At the last G20 meeting in November, a heated exchange took place between Justin Trudeau and Xi Jinping. While anecdotal in nature, the spat is nevertheless symptomatic of the growing tensions between Canada and China. It came as Canada unveiled its new Indo-Pacific Strategy. The strategy marks a reorientation in Canada’s relationship with China, after decades of attempts at rapprochement. The crisis of capitalism is leading to growing tensions between the imperialists, and Canada is being forced to choose sides between the two major powers, the United States and China.
At the November G20 diplomatic ball in Bali, Indonesia, Chinese President Xi Jinping took Prime Minister Justin Trudeau to task for leaking the content of an earlier exchange between them to the media. Earlier at the summit, the two heads of state had spoken briefly, and Trudeau had raised with the Chinese president allegations of Chinese interference in the 2019 Canadian election. The Canadian government then leaked the conversation to the media. Beijing clearly did not like the fact that Trudeau’s office orchestrated this exchange and its subsequent leakage to score political points.
These allegations of Chinese electoral interference have been borrowed from a fear campaign around China that the Canadian media has mobilized in recent months. Other cases highlighted by the media include the eyebrow-raising case of the Chinese researcher at Hydro-Québec accused of espionage—who allegedly sent sensitive documents from his work email address!—and that of the Chinese “secret police stations”—a story spread across the media but almost entirely based on a single report produced by a shady Spanish NGO with links to the CIA.
The claim that China interfered in the 2019 federal election first appeared on Global News, which raised very vague allegations that Justin Trudeau had been informed by the secret services that 11 candidates in the 2019 election had received funding from China. But since then, the Canadian government has been forced to admit that it has no information about the allegations. In fact, Justin Trudeau says he was never informed by the secret service, and based himself on this same Global News report to take the Chinese president to task at the G20! In the diplomatic game between imperialist powers, the truth is optional.
The latest episode in this fear campaign is the requirement since Jan. 5 for travellers from China to undergo COVID testing, allegedly because of the explosion of cases of the virus in the country. This measure has nothing to do with public health and everything to do with foreign policy. According to World Health Organization figures, there have been twice as many confirmed cases of COVID in the U.S. as in China in the last seven days, for a population one-fourth the size. The measures against Chinese travellers will not have any effect on the spread of the virus in Canada, but they will fuel distrust of people of Chinese origin in Canada, which is their real purpose.
A bygone era
With this fear-mongering, the Canadian media is obediently following Ottawa’s lead. In October, Deputy Prime Minister Chrystia Freeland gave a speech at the Brookings Institution in Washington, D.C., in which she heralded the end of a “geopolitical era that has lasted for three decades.” Canada, after nearly 30 years of prioritizing increased trade with China, is now taking a more aggressive posture against it.
Since about the middle of the 20th century, the United States has been by far Canada’s largest trading partner. Canada has grown up in the shadow of the world’s greatest power, which has become its principal ally. This has been both a blessing and a curse for the country, which benefits from being heavily integrated into the world’s largest economy, but is therefore largely dependent on it politically. Mexican dictator Porfirio Diaz once said of his country, “Poor Mexico, so far from God, so close to the United States!” Canada is also close to the United States, but has been more fortunate in its relations with its neighbor.
But Canada, though a second-rate imperialist power and a vassal of the United States, remains an imperialist power, and its ruling class has its own interests. Like an unruly child, Canada has often tried to play at being independent—only to come back and hide under America’s skirts. For example, after the Cuban revolution, Canada maintained trade relations with Cuba despite the American embargo. Similarly, Pierre Elliott Trudeau signed a diplomatic agreement with the U.S.S.R. in 1971, much to the chagrin of the United States.
With the rise of China and the transition of this huge market to capitalism in the 1990s, Canadian capitalists smelled a juicy business opportunity. Some of Canada’s ruling class turned to China. In 1994, Jean Chrétien summed up what mattered to this Sinophile wing of Canadian capitalists: “China will open up and become the biggest buyer of equipment and services in the world.” So the then prime minister led a trade delegation to China, accompanied by nine provincial premiers and hundreds of businessmen. The visit did indeed end with the conclusion of $9 billion in contracts.
