FROLITICKS

Satirical commentary on Canadian and American current political issues

May 15

U.S. Protectionist Trade Policies Will Drag Canada Into Similar Trade Patterns

by bcurry

By signing the United States-Mexico-Canada Agreement (USMCA) in 2018, the ability of Canada to negotiate a trade deal with China or another “non-market economy” was greatly restricted.  Current or future protectionist policies concerning trade with China or other countries will have a direct effect on Canada’s trade patterns.  Under the USMCA, the U.S. will remain Canada’s biggest trade partner (75.4% of total Canadian exports in 2023), especially in the automotive and energy sectors.  One other result has been that the U.S. bought more goods from Mexico than China in 2023 for the first time in 20 years, evidence of how much global trade patterns have shifted. The U.S. under President Trump and now under President Biden has become the most bilateral-trade-focused government in its history.  Like the U.S., Canada is also looking to conclude deals with the EU, Japan, South Korea, the U.K. and India and other democracies eager to share in the benefits of bilateral trade agreements.  For example, as a result in December 2023, Korean exports to the U.S. surpassed Korean exports to China for the first time in 20 years, driven by shipments of vehicles, electric batteries and other parts.

However, in an apparent effort to protect strategic American industries, President Biden’s recent announcement regarding a sharp increase in tariffs on an array of Chinese imports — including electric vehicles, solar cells, semiconductors and advanced batteries — will have an impact on Canada as well.  Initially, the President had pledged to repeal at least some of Trump’s tariffs imposed on China.  However, the upcoming election in 2024 changed all that.  Mr. Biden’s moves, to be phased in over the next three years, now represent the latest trade-war escalation suggesting that the Democrats refuse to cede any ground to their rivals via a tough-on-China appeal to swing voters in the industrial Midwest and beyond.  Politics appears to be overriding economic considerations once again.

Multinationals operating in both the U.S. and Canada are affected by the array of tariffs imposed on Chinese imports, especially when it comes to the need for parts, pharmaceutical ingredients, or rare earth elements essential for many high-tech devices.  However, not everyone in the business community is happy with the most recent tariff increases on these imports.  The National Retail Federation in the U.S., which represents many companies that source or sell Chinese products, called on Mr. Biden to reverse course and lift tariffs.  As consumers continue to battle inflation, the Federation argues that the last thing the administration should be doing is placing additional taxes on imported products that will be paid by U.S. importers and eventually American consumers.  Although the USMCA eliminated tariffs on all Canadian-purchased goods manufactured in the U.S., if a product includes components that were made outside of the U.S. — like China, for example — then the Canadian customer very likely has to pay tariffs on those components.  The same argument can therefore be made with respect to the impact on Canadian consumers and on the inflation rates in both countries.

Mr. Trump has apparently promised to go even further if he wins in November — restricting investment between the two countries and banning some Chinese products from the U.S. entirely.  Back in 2018, with President Trump’s plan to impose tariffs on up to $60 billion (U.S.) of Chinese imports, experts noted that a full-fledged trade war between the world’s two economic superpowers would damage Canada’s economy.  At the time, the Retail Council of Canada declared that such U.S. tariffs that would raise the prices of Chinese consumer goods, such as electronics, sold in the U.S. and while prompting more Canadians to shop at home.  However, such a situation today would very likely lead to a further inflationary increase at a time of already high inflation.

Economists have long argued that trade protectionism leads to a misappropriation of global goods and inefficiencies by interfering with the normal benefits offered by free trade.  Cheaper Chinese imports to the U.S. and Canada led to many more affordable consumer goods which otherwise would not have been available in both countries, while also raising average standards of living in China.  In addition, bilateral trade agreements can be broken at any time by either party to an agreement, unaffected by normal global market considerations and swings in trade patterns.

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May 15

Investigation Into China’s Meddling In Canadian Politics Could Lead to Witch-hunt

by bcurry

There is little doubt that the Chinese Communist Party (CCP) has attempted to meddle in Canadian politics over several decades.  Conservative foreign affairs critic Michael Chong wrote in a recent statement. “It’s long past time for the Trudeau government to come forward with a robust plan to counter Beijing’s foreign interference operations here on Canadian soil.”  Recently, we learned that the Canadian Security Intelligence Service (CSIS) informed Mr. Chong that they were aware of a Chinese diplomat’s threats to his family in Hong Kong.  This alleged intimidation created further outrage among the opposition members who continue to call for a full public enquiry into the CCP’s attempts to interfere in Canadian politics at the local, provincial and federal levels.  The federal government is currently looking into the matter through an independent review as to whether a full public enquiry is needed.

