‘We’ve got a lot of vulnerabilities’: The risks involved with pursuing a ‘strategic partnership’ with China

Margaret McCuaig-Johnston, board director at the China Strategic Risk Institute and former senior Canadian government official, discusses Prime Minister Carney’s upcoming meeting with Chinese President Xi Jinping at the APEC Summit. She examines the risks of Canada pursuing closer trade ties with China, while warning that such moves could undermine Canada and invite Chinese leverage over Canadian policy on Taiwan, Uyghur human rights, and critical infrastructure. She also addresses the striking shift in Canadian public opinion, with more Canadians now viewing the U.S. as a threat than China, and critiques the lack of progress on addressing Chinese foreign interference in Canada. You can listen to this episode on Amazon, Apple, and Spotify. Program Transcript This is an automated transcript. Please check against delivery. HARRISON LOWMAN: Welcome to Hub Hits. I’m Harrison Loman, managing editor of the Hub. Okay. Well, Prime Minister Carney is in South Korea for the Asia Pacific Economic Cooperation Summit to form trade ties with nations in that region is longtime international adversary. China on that list, though, as Carney makes efforts to. To combat against Trump trade tantrums. Carney is actually set to meet with Chinese President Xi Jinping in coming days, his first time as pm, to discuss that and all other matters adjacent. I welcome Margaret McQuaig Johnson, board director at the China Strategic Risk Institute. Margaret, how are you doing today? MARGARET MCCUAIG-JOHNSTON: Just great, thanks. Glad to be with you. HARRISON LOWMAN: Happy to have you. So, a couple days ago, Canada says that China is now a strategic partner. What does that mean? Margaret, translate that for our viewers. MARGARET MCCUAIG-JOHNSTON: Well, we don’t know what it means. So far, the discussions have been, we’re told, have been high level. And we’ll see how in depth that becomes when she and Carney meet later this week. It could mean that we’re embarked on new kind of broad level economic discussions, trade discussions, discussions of geopolitics, discussions of participation in international organizations. Or it could also mean the detailed discussions of sector trade. And that’s where I think things will get interesting and perhaps difficult during the leaders debate. HARRISON LOWMAN: Margaret, in the last election, Carney said that China was our biggest security threat. What changed since that moment, do you think? MARGARET MCCUAIG-JOHNSTON: Well, nothing has changed. It is our biggest security threat. And indeed, when we saw him earlier this month in the Oval Office when President Trump was talking about competition with China and how he’s so successful in competition with China and turned around and said, Canada, too, has been successful in competition with China, Prime Minister Carney agreed. And he said, but we can be more successful working together in competition with China. And Trump agreed. So that was kind of an interesting development. He’s the one who put that on the table. And I think he was looking for some crosswalks with the US With President Trump in advance of the meeting that they were about to go into. So it’ll be interesting to see. Was there a discussion of automotive as part of that and the implications if Canada changed our tariff on Chinese EVs and whether there were American threats made in the event that we did that. And so we do have an agenda with the US that is more significant, much more significant than our agenda with China. China presents some opportunities, but it also presents these big strategic and security risks. HARRISON LOWMAN: Well, this is the thing. I’m wondering what you think, you know, if we drop EV tariffs in exchange for them dropping canola tariffs, form some sort of trade relationship, you’re saying there’s a chance that that doesn’t actually anger President Trump? MARGARET MCCUAIG-JOHNSTON: No, I’m suggesting that it would. And so he may have put some cards on the table that have suggested that, which might cause Carney to pull back a bit. Or maybe Carney has just said, okay, 10% of our Canadian exports to the world are autos. But let’s just set that aside. The auto, Canadian auto sector is dead, and we’ll invite in these Chinese EVs instead. I think that’s the kind of decision it would be, because you can’t have a Canadian auto sector where it’s completely undercut by sales of cheap Chinese EVs. And by cheap, I don’t mean $14,000. Some commentators have said, oh, wouldn’t it be wonderful if we Canadians could get $14,000 EVs. That’s what they sell for in China. But when they’re sold abroad, they’re priced at 10 to 15% below the price of those EVs and other vehicles sold in the European country or in this case, in Canada. And so, you know, the Chinese company gets a big markup on their EV exports. These are cars that are made, remember, in overproduction so that China can keep up its employment levels. And they’re made with aluminum that Human Rights Watch has shown phone is made from the the forced labor of thousands of uyghurs and they’ve got massive security vulnerabilities because the data is kept in China. Not only the data of the car, but when your phone is plugged in, charging, it’s all your phone contents as well. So there are major problems with this, with, with, you know, dropping the EV tariff, that’s for sure. HARRISON LOWMAN: And yet, and yet. Margaret. Angus Reed, the other day, nearly Canadians, 46% say the Canadian government should see the U.S. as an enemy or potential threat. Meanwhile, only 34% view China as an enemy. Canadians viewing the U.S. more of an enemy than China, and 27% of Canadians now hold a favorable view of the Middle Kingdom. That being China, nearly triple the all time low reached in 2021. What do you make of those changing numbers when it comes to sentiment back home? MARGARET MCCUAIG-JOHNSTON: Well, everything is relative, isn’t it? Because we had had this very close economic relationship with the U.S. it’s now