Numerous agreements between the two countries were subsequently concluded under the governments of Jean Chrétien and Stephen Harper. Trade volume between the two countries has grown from a few billion dollars a year in the 1990s to about $70 billion in 2021. China is now Canada’s second-largest trading partner—although it is still a long way from the United States, which still receives 75 per cent of Canada’s exports. A Washington Post commentator happy with the recent anti-China shift sums up the thinking that led to Canada’s opening to China in the 1990s: “Just because the Yankees are too stupidly ideological to do business with this-or-that country is no reason for Canadians to leave money on the table!”
But in recent years, the Sinophobic wing—closer to American interests—of the Canadian ruling class has gone on the offensive. Hypocritically raising the issue of human rights in China—an issue that does not stop them when it comes to doing business with Saudi Arabia or even the United States—they are advocating a more aggressive attitude against Beijing.
The Meng Wanzhou saga in 2018-2019 already heralded that this pro-U.S. and Sinophobic wing was gaining influence in Ottawa. In 2018, Canada arrested Meng Wanzhou, a senior executive at Chinese multinational Huawei, at its border at the request of the United States, who wanted her extradited. In response, China arrested two Canadian nationals, the “two Michaels,” in addition to implementing other sanctions against Canada. Canada’s then-ambassador to China, John McCallum, a known Sinophile, was subsequently fired for commenting publicly on the Meng Wanzhou case, saying she had a strong case against her extradition.
Despite this deterioration in Canada-China relations, Donald Trump’s protectionist policies and general volatility were forcing Canada to look for trade avenues outside the United States, including to China. As an advisor to Justin Trudeau pointed out in 2017, “the more our trade advantages and our stability are shrunk by U.S. trade policy, the more they force us into the global trade world”.
Now, with Trump out of the White House, and an escalation of inter-imperialist tensions—the U.S.-Russia war over Ukraine, the U.S.-China struggle for control of Taiwan and the China Sea in general—the Trudeau government is falling back in line.
The Biden administration is asking its allies to end their ambiguous attitude towards China. Washington is putting pressure on its European allies to take a hard line with China. This has been seen recently in the corridors of NATO, according to insiders who spoke to the Financial Times. Canada appears to have bowed to the pressure last year, having signed a Roadmap for a Renewed U.S.-Canada Partnership, which already announced a change in tone with China.
Canada’s Indo-Pacific Strategy
In her October speech at the Brookings Institution, Chrystia Freeland outlined the thinking behind Canada’s Indo-Pacific Strategy. She obviously dressed up her words in liberal-democratic trappings, but their content is clear. The days of openness to Russia and China are over. It is time for “friendshoring”—a protectionist closing of ranks in the Western imperialist camp. “In 1989, we cashed in on the peace dividend. Now it’s time to take out war insurance,” she said.
So Canada is taking a more aggressive tone with China, which “is an increasingly disruptive global power,” according to the strategy. It announces an increased Canadian military presence in the Indo-Pacific region. It calls for $500 million in military spending in the region over the next five years. Foreign minister Mélanie Joly also announced plans to increase the frequency of Canadian warship passages through the Taiwan Strait. Canada will also increase the number of frigates it maintains in the region from one to three, as well as increasing the number of military attachés. In addition, Canada will invest more in Five Eyes, the spy organization that includes Australia, the United States, New Zealand, the United Kingdom and Canada.
Chrystia Freeland also spoke of “the in-between countries”. As geopolitical tensions mount, imperialist blocs are forming. As the U.S. turns its attention to the Indo-Pacific region, Canada does not want to be left behind. To bring neutral countries into the Western sphere of influence, Canada will expend hundreds of millions of dollars through various business initiatives or efforts hidden under humanitarian or environmental trappings.
In addition to military maneuvering, Canadian imperialism is taking economic actions. While Canada will not stop doing business with China, their strategy announces a shift towards protectionism. Canada does not have the economic clout to really hurt China, and would be shooting itself in the foot if it launched a trade war against China as the United States is currently doing. Still, Canada wants to repatriate its strategic supply chains, or at least make them less dependent on China. This phenomenon, which the business press calls “decoupling,” is being seen across the West. Freeland explained, “We should continue to trade, but we should avoid strategic vulnerabilities in our supply chains and our economies more broadly”
Indeed, the dependence of Canadian supply chains on China is problematic with rising imperialist tensions. This dependence could be used by China as a geopolitical tool and hurt Canada very badly. Canadian imperialists will not have failed to notice how Russia is using Europe’s dependence on its fuel. By cutting off its supply, Russia is wreaking havoc in Europe. It is becoming very expensive for Europeans to heat their homes, which is driving inflation, hurting businesses, and destabilizing one government after another as anger rises among the masses. With this tool, Vladimir Putin is driving a wedge between the European Union and the United States. Freeland said she wanted to ensure that Canada could never be exposed to “blackmail” of this kind.