However, anyone and any organization that has had dealings with or received funds from Chinese sources is now under greater scrutiny, whether deserved or not.  The first instance of note was related to donations apparently given to the Pierre Elliott Trudeau Foundation, which of course can be indirectly connected to his son, current Prime Minister Justin Trudeau.  However, the Foundation is an independent non-profit organization whose mandate is to provide generous financial support for doctoral research by outstanding Scholars, and to support the development of future engaged leaders who inspire innovative approaches as they blaze new trails in the Social Sciences and Humanities.  Being devoted to educational endeavours and scholastic research, there is no proof of any direct influence on the federal government attributed to previous Chinese funding to the Foundation.  However, the optics are not great!

Now, it has been reported that Toronto mayoral candidate Olivia Chow, and a veteran New Democratic Party politician, has won support of a group aligned with China.  However, Chow has been defending democracy activists in Hong Kong and was among a handful of federal MPs who stood in the House of Commons and commemorated the Tiananmen Square massacre and attended Tiananmen vigils.  Toronto has a large Chinese community, so Chow has had meetings to reach out to Toronto’s community of mainland-China immigrants, some of which unfortunately were organized by the CCP branch that spearheads Beijing’s influence and interference efforts worldwide.  In fact, she’s not the only prominent Toronto-area politician to have rubbed shoulders with the group.  Current Liberal Trade Minister Mary Ng posted pictures of her celebrating the lunar New Year with the same group in 2019, praising its efforts to promote “diversity and inclusion.”  As for Vancouver, CSIS reportedly noted that Chinese diplomats tried to get sympathetic candidates elected in last year’s municipal vote, in part by using groups that represented Beijing’s interests.  Ken Sim, who won the mayor’s race in a landslide, has denied that such interference played any part in his victory.  It would now appear that no Canadian politician of Chinese descent is immune to being investigated by the media over possible support received from CCP-affiliated organizations in Canada of which there are several.

The case of Michael Chong has led to the expulsion by the federal government of the Chinese diplomat accused of attempting to intimidate him as a Member of Parliament and outspoken critic of China’s regime.  This is the first high profile case acted upon involving findings by CSIS, and there could potentially be others.  The danger is that, under the current environment, more Canadians of Chinese descent could unjustly become the targets of the media and security agencies simply because of their ethnicity.  One commentator compared the current situation to that of the McCarthy era in American history that saw U.S. Senator Joseph McCarthy produce a series of investigations and hearings during the 1950s in an effort to expose supposed communist infiltration of various areas of the U.S. government.  Numerous Americans suffered unfairly and severely simply from investigations by his Senate committee and its widely publicized indiscriminate allegations.  One can only hope that we will not see a similar witch-hunt taking place in Chinese communities across Canada.  Chinese Canadians have every right as citizens not to be unjustly targeted.  Cooler heads need to prevail during these difficult times.

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Mar 8

China Tried to Meddle in Our Elections, but What Should Come Next?

by bcurry

In recent months in both Canada and the U.S., main media sources have been raising questions about China’s attempts to influence our elections.  However, the involvement of the Chinese government abroad has taken a number of initiatives not only during elections but also all year round.  Not only are they interfering in our affairs, whether through disinformation campaigns, illegal campaign activities or threatening and intimidating nationals of their countries who now live in Canada and the U.S., but also through so-called Chinese police stations.  Both Canada and the U.S. have significant Chinese communities, particularly on the west coast and in cities such as Toronto and New York.  According to the New York Times, Chinese outposts are suspected by the F.B.I. of conducting police operations without jurisdiction or diplomatic approval — one of more than 100 such outfits around the world that are unnerving diplomats and intelligence agents.  Western officials see the outposts as part of Beijing’s larger drive to keep tabs on Chinese nationals abroad, including dissidents.

Declining to get into specifics, Commissioner of the Royal Canadian Mounted Police (RCMP), Brenda Lucki, went on record to stipulate that the RCMP is investigating four such Chinese police stations and that investigation is ongoing.  Chinese personnel at these outposts have been known to carry out surveillance and to covertly harass both American and Canadian citizens of Chinese origin and Chinese nationals.  Beijing on the other hand has explained that these police stations are meant to track down known fugitives abroad and force them to return home.  In response, Canadian officials have called for China to shut down police operations in Canada.  The F.B.I. has carried out at least one raid which was the first known example of the authorities seizing materials from one of the outposts.

