The Biden Administration has embarked on an ambitious program of activity since taking office. Whether dealing with the COVID-19 pandemic through a massive vaccine roll-out, putting together a trillion-dollar-plus economic stimulus plan, or setting aggressive targets to tackle climate change, Biden and his team have departed sharply from the policies of his predecessor. But in one important area little has changed. The exception to the rule of departure from Trump-era policies has been China (aside from an arguably more moderate tone used, with language describing China as an adversary being replaced with references to it being more of a competitor). Indeed, there have been three strands to Biden’s China policy to date; confrontation (where necessary), competition (the supposed normal state of affairs), and cooperation (where possible). When it comes to concrete policies regarding imposition of tariffs on Chinese imports, technology embargoes, military deployment, and sanctions over human rights abuses, almost nothing has changed. The one area where cooperation rather than competition has been explored is that of climate change.
It is not surprising that policy toward China is one of the few areas where Biden has not broken with Trump’s legacy. First, Biden has his hands full with domestic issues, not the least of which is to get the economy going again if COVID can be brought under control. Second, there is a largely bipartisan consensus in Washington (one of the few areas where such consensus exists) that the U.S. needs to stand up to China. Third, most Democrats are not known for being champions of open markets and trade liberalization. While numerous studies have documented the net negative effect on the U.S. economy and U.S. jobs of the U.S.-China trade war, Democrats have long favored protectionist policies on the dubious premise that they help American workers. Biden has not only maintained Trump’s trade policies toward China (at least for the time being), but has expanded the U.S. military posture in the Indo-Pacific region. He has re-invigorated the “Quad,” a loose policy and military grouping encompassing Japan, India and Australia alongside the U.S. The Quad is one element of a “Free and Open Indo-Pacific” (FOIP) strategy being advanced by the U.S., a policy whose goal is the tacit, if not explicit, containment of China.
Meanwhile, in Canada, relations with China lumber along at rock-bottom levels. From a situation a few years ago where many Canadians felt that Canada had a “special relationship” with China, to today with polls indicating that less than 14 percent of the Canadian population has a favorable view of China, the change in the tenor and nature of the relationship has been startling. Heady talk of a free trade agreement just a few short years ago has been consigned to the dustbin as there is now almost zero public support for such an initiative. The immediate cause of contention is Canada’s December 2018 arrest—at U.S. request--- of Huawei executive Meng Wanzhou as she transited Vancouver enroute to Latin America, combined with China’s arrest a few days later of two Canadians (Michael Kovrig and Michael Spavor—the so-called “two Michaels”) on charges of espionage. China further retaliated, notably by imposing trade restrictions on key Canadian exports on various phytosanitary grounds, although bilateral trade rebounded in 2020. COVID-19 has also dried up the flow of incoming Chinese tourists and students. China claims the arrest of the Michaels is unrelated to the Meng Wanzhou case but has also indicated that a satisfactory outcome to the Meng case would facilitate resolution of the situation of the two Michaels and put bilateral relations back on track.
While the Meng Wanzhou extradition hearing in Vancouver drags on (her defense team successfully requested an adjournment to August to be able to assemble more evidence), the fastest solution lies in Washington. Canada has appealed to the United States for help in securing the release of its two detained citizens. While Biden Administration officials have responded with reassuring comments, just as occurred under Donald Trump, beyond supportive statements little appears to be happening. However, the U.S. could change the situation overnight by dropping the extradition request and instead pursuing Huawei as a corporate transgressor rather than charging Meng personally. This is normally the procedure in cases of alleged corporate malfeasance. Huawei is accused of assisting Iran to evade U.S. sanctions and Meng is charged with bank fraud by giving HSBC misleading assurances regarding the company’s involvement.