Electric vehicles, batteries and critical minerals
In an unprecedented protectionist attack on China, the Canadian government recently ordered three Canadian lithium miners in Chile and Argentina to cut ties with their Chinese investors, using a national security pretext. The announcement by Industry Minister Francois-Philippe Champagne was a warning to China that Canada would be much less welcoming to Chinese capital in the “critical minerals” sector. In particular, Canada will prohibit, except in exceptional circumstances, state-owned companies from investing in Canadian critical minerals, a decision that is clearly aimed at China.
Critical minerals are 31 minerals outlined in a new Canadian Critical Minerals Strategy, including lithium, graphite, nickel, cobalt, copper and rare earth elements. These minerals are essential to the manufacture of strategic products, such as semiconductors and other digital components. The strategy, which calls for $4 billion in investments in this sector, contains a strong protectionist undertone and is part of efforts to “friendshore” and repatriate strategic supply chains. “Canada’s European allies have recently seen the cost of relying on countries with different values than ours for the supply of strategic commodities such as oil and gas, and there is a strong desire to avoid such vulnerabilities in emerging markets such as critical minerals,” the document states.
Lithium in particular, which is needed for battery production, is becoming strategically important as governments around the world set targets to stop producing gasoline-powered vehicles. Canada, for example, has set a goal of ending production of gasoline-powered vehicles by 2035. According to the International Energy Association, global demand for lithium is expected to increase by more than 10 times over the next 20 years.
China dominates this industry, controlling 60 per cent of the world’s lithium processing capacity. This presents a problem for the Western imperialists. The United States is trying to end this dependence on China, and recently passed a protectionist law to try to address the problem, the Inflation Reduction Act. This law gives tax credits to companies that produce their electric vehicles with critical minerals from North America or U.S. allies.
Canada does not want to miss this opportunity. The country has the sixth-largest known reserve of lithium in the world, but does not yet have a mine. However, Canadian mining companies are extracting lithium from Chile, which has by far the largest reserves of the mineral. But Canada is dependent on China for lithium processing, as it has no refining plant. Ottawa will fund various lithium processing plants, and several lithium mining projects have been launched in Quebec, with the support of the provincial government. The strategy also talks about accelerating the permitting process for new mines.
As the capitalist system sinks ever-deeper into crisis, the balance of power between the imperialists is becoming increasingly unstable. The shift in economic relations is leading to shifts in geopolitical relations. The time when capitalists had a blind faith in globalization—that is to say, in the extension of world trade—to bring peace (on their own soil, to be clear) is over. When there was enough meat for everyone, the imperialist scavengers more or less left each other alone. But the economic decline is now causing the vultures to fight for every last crumb, leading to geopolitical tensions and inter-imperialist conflicts. Canada’s aggressiveness towards China should be understood in this context.
The war in Ukraine is part of the same overall picture. This war is really between the United States and Russia, to determine who will plunder Ukraine and the surrounding region. More generally, the United States has provoked Russia into launching a costly and risky invasion to weaken its rival and force the Eastern European countries into the Western camp for good. The United States is trying to reassert its position as the world’s leading power in the face of the rise of new powers.
However, Eastern Europe represents a secondary front for the United States. Russia, although militarily dangerous and able to blackmail Europe with its large oil reserves, remains a second-rate imperialist power. It is to the Indo-Pacific region that the U.S. is turning its attention, as President Joe Biden stated in a recent national security strategy paper.
China, now the world’s second-largest economy and second-largest military power, represents a far more frightening rival for the United States. The United States is rushing to assert control over China’s backyard (the Indo-Pacific) before China has had a chance to expand its influence. The U.S. had a bit of a scare for a few years when the then president of the Philippines announced the end of his friendship with the U.S. and the beginning of an alliance with China, until his successor brought the country back into the U.S. fold. There is also the case of Hong Kong, over which Beijing has asserted its control in recent years. We can also mention Solomon Islands, which signed a security pact with China this year, forcing the U.S. to increase its diplomatic efforts towards Pacific island nations.
