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Canada is set to reveal its China strategy. For a sneak peek, look to Washington

In the China-obsessed U.S. capital, there’s an extensive trail of clues about looming battle over technology

Canada’s long-awaited strategy for dealing with China and the broader Indo-Pacific region might finally be released within days.

It’s taken a while. But two sources say the Trudeau government hopes to have the paper completed and out in public before the prime minister heads to Asia later this month.

Advance clues of some of its themes, however, are available in a place where public officials have spent years obsessing over this issue: the United States.

It’s no accident that Canadian ministers have been travelling to Washington lately to talk about trading more with allies or even decoupling from China.

It’s a textbook example of preaching to the choir. Or, to stick with the musical metaphor, it’s an example of singing from a common hymn book.

Political Washington under the last few administrations has been increasingly seized with girding itself for a generation of competition with China. 

And the U.S. has made clear, for some time, that it’s eager to know where Canada stands in the century’s biggest geopolitical rivalry.

The U.S. already has strategy papers and books from current and past government officials and numerous trade actions, from tariffs on Chinese imports to several export bans forbidding certain high-tech products from being sold to China. 

Sources say the Canadian policies won’t entirely replicate U.S. ones, but that one U.S. politician’s speech, in particular, resembles Ottawa’s thinking on China.

Canada’s Foreign Minister Mélanie Joly, foreground, is leading the review the China policy. For clues on some of its themes, there’s a recent speech by U.S. Secretary of State Antony Blinken, left. (Blair Gable/Reuters)

The speech was delivered earlier this year by U.S. Secretary of State Antony Blinken, and it advocates two concurrent paths in working with China.

A 2-track approach

Track one: to keep trading with China and co-operating where possible, like on mutually beneficial issues involving public health and the environment. Yet some trade will be curtailed.

There’s the second, more antagonistic track laid out by Blinken. It involves limiting trade with China in a pair of areas: cutting-edge technology and vital goods where Chinese state-backed companies are pursuing a global monopoly.

Blinken mentioned semiconductors, steel and pharmaceuticals as examples.

“To the people of China: we’ll compete with confidence; we’ll co-operate wherever we can; we’ll contest where we must,” Blinken said in the speech earlier this year. “We want trade and investment as long as they’re fair and don’t jeopardize our national security.”

We’re already seeing signs of that two-track approach in U.S. trade data. American imports of toys and phones are still rising from China, yet imports of semiconductors and certain IT products are plunging

There’s far more detail on the U.S. strategy in a multitude of public documents and also a new law aimed at getting more electric car components from Canada and fewer from China.

The U.S. pressed allies for years to keep Huawei out of 5G networks. It was an early sign of what’s ahead. (Mark Schiefelbein/AP)

These official texts make for dry reading. Fortunately, more captivating copy is available. 

An engrossing glimpse into the psyche of modern-day Washington comes in new books written by insiders working on China policy. 

What Washington’s insiders foresee

One such book comes from the current head of China policy in the White House’s National Security Council, written before he took the job.

Rush Doshi combed through thousands of Chinese documents dating back decades for his book The Long Game: China’s Grand Strategy to Displace American Order.

Its central thesis is that China spent years lulling the U.S. into a false sense of security while concealing its goal of supplanting the U.S.-led liberal order.

It says China is moving onto the final phase of its strategy — where it pushes U.S. forces out of the western Pacific; reclaims Taiwan; and re-engineers international institutions and technology standards in ways that benefit authoritarian and illiberal governments, while selling those governments surveillance equipment to squash any opposition.

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After laying out several possible U.S. responses, Doshi urges a so-called middle path. Not friendly, nor overtly hostile — but a bit like what Blinken describes.

In summary: deny China access to cutting-edge technology; invest in scientific research at home; build international alliances; and create new, friendlier trade networks for critical products.

Book predicts big shift: a scared, struggling China

There’s an even more provocative book — enthusiastically endorsed by former defence secretary James Mattis — co-authored by former senior strategists at the Pentagon who still play advisory roles.

The central argument is that China is about to hit a rough patch — it will grow in power during the 2020s, then suffer a long, painful slowdown starting in the 2030s.

That’s because three magical conditions that enabled China’s decades-long rise are set to expire, says the book, Danger Zone: The Coming Conflict with China.

China’s population exploded but will now shrink. The world flung open its doors to Chinese trade but is now building barriers. China liberalized its economy but is now reverting to state controls

That, says the book, triggers an entirely new threat.

“That’s when we should get really worried. What happens when a country that wants the world concludes that it might not be able to get it peacefully?” says the book. “The answer, history suggests, is nothing good.… Some of history’s deadliest wars were started by revisionist powers whose future no longer looked so bright.”

The book argues that autocracies, especially, turn more aggressive when they start doubting the inevitability of their rise. At home, they’re paranoid about threats to their rule, and in foreign affairs, they’re desperate to claim wins while they still can.