Since national opposition parties in Canada have continued to call for a public inquiry into China’s attempts to influence recent federal elections, they have forced Prime Minister Justin Trudeau to at least introduce a review process to be carried out by an independent person with required and acceptable qualifications.  This individual will determine whether or not a full public inquiry could be undertaken without disclosing on-going national security initiatives.  No one denies that China’s evident attempt to influence our elections is a real threat to undermining trust in our electoral processes.  The question then becomes, what can we realistically do about it?  Expelling Chinese officials could be one means to get our point across, but could also lead to a diplomatic war involving the retaliatory expulsion of Canadian/American diplomats and officials.  In the meantime, in order to ensure that our democratic ways are not undermined, one could begin by encouraging and supporting counter measures within both countries.

For example, when it comes to the spreading of misinformation, via the internet or other means, both Americans and Canadians need to be better informed as to where the information is coming from.  In Canada, parties select candidates in each riding through voting processes by registered members.  It has been suggested that the Chinese have sent non-citizens of Chinese descent to vote in constituency candidate meetings in order to support the selection of candidates who support China’s positions on Hong Kong and Taiwan.  The solution appears to be simple enough!  Party officials should only register Canadian citizens for voting purposes, candidate selection being a strong democratic process. 

The last thing that Canadians and Americans want to do is take it out on our Chinese population in response to the Chinese government’s incursion into our democratic processes.  Intimidation and threats of any community members is unacceptable to say the least, and needs to be investigated and stopped by our police and security forces.  Due to the current tense relations between China and the West, one can understand why governments don’t want to get into a full out diplomatic war.  There is little doubt that economic implications are enormous for both Canada and the U.S., particularly when it comes to China and trade.  Nevertheless, we owe it to both our citizens of Chinese descent and to all citizens to make it clear that illegitimate activities by the Chinese regime need to stop.  As citizens, we all have to do our part and become better informed about such activities.

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Feb 6

Both the U.S. and Canada Have Raised Security Concerns About Chinese Businesses

by bcurry

Relations between the U.S. and Canada regarding China haven’t been this low for years.  The recent shooting down of a Chinese surveillance balloon has simply made matters worst.  We know that the balloon flew over parts of western Canada before moving over American air space.  While Chinese authorities argued that this was simply a weather balloon that had gone off course, officials at North American Aerospace Defense Command (NORAD) claimed that it was a spy balloon.  In the end, President Biden ordered that the balloon be shot down over the ocean within American controlled waters, allowing the military to retrieve the balloon’s remnants for further study.  In protest, Secretary of State Antony Blinken postponed a planned high-stakes weekend diplomatic trip to China.  In addition, a number of American Congressional members once again turned their attention to Chinese businesses, such as TikTok and Huawei, which have been operating in the U.S. 

With respect to social media platform TikTok, U.S. lawmakers have expressed concerns about TikTok mining users’ private data and passing on the information to the Chinese Communist Party (CCP).  China’s Vice Foreign Minister Xie Feng insisted that China would “resolutely safeguard the legitimate rights and interests of Chinese companies.”  There is little doubt that Chinese companies are operating under the auspices of the CCP.  Whether or not these companies represent a national security risk has yet to be fully determined, despite all kinds of allegations by some American and Canadian authorities.

China is making major inroads into a number of countries as a way to extend its influence around the world.  For example, the latest interest by Chinese companies is in Mexico due to the advantages for imports to the U.S. because of the North American trade deal involving the three North American countries.  Chinese firms are establishing factories in Mexico that allow them to label their goods “Made in Mexico,” then trucking their products into the U.S. and Canada duty-free.  They are currently setting up operations inside the North American trading bloc as a way to supply Americans and Canadians with goods, from electronics to clothing to furniture.  This also allows Chinese companies to greatly reduce skyrocketing shipping and transportation costs, while taking advantage of Mexico’s highly skilled workforce, given the presence of its universities that churn out engineering graduates.  The Mexican government is openly welcoming billions of dollars worth of Chinese investments as a means to further develop their industrial sites close to the U.S. border and the potential creation of thousands of new jobs.