But it is around Taiwan that the world’s two greatest powers are currently clashing. The island off the coast of China is claimed by China, but is largely under American influence. Taiwan is of crucial strategic importance in our time, producing 92 per cent of advanced microchips as well as a significant share of semiconductors, placing it at the heart of the digital economy. Nancy Pelosi’s visit to Taiwan last summer was a signal from the United States to China that it intends to keep the island under its umbrella. The visit took place as part of a tour of Asia to close the ranks of American allies in the region against China.
It is in the context of this conflict between the world’s two greatest powers that Canada’s new aggressiveness towards China must be understood. Canada is following the example set by the United States, which is putting pressure on its allies.
Moreover, as the U.S. attempts to remove the Indo-Pacific region from Chinese influence by investing more capital there, Canadian capitalists want their share of the spoils. The Canadian Chamber of Commerce, for example, “welcomes the government’s commitment to broaden and deepen Canada’s economic engagement in the Indo-Pacific region.” “The single largest immediate contribution Canada can make to the Indo-Pacific is to develop a comprehensive strategy to export far greater quantities of food, fuel and fertilizer to the region,” the business organization says, clearly smelling a good deal.
Good ol’ protectionism
But hidden behind fancy words like “decoupling” and “friendshoring”, what we are witnessing is simply the return of good old protectionism. In times of crisis, every national bourgeoisie starts counting its pennies, and looks at its neighbors with suspicion. Brexit and “Make America Great Again” were not purely accidents or the whims of dumb politicians (although these factors did play a role), but also had their roots in the crisis of capitalism. Since the pandemic and the war in Ukraine, the rise of protectionism has been seen in one country after another, as each country reacts to the protectionism of others with its own protectionist measures.
However, this will only make the crisis of capitalism worse. Protectionism means higher prices, thus inflation. Indeed, protectionism means producing products at home that are produced more efficiently elsewhere. This will increase the cost of living, as more expensive goods replace cheaper goods produced abroad.
This will have implications for domestic stability, both in Canada and in the rest of the advanced capitalist countries. Despite the stagnation of wages since the 1980s, the development of Chinese industry and the massive increase in imports from China had been a factor of stability. Commodities made with cheap Chinese labor invaded Western markets, giving workers access to all kinds of cheap products. This allowed capitalists to offer certain “luxuries” to workers in the form of affordable electronics and appliances. Wages stagnated, but at least we could expect to pay less and less for gadgets made in China.
But this process is being reversed. Protectionism will make inflation worse. It will disrupt companies’ supply chains, which could slow or halt production in some industries (especially those requiring electronic components or lithium batteries) and thus accelerate the recession. At the same time, what was previously affordable for the average worker could become a luxury. With inflation already soaring, a surge in protectionism has the potential to turbocharge the cost-of-living crisis.
Workers will not stand idly by as their standard of living is reduced. The inflationary crisis is already triggering a massive workers’ movement in the U.K., with strikes in a range of sectors. It is to be expected that this will happen here too. Already, the figures show a significant rise in the number of strike days in Canada last year.
In 2021, some bourgeois commentators were naïve enough to believe that governments could pay off their huge pandemic debts with a “V-shaped recovery”, an economic boom like the post-World War II boom. But the post-war boom was driven by the explosion of world trade. Today, we are living in a situation much more like that of the 1930s, with a major economic crisis approaching, combined with rising protectionism and tensions between imperialist blocs.
The Canadian imperialists are playing with fire. By trying to maintain their position on the world market through increased aggression, they risk undermining their domestic situation, pushing workers into revolt. Whatever they do, the capitalists will only make things worse. Their system is on its last legs. It is time to end their suffering by giving it the coup de grâce.
Workers of the world, unite!
Last November, class struggle made a comeback in China, with major demonstrations sparked by an uprising of Foxconn workers in Zhengzhou. The awakening of the Chinese working class represents a major development. China’s huge working class consists of hundreds of millions of workers operating the world’s factory. The world is literally dependent on the Chinese working class, which has enormous potential power. In the struggle of Canadian workers against their bosses, Chinese workers can be important allies. We must reject attempts to divide us.
The working class does not pick a side between the Canadian and Chinese imperialist bandits. Workers have nothing to gain and everything to lose from Canada’s aggressive moves against China and its imperialist ambitions in the Indo-Pacific. These only increase the risk of armed conflict, and lead to more waste of public funds on armaments, while public services collapse. The Sinophobic fear campaign will only fuel racism in the context of already rising anti-Asian racism, further dividing the working class. Canadian workers must oppose the belligerent, anti-Chinese rhetoric and maneuvers of their ruling class.