It points to examples from Ancient Greece as well as Russia in the early 1900s, Germany before the First World War and Japan before the Second World War.

Hence the name of the book, Danger Zone: it predicts we’ll enter a perilous stretch over the next few years as China sees its best, perhaps last, opportunity to seize Taiwan.

China-watchers were struck by a shift in tone from President Xi Jinping in his speech to a party congress last month, which was heavy on national security and warnings of new threats to Chinese prosperity. (Tingshu Wang/Reuters)

Reclaiming that island, the authors say, is not just an issue of patriotic sentiment to the Chinese government, but a strategic cure for its upcoming ills.

It would extend China’s military reach over the sea, provide a gigantic de facto aircraft carrier and turn over Taiwan’s world-dominating semiconductor and advanced chip industry. 

In an interview, book co-author Hal Brands said any such war would primarily unfold in Asia, but he said North America would suffer the effects, from economic impacts to cyberattacks.

“Homelands will not be sanctuaries,” said Brands, special assistant to the U.S. defence secretary for strategic planning in 2015 and 2016, and former lead writer on the team that produces the U.S. National Defence Strategy.

His book offers lessons from the early Cold War, in the late 1940s, when the Soviet Union was in its most dominant position — but says the U.S. kept it at bay, through diplomacy, alliance-building and military deterrence.

The book says setting priorities is key. And a top priority it identifies should, by now, sound familiar.

It’s technology.

A role for Canada in this new world

The book argues that past superpowers were built by dominating their era’s critical technology — the British with steam and iron; the U.S. with steel and electronics; and now, China sees artificial intelligence, telecommunications and quantum computing as keys to future power.

Here’s where there’s a role for Canada. Danger Zone urges the creation of a free-world economic bloc for emerging technology, like a club for high-tech trade, or a digital alliance.

“Canada has a non-trivial role to play,” Brands said.

The U.S. is keen on greater technological self-reliance. Here, President Joe Biden celebrated a just-passed law that funds semiconductor research, at a groundbreaking ceremony in September for a new Intel plant in Ohio. (Joshua Roberts/Reuters)

There are signs Ottawa also sees this as an ideal niche for Canada. It’s spending billions to get a critical minerals and electric battery industry going, as are individual provinces.

Canada just forced three Chinese companies to sell their holdings in Canadian mineral firms and threatened to block future purchases by its state-run companies.

In addition, Canada just asked to join the new U.S.-led Indo-Pacific trade group, and has the U.S.’s backing.

For months, trade insiders — indeed, even the Canadian government — questioned the point of signing onto that group, given that it’s not a formal trade agreement and there’s already a similar informal club of its type for the Americas.

But the Canadian business lobby urged Ottawa to sign onto the Indo-Pacific alliance, arguing Canada had to be part of its discussions involving new supply chains.

“It’s imperative that Canada has a seat at the table,” said Trevor Kennedy, vice-president for trade policy at the Business Council of Canada.

Yet there are ongoing challenges.

The U.S. sees a role for Canada in new supply chains where allies trade advanced technologies among themselves. Blinken, right, highlighted that by visiting a lithium battery-recycling plant in Montreal last month with his Canadian counterpart Foreign Minister Mélanie Joly, centre. (Ryan Remiorz/CP)

Critic suggests Canada is more talk than action

Canada’s critical-minerals industry is in its infancy, with some projects starting but the industry facing serious obstacles.   

One Washington critic of Canadian trade policies says Canada talks a great game about wanting to move supply chains from China, but doesn’t follow through.

Charles Benoit, a Canadian-American trade lawyer and counsel with a pro-reshoring group based in Washington, expressed disbelief that Canadian cabinet ministers would come to Washington to talk about decoupling from China.

He said it’s the United States, not Canada, that has slapped wide-ranging tariffs on China in retaliation for intellectual property theft; Benoit said those tariffs have helped restore some manufacturing in the U.S. 

And he said it’s the U.S., not Canada, pushing for the highest level of North American content in cars under the new continental trade agreement; Mexico and Canada are suing the U.S. for it.

“They’re actually working against decoupling,” said Benoit, of the Coalition for a Prosperous America.

We’ll soon see Ottawa’s plans for walking this delicate line. 

In a sign of the times, Canada is trying to remove Chinese state-backed enterprises from owning critical minerals, such as those that power electric vehicles and other cutting-edge technologies. (Eric Gaillard/Reuters)

Numerous federal departments are involved in the Indo-Pacific strategy, and barring any last-minute snags, it’ll be out when Prime Minister Justin Trudeau leaves for Asia.

So trade with China will continue. In fact, Canada’s product sales to China are still growing from year to year, and sources say the incoming strategy will encourage some of that, as Blinken did.

But let’s put those exports to China in context: they represent barely four per cent of Canada’s worldwide total, and that share hasn’t really budged for years.

We have a far bigger customer next door. 

And the Americans foresee a world with new limits on trade with China. It appears we’re entering that world, too.

Source: CBC