As a matter of increasing its influence abroad, China has invested in numerous infrastructure investments around the world, notably in Africa, South America and Asia.  Such investments often target critical sectors such as those in transportation (high speed rail), energy (oil and gas extraction) and mining (nickel deposits).  Many countries and their political elites believe that China is now the relevant superpower and the U.S. is in relative decline, especially after the disastrous foreign policies administered by Donald Trump. 

There is little doubt that American and Canadian politicians, particularly those of the right-wing persuasion, will continue to raise security concerns wherever Chinese businesses are active.  What is ironic is that American and Canadian companies were quick to invest in manufacturing operations in China, hoping to take advantage of cheaper labour costs and weaker environmental and health and safety regulation.  China took full advantage of the resulting opportunities to expand their business and economic interests in North America.  At this time, based on speculating about possible security concerns, I question whether we can prevent these business ties?  This recent balloon episode may have raised such concerns, but it apparently is nothing new since it is reported that three similar balloons actually flew over the U.S. when President Trump was in office.  Strange that no one complained about those incursions at that time?

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Jan 22

It’s Hard to be Optimistic About the Rest of 2022 — Here’s Why

by bcurry

Well, the New Year began much as the old year ended.  Across the board there are numerous reasons for North Americans not to be overly optimistic about the rest of the year.  Several key factors are leading us to this conclusion.

  • The Omicron variant of COVID-19 has created a fourth or fifth wave, depending on who you are talking to.  Although Omicron appears to have possibly peaked, it has once again severely strained our health care systems.  In addition, the unvaccinated continue to represent the largest number of hospitalizations, especially when it comes to patients in our ICUs.  Our health care providers continue to be under a great deal of strain, especially after two years of treating COVID patients.  There is now a tremendous backlog of elective surgeries and treatments.  In addition, although CDC studies show the effectiveness of booster vaccine shots in preventing severe COVID cases, far fewer adults have gotten booster shots to date.  When will we move from a pandemic to an endemic?
  • In most jurisdictions, kids are back for in-person learning in schools.  However, there are still a large number of children under the age of twelve who have not received their first dose of a COVID vaccine.  With the Omicron variant being twice as contagious as the Delta variant, many parents are concerned about the safety of schools and the potential effect of the disease on their children.  Indeed, statistics have shown that more children are being hospitalized due to Omicron.  Questions have been raised about whether in-person learning can continue in the near future.
  • Even with the economy starting to reopen, a number of economic issues have arisen.  Among these is the forecast of continuing hyperinflation over the coming months.  There continue to be supply chain problems, shortages of skilled labour and increasing fuel, food and housing prices.  With the current annual inflation rate running at around six percent, Canadians have not seen such a high inflation rate since 1991.  A survey of consumer expectations showed Canadian households also expect inflation to stay above 3 percent over the next couple of years, above the two percent average considered normally acceptable.  Central banks have little choice but to raise interest rates this year which will have a major effect on government and personal debt payments down the road.
  • Internationally, both the U.S. and Canada, as members of the North Atlantic Treaty Organization (NATO), will have to deal with on-going Russian threats suggesting a possible military incursion into eastern Ukraine.  Although the Ukraine is not a member of NATO, the allied countries strongly believe that there needs to be an immediate and firm reaction to any Russian incursion.  As a warning to Russian President Vladimir Putin, NATO countries are arming and training the Ukraine military and defence forces in preparation for such an event.
  • China’s economy is slowing, a worrying sign for the world.  China’s National Bureau of Statistics indicates that economic output from October through December of 2021 was only 4% higher than during the same period a year earlier.  This is a far cry from previous annual growth rates ranging between 6 and 9 percent in recent years.  The Omicron variant of the coronavirus is now starting to spread in China, leading to more restrictions around the country and raising fears of renewed disruption of supply chains.  Being a major supplier to the North American markets, any continuing slowdown in China’s economy will have a severe impact on U.S. and Canadian businesses and consumers.
  • COVID-19 government relief programs for the unemployed and businesses affected by government-imposed lockdowns and public health measures are being phased out.  This could result in many hardships for lower income individuals and small to medium-sized businesses.  The resulting loss of income due to the pandemic will have an impact on government revenues in the near future.  Many government support programs may have to be reviewed for termination or reduction under expected future austerity measures.