The U.S. does not seem inclined to be particularly helpful when it comes to resolving the Meng/Michaels issue under Biden any more than it was under Trump. The Biden Administration has little incentive to help improve Canada-China relations; it does not want Canada to become a back door for Chinese products to the U.S. under the new NAFTA Agreement (the USMCA). The U.S under Donald Trump went so far as to insert a poison pill into the USMCA (Article 32.10) allowing any of the three partners to withdraw from the Agreement if either of the other two sign a free trade agreement with a country designated as a “non-market economy” by one of the North American partners. Although China is not specifically mentioned in the USMCA, it is the only country that fits the definition of “non-market economy”. Canada, which at the time of negotiating a new North American trade agreement had been flirting with the idea of a free trade agreement with China, accepted the restriction as part of the price of saving NAFTA.
This raises the classic Canadian dilemma. Given the close cultural, historical, geographic and economic ties with the U.S. (some three-quarters of Canadian exports go to the U.S. market), Canadian policy makers look at most foreign policy issues through the prism of its impact on Canada-U.S. relations. There are exceptions—Canadian policy towards Cuba, participation in the Vietnam and later the Iraq Wars—but by-and-large Canadian foreign policy and trade policy is shaped by potential U.S. reaction. In some cases, Canadians may even self-censor or worry unduly about how Washington (sometimes the White House; sometimes Congress) will react to a given initiative or policy. There is no doubt that the current U.S. posture toward China is a constraining element for Canada when it comes to determining a way forward for Canada-China relations
This is not lost on the Chinese who publicly blame U.S. interference for the downturn in Canada-China relations, implying that Canada should pursue a more independent foreign policy. However, the reality is that it is not in Canada’s interest to put too much space between itself and the U.S. when it comes to foreign policy for a variety of reasons, ranging from trade relations to military defense to domestic political realities. Nevertheless, that still leaves some room for manoeuvre for Canada when it comes to China. For example, there is little advantage for Canada in seeking to join the "Quad" or signing on the U.S. version of an Indo-Pacific strategy. Rather, Canada should leverage its membership in the Comprehensive and Progressive Trans-Pacific Partnership, the CPTPP (a regional trade pact that China has expressed some interest in joining) by seeking its expansion, and seek to align with more inclusive Indo-Pacific frameworks such as those advocated by Japan or ASEAN.
Where the interests of Canada, China and the Biden Administration do converge is in the area of climate change. Being locked into a North American economic framework with the U.S. requires Canada to “up its game” and match, if not exceed, Biden’s climate change targets. At the same time, there will be no real progress on global climate change and meeting zero emission targets without meaningful Chinese participation. Biden recognizes this, which is why the environment is one of the policy areas demarcated for constructive dialogue and cooperation with China. Likewise, Canada and China should be able to find common ground for engagement on climate policy as a means to start rebuilding their relationship once the Meng/Michaels issue has been resolved. Dialogue in this area will reinforce rather than undercut U.S. efforts on setting achievable climate change targets and is thus a triple-win scenario.
While the environment is the best example of where all three countries have broadly convergent interests, in other areas interests are either competitive or widely divergent, depending on the subject. Technology, intellectual property, state capitalism and human rights are all examples of divergent views. When U.S.-China interests diverge, Canada has little choice—both from a realpolitik as well as a values perspective—but to align broadly with the U.S. Unlike the early days of establishing diplomatic relations with China, the U.S. does not need Canada as an interlocutor valable with China, and China no longer needs “a friend in America’s backyard” (as Canada was reportedly described by Mao Zedong in 1970).
The advent of the Biden Administration has so far not fundamentally changed the dynamic of U.S.-China relations, although there has been some superficial easing. As a result, Canada’s policy space between the U.S. and China has also not fundamentally altered. It is narrow, with few areas other than the environment to provide fertile ground for policy engagement. Hopefully both China and the U.S. will find greater opportunity to find common ground for cooperation and dialogue--although the signs are not particularly propitious at the moment. If that happens, Canada may find that it has a greater scope for its own policy initiatives with China instead of being “road kill in a game of chicken” (as described by a Canadian professor) between two superpowers. Much will depend on the future shape of U.S.-China relations under President Biden.