Masters of Duplicity

China is the master of duplicity.

It is no surprise that many Chinese proverbs deal with the use and practice of duplicity. This practice is at the root of most Chinese statements about why the are doing something and what they are doing. The recent announcements by Chinese trade officials that they are imposing tariffs on $3.7 billion worth of Canadian agricultural and food products ostensibly because Canada has imposed 100% tariffs on EVs made in China, is a case in point.

In doing so they conveniently ignore the fact that over a decade they have subsidized an industry with the intent to essentially dominate a sector and undercut competition with lower costs.

"Starting in 2009, the country began handing out financial subsidies to EV companies for producing buses, taxis, or cars for individual consumers. That year, fewer than 500 EVs were sold in China. But more money meant companies could keep spending to improve their models. It also meant consumers could spend less to get an EV of their own. 

From 2009 to 2022, the government poured over 200 billion RMB ($29 billion) into relevant subsidies and tax breaks. While the subsidy policy officially ended at the end of last year and was replaced by a more market-oriented system called “dual credits,” it had already had its intended effect: the more than 6 million EVs sold in China in 2022 accounted for over half of global EV sales." (How did China come to dominate the world of electric cars? MIT Technology Review).

My point here is Canada needs to recognize China for what it is in international commerce and geopolitical actions - a duplicitous cheater that talks from both sides of their mouth. The two Michaels's fiasco was another illustration of this behaviour in another sphere. According to the Chinese, the Michael's were spies. The facts of the matter were that they were pawns in the response for our rightful arrest in Canada on behalf of the United States of Huawei executive Meng Wenzhou who was found to be engaged in financial fraud in dealing with Iran. Huawei is one of China's proxy state enterprises.

Consequently we are now in a trade war with China. This is not the first time we have locked horns with China in trade. However, how many times do we need to be awakened to the need to adjust our economic strategy to fend off these challenges? The facility with which centrally planned economies, ruled by autocrats can deploy their resources to a focused purpose should inform our approach going forward. Canadian economic and commercial policy must become more focused and concentrated given the size of our economy and scope of our commerce.

However, the current trade tussle is small potatoes compared to what we will face in the years ahead with China's geopolitical duplicity.

The recent announcement by the Chinese Department of Defense that spending will increase by 7% and amount to $300 billion (US) on the stated reason that "the world has become a dangerous place" is the penultimate of crafty deception. The world is a more dangerous place because the Chinese and their autocratic/dictatorial accomplices have made the world a more dangerous place.

In fact, the Chinese are seizing an opportunity, which admittedly they also execute with great skill. The opportunity is that with American isolationism and the current preoccupation with Ukraine, Europe and the Middle-East, the distraction will allow the Chinese to continue their expansionist aims in the South China sea, other international waterways and the eventual subjugation of Taiwan, all in the abject flouting of international practice and law. 

This is already happening and will only be accelerated with the additional and unprecedented commitment of resources to defense.

How does this link to Canada, trade and our own security?

First, there is a lesson to be taken with respect to trade. With about 85% of our trade in canola going to China we need to help this industry find other markets for their product. Canola is a healthy alternative to cooking oils, and is low in saturated fat and light in texture. It is used in cooking, baking and animal feeds as well as a plethora of industrial products. (https://www.canolacouncil.org/about-canola/) Given its many applications there is a world-wide market for the product with attendant opportunities for Canadian producers of canola upon which to capitalize. How we must do this is the subject of another posting.

Second, the lesson for defense and security is that in concert with the challenges we face from the US to our sovereignty at our borders, on our coasts and in our Arctic, the Chinese also have designs on our northern most territories. In declaring themselves a "near Arctic State" the "thin edge of the wedge" is being inserted into what is clearly our territory but in which our own defense has been severely lacking. The recent announcement that Canada will build another polar icebreaker is encouraging - but runs the risk of being too little too late. Again, this will be fleshed out more fully in subsequent postings.

The overarching lesson for Canada is, as we face economic and strategic challenges on more than one front, from more than one adversary, we cannot slip into complacency or drag our collective feet in response. Unfortunately we are facing all of these challenges at once and have been caught with our pants down. We have no other choice that to put on and pull our big boy pants and make certain that the difficult choices required to allocate our resources to defend ourselves in all these spheres, is actioned at once.