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Nov 20

U.S. and Canada Unlikely to Boycott 2022 Winter Olympic Games in Beijing

by bcurry

The unknown whereabouts of Chinese tennis player Peng Shuai once again has raised the spectre of multiple human rights issues in China.  Peng, one of the country’s most recognizable tennis stars, has not been seen publicly since November 2nd, when she accused a top government official of sexual assault.  Back in 2020, the Australians exposed the fact that a network of nearly 40 internment camps had been constructed or were under construction in China’s far west, used to detain Uighurs and people from other Muslim minorities.  Chinese authorities said that the camps were part of their “re-education” system, which they claimed was about to be phased out.  Then of course, there was the forced closure of Hong Kong’s pro-democracy newspaper the Apple Daily in June 2021, just eight months after the Communist Party of China (CPC) leadership imposed a new national security law on Hong Kong.  The new law was aimed at quelling pro-democracy rallies that started in the summer of 2020 in response to China’s proposed extradition law.  Then there was the arrest of two Canadians Michael Spavor and Michael Kovrig who were imprisoned in China on trumped up charges for nearly three years, as part of China’s retaliation for the arrest in Canada of Huawei executive Meng Wanzhou for possible extradition to the U.S.  Of course, in each and every case the Chinese authorities have denied accusations of human rights abuses.

Make no doubt about it, all powerful President Xi Jinping and the CPC desperately want the winter Olympics to go ahead, putting China once again on the world’s stage.  Now we hear that President Biden is considering a U.S. diplomatic boycott of the 2022 Winter Olympic games in Beijing to protest China’s treatment of its Uyghur Muslim minority and other human rights violations.  Some experts suggest that Canada would most likely follow his lead.  Nevertheless, the games would no doubt proceed with the full participation of American and Canadian Olympians.

Six times in the past, countries officially boycotted the Olympic Games, with as few as three countries refusing to compete in 1964 and as many as 65 nations in 1980, led by the U.S., staying away from Moscow, Russia, as a result of the Soviet invasion of Afghanistan.  Just as Adolf Hitler tried to use the 1936 Olympic games in Berlin to raise the stature of Nazi Germany and Aryan race, President Xi Jinping and the CPC are anxious to use these Olympic Games to highlight China’s achievements.  Politically, Xi’s expected to break precedent and secure a third term to extend his indefinite rule and certainly doesn’t want to be embarrassed by any boycott.

In light of the current situation involving Peng Shuai, there is increasing political pressure on both the U.S. and Canada to at least promote a diplomatic boycott of the winter games.  However, Canadian lawyer and International Olympic Committee (IOC) member Dick Pound notes that implementing such a boycott won’t make any difference to China if only one or two countries are involved.  Certainly, no one wants to penalize the athletes who have trained and competed for years to participate in the Olympics.  Given China’s international initiatives, especially those in developing countries, it would be next to impossible to obtain widespread political support for any full-blown boycott.  As the world’s second most powerful economic entity, China has a tremendous amount of clout.

For this reason, Xi Jinping will have his day in the Chinese winter.  Once again, concerns about human rights will take second place to economic and political matters.  For what it’s worth, this past week, the Washington Post reported that the White House is expected to announce that neither President Biden nor any other U.S. government officials will attend the Beijing Games.  I this is the cases, one can expect that Prime Minister Justin Trudeau would shortly follow the President’s lead.  However, China will proceed with the games and its athletes will prevail in many sports.  Americans and Canadians can be expected to watch in awe as China displays its culture, technologies and athleticism.   As an avid China watcher, I’ll be looking forward to the show!

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Mar 29

China Is Moving Quickly Into International Void Left By The U.S.

by bcurry

Anyone paying attention over the past couple of years to China’s moves on both the trade and diplomatic fronts would have seen great process in its filling the void left by the Trump administration.  China’s influence abroad was greatly led by its ‘Belt and Road Initiative’, a multi-trillion-dollar infrastructure scheme intended to stretch from East Asia to Europe.  China has lent billions of dollars to countries to upgrade old or to build new infrastructure, including roads, dams and railroads.  This initiative recently culminated in a 25-year cooperation agreement signed by China and Iran to strengthen their long-standing economic and political alliance.  This could deepen Beijing’s influence in the Middle East and undercut American efforts to keep Tehran isolated.

