Isolating China could lead to a series of unintended consequences

Randolph MankCanadian Global Affairs Minister Melanie Joly delivered a speech in Toronto today foreshadowing Canada’s long-awaited Indo-Pacific Strategy, promised within a month. She highlighted the geopolitical risks of doing business with China and the desire to strengthen ties with India and South-East Asia.

The hardline China policy came as no surprise. On October 11, in a speech at the Brookings Institution in Washington, D.C., Deputy Prime Minister Freeland – reacting both to China’s recent hostage diplomacy against Canada and Russia’s invasion of Ukraine – spoke about the need for “friend-shoring” in restructuring global supply chains away from authoritarian regimes. Two weeks later, during U.S. Secretary of State Blinken’s visit to Ottawa, Minister Joly announced that Canada will seek to join the U.S.-initiated Indo-Pacific Framework talks and host the first Canada-U.S. Strategic Dialogue on the Indo-Pacific.

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Following suit, Industry Minister Philippe Champagne invoked national security concerns in ordering three Chinese companies to sell their interests in small lithium mining operations in Canada.

These moves may be better understood in the context of the Biden Administration’s February 2021 announcement – driven first by COVID-19 pandemic disruptions but now conflated with China containment – that it will repatriate production in four strategic sectors: batteries, rare earth minerals, pharmaceuticals and semiconductors. Our government has since then been rightly engaged in ensuring that Canada isn’t left out.

While accepting that alignment with the U.S. serves Canada’s core interests, it’s fair to ask what we imagine the end game of isolating China might be.

Is it to contain China until its authoritarian regime either collapses or ceases its abysmal abuses and reforms itself? Or, following the model of Russia in Ukraine, is the goal to respond to China’s aggression with a confrontation that will degrade its military and thwart its expansionist goals? Both scenarios raise red flags.

First, we need to be careful when aligning with the U.S. that we aren’t just falling into a contest of political one-upmanship between the Republican and Democratic Parties as they vie for electoral advantage. Defining China as the external enemy has achieved rare bipartisan consensus.

Second, regime change will always be up to the people of China, not something we can drive through an Indo-Pacific Strategy. The Chinese face serious disruptions from the zero-COVID policy, as well as a collapse in the real estate sector, severe debt, and steep demographic decline.

Third, if our goal is governance and human rights reform in China, as it should be, isolating China reduces opportunities for advocacy and engagement through bilateral and multilateral channels. Our history of bilateral differences with India and countries of South-East Asia suggests that there are no easy relations.

Fourth, we need to be conscious of the benefits of globalization to the Canadian economy. While 73 per cent of our trade is indeed with the U.S., diversified trade with the rest of the world, including with our second largest partner China at five per cent, is also vital to our economy and individual Canadians and businesses. Notably, German Chancellor Olaf Scholz and top German CEOs visited Beijing last week to promote increased economic ties. His government also approved Chinese state shipping giant Cosco’s controversial investment in the port of Hamburg.

Fifth, we should consider environmental consequences. China refines 60 per cent of the world’s lithium in processes that Canadian environmental regulations would not allow here. They then use it to produce the batteries that help power our own green transition. Ironically, given our own hardline, the U.S. has approved Chinese company Gotion’s US$2.4 billion investment to build an EV battery production facility in Michigan, even providing US$715 million in public incentives in support of 2,350 new jobs.

Sixth, if the end game is confrontation, we need to consider our own military limitations. U.S President Joe Biden has indicated (subsequently corrected by the White House) that the U.S. would defend Taiwan if attacked, contradicting the longstanding one-China policy featuring strategic ambiguity around Taiwan. Going all-in with the U.S. will require Canada to increase its military capabilities significantly.

Seventh, we should be careful to preserve the credibility of Canada as an independent foreign policy player. Canada has a proud tradition of meaningful multilateral initiatives, such as peacekeeping, banning landmines, setting global trade rules, and so on. We have also successfully preserved the latitude to abstain from U.S. military actions on occasion, as in Iraq.

In sum, though it will no doubt contain many positive elements, an Indo-Pacific Strategy that aims to isolate rather than engage with China, though inevitable, could bring a series of unintended consequences of which we need to be fully aware.

As some have warned, a new Cold War may well be the unfortunate result, with no clear end-game in sight.

Randolph Mank is a former three-time Canadian ambassador in Asia and VP Asia for BlackBerry. He currently heads MankGlobal consulting and is a Fellow of the Canadian Global Affairs Institute and the Balsillie School of International Affairs.

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