Living with China: A Middle Power Finds Its Way
Living with China urges Canadians to adopt a forward-looking China strategy that recognizes the significance of China’s history and values for its development model of authoritarian state capitalism and managed markets. Market reforms will be key drivers of China’s long-term growth, yet Chinese policy is ambivalent about the potential dangers of spontaneous market forces undermining the Party’s central goal of political stability. The tensions between market forces and state intervention and between political and economic goals are identified in the book’s early chapters that outline what Canadians need to know about the Chinese economy. The book also examines how Chinese enterprises are going global through direct investments and participation in the dynamic but troubled Belt and Road Initiative.
In an environment of rising tensions over trade and technology – evident in negotiating the USMCA with the Unites States and doing business with Huawei, the China-based telecommunication giant – Canada needs a China strategy. Living with China is one of the first comprehensive volumes on a forward-looking Canada-China strategy. The recommended strategy includes more leadership from top officials, building a Canada brand, strengthening our international human capital, addressing security issues, and negotiating bilateral trade and investment liberalization. Dobson also acknowledges the importance of addressing such key issues as intellectual property protection, cybersecurity, and value differences such as respect for individual rights.
- Imprint: Rotman-UTP Publishing
- World Rights
- Page Count: 192 pages
- Dimensions: 6.0in x 1.0in x 9.0in
"This book is a must read for Canadians seeking to learn how we need to engage a changing China in the years ahead."
Hon. Peter Harder, PC, Senator, Ontario
“Against the turbulent backdrop of an unravelling global trading system and the biggest downturn in Canada-China relations since recognition in 1970, this book is a trenchant and realistic assessment of China's dynamic evolution, Canadian interests, and the ingredients of a national strategy appropriate to the times. The best analysis yet of what a recalibrated engagement approach would look like that involves living with China as it is rather than what we would like it to be.”
Paul Evans, School of Public Policy and Global Affairs, University of British Columbia
“In the coming decade, there will be no greater foreign policy challenge for Canada than managing the China relationship. Wendy Dobson is one of the few analysts with the vision and experience to provide an informed blueprint for the future. Living with China maps Canada’s economic and diplomatic resources against China’s ascent as a global superpower, identifying opportunities for action and areas of risk. This is a must-read for businesses and policymakers seeking to understand the difference between muddling through and succeeding as a middle power by mobilizing all available resources.”
Laura Dawson, Director, Canada Institute at the Wilson Center, Washington, DC
“As usual, Wendy Dobson delivers an insightful view of China today, covering key topics that explain China’s relationship with the world, including innovation, financial reform, outbound investment, Belt & Road, and China’s sense of self and the global role it wants to play. China is not, and will never be, like Canada. Where China is going is quite clear – the question for Canada is, how can we ensure that Canada derives benefit from China’s rise? Smart countries don’t let China ‘happen to them.’ Canada needs to build a strategy that is in its own interests and that ensures Canada’s prosperity grows as a result of an economic relationship with a country whose growing middle class wants the products and services Canada has to offer.”
Sarah Kutulakos, Executive Director & COO, Canada China Business Council
Author InformationWendy Dobson is the Co-Director at Rotman Institute for International Business and a professor emerita of Economic Analysis and Policy.
Table of contents
1 China’s Rise: Getting Its House in Order
2 China as a Global Innovator?
3 Creating a Leading Financial System: A Work in Progress
4 China Invests Abroad: A New Era of Chinese Capital
5 The Belt and Road Initiative: China Reaches Out
6 Living with China: Canada Finds Its Way
Read An Excerpt
Canada is caught between two giant trading partners whose relationship has deteriorated as Americans challenge China’s development model of state capitalism and managed markets that puts Chinese enterprises first, at home and abroad. Canada, however, long used to a unipolar world dominated by the United States, lacks a China strategy. A foundation was laid in 2016 when Prime Minister Trudeau and Premier Li Keqiang agreed to a lengthy agenda for cooperation, including a possible free trade agreement. But in less than two years, the relationship between Canada and China plunged into a deep freeze when Meng Wanzhou, chief financial officer of Huawei Technologies, China’s huge, privately owned telecommunications conglomerate, arrived in Canada and the United States unexpectedly exercised a bilateral treaty to request her extradition to face criminal charges of banking and wire fraud, among others. Chinese leaders chose to blame Canada for her arrest.
These events reflect the shifting centre of gravity in the global economy, foreshadowed in my 2009 study, Gravity Shift: How Asia’s New Economic Powerhouses Will Shape the 21st Century, which anticipated the expanded economic significance of China and India by 2030. Today, just ten years later, the post–Second World War, Western-dominated world order is evolving into one with multiple players, each with its own system of governance, but also experiencing rising living standards and rapid technological change. Americans’ belief in their own primacy is increasingly out of step with this shift of gravity.
China’s relationship with the United States, meanwhile, has grown into a deep economic interdependence that is particularly valued by Chinese leaders who seek a stable international environment in which to pursue the country’s domestic development and continued rise. Americans, however, have come to regard China as a revisionist state, and as a strategic rival and security threat. Headlines focus on the hundreds of billions of dollars of US tariffs imposed on Chinese imports, but Americans are increasingly critical of China’s management of domestic markets and President Xi Jinping’s robust support for advancing China’s technological supremacy, not least through his Made in China 2025 strategy.
Canada’s own changing relationship with China is reflected in the transformation of the world economy. As a middle power, its diplomatic relations have stressed engagement and accommodation with China, but living with China has meant being pulled into the orbit of the deteriorating relationship between China and the United States. Pierre Elliott Trudeau once characterized Canada’s relationship with the United States as like a mouse living next to an elephant, but life with two restive elephants is far more complex. Canada’s ties with China are at their worst since the events of Tiananmen Square in 1989. Meanwhile Canada is caught in the escalating China-US feud over the Meng affair and, with the other members of the so-called Five Eyes intelligence partners, faces increased US pressure to ban Huawei from supplying equipment to 5G mobile wireless networks in North America and Europe.
Views differ on how to mend the rift and how long this might take. What is clear, however, is that Canada needs a comprehensive strategy for living with China. Canada can hedge its Asian bets by further developing other options – with Japan, the ten members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the Association of Southeast Asian Nations – but at the centre of any comprehensive strategy must lie China. Canadians must come to understand Chinese history, values, and institutions and their significance for the Chinese president’s strategies, long and short term, at home and abroad. What is the context for Xi’s energetic international economic policies and institutional proposals? What are the rationales for his politicization of markets and increasingly autocratic ways at home? These are topics in the first part of this book. The second part focuses on the context for Canada’s China strategy. Here I argue that the emphasis on negotiating a free trade agreement is not a strategy, and might be the wrong goal. A better understanding of China’s history and views should convince Canadians of the need for a multipronged strategy that includes trade, investment, security, and engagement with multilateral partners and the public – a strategy based on mutual respect, accommodation, and genuine discussion of differences in values and institutions.
A dynamic train of events will play out as Canadians prepare for national elections in October 2019. Key economic and technological issues likely will be on the agenda for debate, including those related to the US-China relationship, given the tidal wave of recent books on the subject. My own contribution, Partners and Rivals: The Uneasy Future to China’s Relationship with the United States, published in 2013, examined their potential global roles in the next half-century, and predicted that neither would be able to dominate the other. This study, Living with China, takes the perspective of a middle power’s evolving relationship with a fast-changing China, and aims to deepen Canadians’ understanding of the issues and options, recognizing that any strategy Canada chooses will reflect its deep integration with the United States.
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