we should organize a boycott of companies like Stellantis that have moved production to the U.S., just to make it clear that the auto pact was very successful.

As I said in my opening remarks, we set the rules here. We should welcome Chinese car manufacturers but set the rules. Similar to what GM Canada had to do when it went to Shanghai in 2009, we should say, “You are welcome to come to Canada, but after three years, you will need to have about 30% Canadian content. After 10 years, that content has to be 100%.” This would help maintain jobs in Ontario and other provinces with regard to car part manufacturers and, of course, auto workers.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

Can we take this a step further? We know Canada has the resources needed to compete in the EV market. We have ample access to zero-emission electricity. We have access to critical minerals.

How do we turn those natural advantages into assets for negotiating with Chinese automakers when it comes time to look at building in Canada?

[Guy Saint-Jacques]

I think the government should look at the whole supply chain.

I said that we have to clarify the rules that apply to Chinese investment in Canada. Of course, we know China has become a big investor abroad. Chinese companies have invested over $100 billion already. This was mostly in the oil and gas sector, but I think they now want to expand.

The future, for us—

[The Chair, Liberal, Salma Zahid]

I'm sorry for interrupting, but the time is up for MP Noormohamed. Please wind it up in a few seconds.

[Guy Saint-Jacques]

We have to move to green technologies. We could welcome Chinese investment in critical minerals and rare earths, provided that 70% or 80% of it stays in North America.

[The Chair, Liberal, Salma Zahid]

Thank you.

Now we will proceed to MP Blanchette-Joncas for six minutes.

Please go ahead.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

Thank you, Madam Chair.

I thank the witnesses who are with us today.

Mr. Saint‑Jacques, on April 17, 2025, the Prime Minister of Canada, Mark Carney, said that the greatest threat to Canada's security is China. Now we are doing business with China.

Can you explain something to me? Based on your experience, has this security threat disappeared or diminished over the past year?

[Guy Saint-Jacques]

The threat has not disappeared. In fact, during the Hogue commission's work, we learned a great deal about the extent of Chinese interference activities, both in the political sphere and within the Chinese community, where, unfortunately, Canadians of Chinese descent are being harassed.

I think it's high time the government implemented the foreign agent registry. It should also reassure Canadians that more will be done to counter Chinese interference and to better protect Canadians of Chinese descent, so that if they report something to the RCMP, there will be genuine investigations to try to put a stop to this kind of intimidation.

China is conducting an extremely complex operation via its united front system, coordinated by its department of labour. A report by the Jamestown Foundation stated that, in 2023, 575 Chinese associations in Canada received funding from that department or were under its influence. The government has to combat this. As Mr. Kovrig said, China is actively engaged in disinformation to undermine our democracies.

So, on the one hand, we really do need to engage more with China. There are ways to do business with China while being cautious and protecting our intellectual property. However, on the other hand, we have to do much more. I hope that, during his discussions with Chinese leaders, Mr. Carney made it clear that these disinformation and interference activities are unacceptable to Canada and that there will be zero tolerance for them.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

Thank you, Mr. Saint‑Jacques.

You mentioned reassurance. I, too, am trying to make sense of the rhetoric. The Prime Minister said that China is the greatest security threat, yet Canada is trading with China. This doesn't mean we should stop trading with China altogether, but what security guarantees do we have?

Won't this electric vehicle agreement make us more dependent on China rather than truly strengthening our technological independence? We've talked about our resources, our expertise and our potential. How can anyone publicly condemn an authoritarian and totalitarian regime that threatens Canada's security, then turn around and trade with that regime a few months later? Is trade an excuse for democratic and moral degeneration?