in jeopardy. And so our government and our business community and our population are looking at, oh, oh, what do we do now? And the Prime Minister has said we need to diversify. I completely agree with that. But that doesn’t mean that we should move from our newly erratic trading partner, the US to our even more erratic trading partner in China. And if you just look at canola, this is the third time in 10 years that canola sales have come to a halt overnight. And the canola producers should be learning from this that they themselves have to diversify to other countries in the region. They haven’t learned that yet. They keep putting pressure on the Prime Minister to drop the EV tariffs so that they can go in that big China trade door that China likes to advertise when really we should be diversifying to biofuels and diversifying to other countries in the region. We have a really strong Indo Pacific strategy and we need to build on that and deepen those trade ties. HARRISON LOWMAN: Margaret, you sit at that crossroads between business and human rights. I know you’re an advisory board member for the Uyghur Rights Advocacy Project. You’ve briefed ministers in terms of a meeting like this. Do you mention the Uyghur camps? Do you mention the Uyghur camps? Do you mention Taiwan sovereignty being under threat? How do you walk that tightrope in the meeting that’s about to take place in a few hours? MARGARET MCCUAIG-JOHNSTON: That’s an interesting question. Prime Minister Chretien said that when he went to China he would say to his counterpart, I have to raise human rights. I just raised it. Let’s go on to business. So, you know, previous Prime Ministers have not taken the human rights issue seriously. We know that the Prime Minister has talked about values, but he looks at values through an economic lens primarily. I’m hoping that he would raise these questions. But China’s ambassador to Canada earlier this year, in an interview with the Globe and Mail, said that Canada, if it wants stable relations with China, and that’s what we’re aspiring to, according to our Minister of Foreign affairs, we need to be silent on Taiwan, silent on the Uyghurs and Tibetans. We have to open up our critical mineral, sensitive critical mineral sector to Chinese investment. We have to stop the national security screening on Chinese investment more broadly. We have to stop the national security screening on research collaboration of our universities with Chinese military universities. And we have to open up the Canadian Arctic to China’s activities there. So that’s what China is expecting us to do if we want to improve trade with China. If we drop the EV tariff to get canola back on track, then that’s a short term win for medium to really serious long term problems because they will turn around and use our canola farmers against us when they want our silence on Taiwan and action on these other public policies of the Canadian government that they want us to change. HARRISON LOWMAN: Just lastly, Margaret, let’s get into those public policies. Looking here domestically, a few months ago this was all the rage. Talking about a foreign agents registry, shutting down police stations in this country where members of the Chinese government are harassing members of the Chinese diaspora here in Canada, the infiltration of a top secret lab. That’s what we talked about last. In terms of China doing that over in Winnipeg. Where are we at in terms of progress and addressing these things? What do you grade the government? MARGARET MCCUAIG-JOHNSTON: Well, I’m not going to assign them a grade. I guess I would just make a flat statement. There hasn’t been any action that we’ve seen. The Hoag Commission brought out a whole series of recommendations. We haven’t seen action. We’re told that a foreign registry is coming. I was first consulted on that in January of 2023. So almost three years ago and nothing’s happened. There’s been no registry. They’ve been working for the last more than a year on regulations. I was an Assistant Deputy Minister in the Canadian government. I know it doesn’t take that long to do this kind of thing. Just this month we have the spy that was at Hydro Quebec on trial in Montreal and he was accused of stealing Hydro Quebec secrets and giving them to people in China. And there’s strong evidence Hydro Quebec is now in the court saying that they have to protect their commercially sensitive information from coming out in the public in court. That’s how sensitive the information was that this guy stole. And the head of Hydro Quebec, the CEO during this whole period when this was discovered and going to court was Michael Sabia, who’s now clerk of the Privy Council. So the prime minister has in his own office somebody who knows the severity of, of China’s interference in our country. And so I would hope that that would give him pause from turning the other cheek and saying, let’s do short term, trade things together and hope that that’s not used against us as leverage. Further, we have right now in Europe a situation where China has cut off access for European automakers to parts from China, components including sensitive magnets and other things made by critical minerals in retaliation for something that Holland did. And so, you know, they could use Arado industry if Chinese EVs are invited in here to, to cut off access to parts if we don’t change some other policy or, you know, cut off access to service. So we’ve, we’ve got a lot of further vulnerabilities that would be opened up if we caved into this demand that China is making on us. HARRISON LOWMAN: Well, we’ll see if the demand, you know, is you basically have to keep it. So there’s no progress on the issues we just addressed. If you want to remain, quote, unquote, strategic partners. Okay. That’s Margaret McQuaig Johnson, board director at the China Strategic Risk Institute, expert in all things China. You can tell by all the books behind her read. They’re all focused on China and the region. Thanks so much for joining us on Hub Hits today, Margaret. Appreciate it.