Back in January, Bloomberg News produced a synopsis about how China had won Trump’s trade war and even got Americans to foot the bill.  The trade deficit with the U.S. has significantly increased and China had easily withstood Trump’s tariff salvos.  In 2019, a group of 10 Southeast Asian nations replaced the U.S. as China’s second-largest trading partner.  Furthermore, most U.S. manufacturers surveyed last September said they didn’t intend to move production out of China.  There is no evidence that the U.S. tariffs on China benefit American workers and the tariffs have actually cost American companies and consumers in loss incomes.  According to the country’s National Bureau of Statistics, the Chinese economy rose 2.3% last year.  By contrast, the U.S., Canada, Japan and many nations in Europe have suffered steep falls in economic output, especially after the emergence of the pandemic.

Then there is China’s willingness to provide its COVID-19 vaccine to vulnerable countries, including Brazil where hospitals have been overwhelmed by a surge of infections.  CoronaVac has turned out to be the most affordable and most accessible inoculation for the more vulnerable nations.  In China, Sinovac, the maker of CoronaVac, started delivery tens of millions of doses overseas, reportedly providing free samples to 53 nations and exporting it to 22 nations that positioned orders.  Meanwhile, the U.S. appears to be hoarding vaccines and its forecast supply reportedly will be enough to vaccinate 650 million people — nearly twice the U.S. population.

All of the evidence indicates that China, as part of its foreign and trade policies, is attempting to extend its growing influence abroad through a number of avenues.  Meanwhile, countries like the U.S. and Canada can only sit on the sidelines and watch.  It is unclear whether the American or Canadian governments can do much to counteract the growth of Chinese influence in the international sphere.  Indeed, it may be too late given the existing long-term economic problems in both countries.

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Feb 8

Trump Administration’s “Industrial Militarism” Highlighted In Attack on China’s Huawei

by bcurry

Nowhere is it more clearly demonstrated that President Trump is using industrial clout to carry out “industrial militarism” than in his attack on Huawei to block the tech giant’s global 5G expansion. 5G stands for fifth-generation networks which are essentially a faster and more reliable version of wireless connectivity and mark a massive leap forward in such wireless technology.  Numerous industrialized countries are moving to build a 5G network, such as Canada whose 5G network could be in place around 2020. Huawei is the largest global company in 5G development and installation and is involved in 140-plus countries around the world. In Canada, companies such as Telus and BCE, or Bell Canada, are partnering to build 5G technology along with Huawei. Their Canadian rival, Rogers, is working alongside Swedish telecom Ericsson— a main Huawei rival. As a result, Ottawa has come under increasing pressure from the U.S. to block Huawei from developing its 5G technology in Canada, as critics warn it could present a national security risk.

Recently, U.S. Attorney General William Barr made the case for an all-out economic war on China’s Huawei in order to block the tech giant’s global 5G expansion. He even called on America’s “allies” to join what amounts not only an international strategic offensive against Huawei but also against China itself. He further suggested that the U.S. and its allies, including Canada and Britain, align their financial and technological forces to support European firms, Nokia and Ericsson, Huawei’s major 5G competitors. By getting governments to become involved in a business sector, such as the telecom sector, this position would contradict the traditional American principle of supporting free-market enterprise.  It would be blatantly perceived as causing a geo-strategic economic confrontation with China, similar to what occurred during the Cold War between the U.S. and the Soviet Union.

So far, a number of countries, including Canada and Britain, have rejected the idea of participating in any U.S. takeover of Nokia and/or Ericsson. Interestingly, although use of Huawei equipment has been banned in the U.S. since 2012 over fears it’s a security risk, some two dozen U.S. telecom companies have used Huawei’s equipment to provide services in remote regions. In Canada, a number of communities in provinces such as British Columbia and Saskatchewan, are using Huawei equipment to service non-core 4G in rural regions in particular. So far, there is no evidence that China has used network equipment for cyber-espionage.

As critics of “industrial militarism” argue, is it really up to Americans to fight the People’s Republic of China and its authoritarian regime — with its state-run enterprises and dirigiste economic policies — by adopting some of the same statist interventions? As one expert rightly noted, an extended trade war between the U.S. and China and threats by Trump to ban certain Chinese tech firms from the American supply chain, could further divide the global tech scene. Left unchanged, that could result in a world where technological progress among countries is far less uniform, cost-effective and integrated.  In Canada, competition in the telecom sector is alive and well. Huawei, Swedish telecom Ericsson, Nokia, Samsung and others are all being allowed to compete freely in pursuit of the lucrative market.  This is expected to greatly improve telecom services to Canadian consumers, especially in rural and remote regions.

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Aug 14

Trump Greatly Underestimated China’s Resolve on Trade

by bcurry

The great negotiator, Donald Trump, has once again underestimated his opponents on the international stage. Recently, he threatened the Chinese with more tariffs on additional imports from China if they didn’t give in to U.S. demands. Now, the next worst thing to encountering a skunk is to back the Chinese regime against their proverbial wall.  That’s exactly what Trump’s administration has done.  In addition, he has often said that the tariffs would be paid for by the Chinese, not by the American consumer.  Alas, once again, Trump has reversed his latest tariff threats by claiming that he did not want to punish American consumers prior to Christmas with higher prices on imported Chinese products.  Americans apparently still want to purchase such goods as cellphones, clothing, TVs, video games, toys, etc., etc. at affordable prices.

Besides devaluing its currency, the Chinese administration has numerous other weapons in its economic arsenal. The last thing that the Chinese Communist Party (CCP) wants to do is loose face in China. The CCP is having to deal with threatening situations in Hong Kong and Tibet, and is not reluctant to use force to quell such threats, despite the potential for international condemnation. Defending human rights is not the CCP’s forte.  The CCP is prepared to do whatever it takes to maintain its control and power.  This will not change anytime soon.

In recent years, China has expanded its economic and political influence in serious geopolitical moves. It is not only a formidable force in Southeast Asia, but has moved to directly influence events in Africa, the Middle East and South America. Its foreign policies include providing financial and technical aid for infrastructure and resource development in several countries.  It is always looking for new markets and resources. China wants to establish itself as a leading superpower on the world stage, and it will not be bullied by anyone, including the American President.

It’s time that the West stops underestimating the strengths of China.Inc.  China is a superpower and wants to be treated as an equal by the U.S.  Time is not on the side of Trump.  All that China needs to do is wait and watch for the coming global recession eventually and inevitably brought on by this trade war.

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Jul 8

Should Canada Get Into a Trade War With China?

by bcurry

Andrew Scheer, leader of the opposition federal part Conservatives in Parliament, has come out on the national campaign trail swinging against China. He has called for placing tariffs on Chinese imports in retaliation for China’s recent blockage of Canadian agricultural products such as pork and canola. Much of China’s actions have to do with current extradition hearings, requested by U.S. authorities, against Huawei Technologies Co. Chief Financial Officer Meng Wanzhou. Ms. Meng is being held in custody in her Vancouver mansion awaiting the start of these hearings which could take months. In retaliation, China has charged two former Canadian diplomats with espionage and they are being held in detention.

Next to the U.S., China is Canada’s major trading partner. Canada has been pushing for entry into the proposed Trans-Pacific Partnership (TPP) trade agreement, negotiations for which the U.S. withdrew from under President Trump. The TPP would allow Canada to strengthen economic ties with Asian countries and reduce its reliance on the U.S. markets. Then there is Canada’s current relationship with China’s Huawei corporation which is a world leader in wireless technology. Pressure is being put on Canadians by the Americans to limit the involvement of Huawei in their telecommunications sector due to national security concerns.

Prime Minister Trudeau has to be very careful in his government’s approach to China given the potential negative impacts on the Canadian economy. With respect to the two Canadians in Chinese custody, he has correctly obtained the support of Canada’s major allies to put diplomatic pressure on China. However, getting into a trade war with China would not be advisable at this time given that billions of dollars of trade would be at risk. Canada would be better off looking to diversify its trade with other Asian countries such as Vietnam. Vietnam has been Canada’s largest trading partner in the ASEAN region since 2015. In 2017, two-way merchandise trade between Canada and Vietnam reached $6.2 billion, up from $5.5 billion in 2016. In 2017, Canada’s merchandise exports to Vietnam in 2017 amounted to approximately $1.1 billion. India is another country to be seriously considered for trade expansion as Canadian exports to India were over $3 Billion (US) during 2017.

Chinese companies provide Canadians with many affordable goods (just think of Walmart and Dollarama) and trade opportunities. Any move to imposing tariffs would only hurt the average Canadian through increased costs for such goods.  The China-U.S. trade war, which is hurting average Americans, has only further complicated matters.  Yes, there are political and humanitarian concerns with China’s domestic policies, but so are there similar concerns in other industrialized countries. Throwing more gas on the fires is not going to help resolve anything at this time.  As a middle power caught in a dispute between the world’s two largest economies, I would suggest that the Canadian government continue to take a slow, calculated and cautious approach to these issues.

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