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The China Challenge

Huhua Cao
Vivienne Poy

Canada-China: the growing interdependence

Chapter 9. Post-Colonial Transformations in China’s Hong Kong and Macau: Implications for Cross-Taiwan-Strait and Canada–PRC Links

The Keynote Address to the Conference of the Same Title at the University of Waterloo, June 27, 2009

Vivienne Poy

Texte intégral

1Many Canadians believe that we are regarded as friends of China because of Pierre Trudeau, and because of the sacrifices of Norman Bethune, and, of course, Dashan is our best cultural ambassador to China. So why is it that, when Canadians travel to China today, we are asked by ordinary people, such as taxi drivers, why we hate them? This morning I will present an overview of the relationship between our two countries since the establishment of the People’s Republic of China, within the ever-changing economic and political dynamics of Greater China. You will notice that I will not be mentioning Macau, and that is purely because of my ignorance of that Special Administrative Region.

2Canada was the leading Western country in building a relationship with China in the early days. Despite the lack of formal economic or political ties, Canada started to sell wheat to China in 1958. Sales grew from $9 million in 1960 to $147 million two years later. Until the end of the 1960s the total exports from Canada varied from $100 million to $185 million annually, and they almost entirely consisted of wheat.

3In October 1970, China and Canada established formal diplomatic relations, and in 1973 the two countries signed the Canada–China Trade Agreement, which allowed for the mutual extension of “most favoured nation” status. By 1973, Canadian exports to China had doubled. After the death of Chairman Mao in 1976, the Open Door Policy was introduced, and it led to further improvements in Canadian access to Chinese markets. In 1978, the Canada–China Trade Council was established: it was later renamed the Canada China Business Council. In 1980, Canada granted preferential trade status to China, reducing tariffs on imports from China by over one third from the regular “most-favoured nation” tariff rate. However, many products were excluded from this agreement. Between 1978 and 1988, Chinese exports to Canada grew, averaging an increase of twenty-six percent a year, while Canadian exports grew only by an average of eighteen percent a year.

4As early as the 1960s, Britain began to differentiate passports carried by Hong Kong residents. This was a prelude to the negotiations between Margaret Thatcher’s government and Beijing on the return of sovereignty over Hong Kong to China, which subsequently led to an exodus of Hong Kong residents, many of whom came to Canada. Emigration from Hong Kong was on many people’s minds. I remember hearing of the fear of change whenever we visited Hong Kong. Many were sure that it would be for the worse. On the other hand, Canada, like many other immigrant-receiving countries, opened its doors to attract wealthy immigrants by making it easier for businesspeople, entrepreneurs and investors to immigrate to Canada.

5The influx of immigrants from Hong Kong was due to fear of political change, but the movement of people also coincided with changes in the economic situation in Canada and Hong Kong. This, we will see, in subsequent years, was the reason why so many returned from Canada to Hong Kong or mainland China. During those years I watched with great interest as many members of my extended family immigrated to Canada. The only person who said he would never leave Hong Kong was my father. He passed away before the final agreement was signed between Britain and China.

6The return of sovereignty at the end of the 1990s had far-reaching consequences for Canadian relations with that part of Asia. The number of Canadians of Chinese heritage suddenly swelled, and Chinese became the third most spoken language in Canada. In the mid-1990s the economy boomed in Hong Kong, which seemed to overshadow the fear of Communism. Many immigrant heads of households returned to Hong Kong to work while leaving their families in Canada, and the children attended school here. These children grew up being bicultural, with one foot in Canada and one in Asia. As Greater China flourished economically, many Canadians of Chinese heritage born or raised in Canada were drawn by the opportunities there. Now, about 250,000 Canadians live in Greater China and 1.3 million Canadians in Canada claim Chinese heritage. As a result Canada’s relations with Greater China have grown closer, largely through the movements of people who feel equally at home in both worlds.

7Ideally, this should mean that Canada has increased its ties with and influence over Greater China, but this is not the case. Ironically, just as Greater China has grown in importance as a global economic power, Canada has decreased its influence and presence. Relations between our two countries, like that of China with other western nations, were strained after the Tiananmen Square massacre in 1989, even though trade continued to grow. By 1994, the two-way trade exceeded $6 billion. In the same year, Canada established its “four pillar” policy on China, comprising economic partnership, peace and security, sustainable development, human rights, good governance and the rule of law.

8In 2001, China joined the World Trade Organization, and in the following six years Chinese exports worldwide quadrupled, rising twenty-nine percent a year. By 2007, globally, China accounted for more than eight percent of exports and almost seven percent of imports. Over the past ten years, China has expanded its international trade dramatically and transformed many of its cities into vibrant financial and manufacturing centres. The Chinese growth rate averaged about nine percent over the past two decades, and was often in double digits. As a result of this astonishing growth, many millions have climbed out of poverty and joined the middle class. Despite all the problems China still has to overcome, this phenomenon cannot be ignored by the rest of the world.

9Appearing before the Senate’s Standing Committee on Foreign Affairs on April 29 this spring, China’s Ambassador to Canada, His Excellency Lan Lijun, said, “Over the past few years, we have seen a downturn in our relationship. There has been no active exchange of high-level visits. The approach taken on certain issues is not conducive to developing a sound, better relationship.” So what happened? Successive Canadian governments, and many companies, have failed to understand the extent of China’s transformation. Canada’s dependence on trade with the United States has paid dividends in the past, but, as we can see, we are dragged under when there is an economic crisis in the United States. Some individuals in the current government still seemed fixated on the Cold War dichotomy, fearing Communism in any form. This is ironic because, when I am in Hong Kong or on the mainland, I recognize how socialistic we are in Canada. Some in our government feel that closer economic ties would mean condoning China’s labour conditions and its poor record on human rights. There are also national security and other concerns that state-owned Chinese companies, using sovereign wealth funds (pools of government-owned financial assets), should be limited in their ability to acquire foreign assets. Much of the tone from the present government has been judgmental and negative, and we all know that this approach does not work, whether between people or between governments.

10With the recent economic crisis, the dramatic changes in Greater China over the past decade are now being recognized more widely. China surpassed Germany as the third largest economy in the world at the beginning of this year. As America’s banker, with huge savings among its many citizens, and as a global trader, it is roughly five times more involved in the global economy than other emerging economies such as India, Russia or Brazil. The recent Chinese contribution of US$ 40 billion to replenish the International Monetary Fund was an international triumph for China. It is, therefore, not surprising that Hillary Clinton said, “some believe that China on the rise is by definition an adversary. To the contrary, the US and China benefit from, and contribute to, each other’s successes.” This certainly offers China’s leaders strategic opportunities. It was no surprise when in April, at the G20 summit in London, many were musing about a “G2,” a China–US duopoly to guide world affairs. This came as a wake-up call to Prime Minister Harper.

11Nationalism is on the rise in China. The Beijing Olympics in 2008 were a huge source of pride for both China and the Chinese diaspora around the world. The next big international event is the Shanghai Expo. Criticism of China at these international events will only serve to spur on this nationalism.

12Many have overcome poverty in China, but many more have yet to be swept up by the wave of progress. Despite its economic miracle, there is huge disparity between the coastal regions and the vast hinterland. With the recent economic crisis, millions of university graduates are joining the tens of millions of migrant workers among the unemployed. Economic decline of this magnitude could lead to the destabilization of Chinese society. China faces huge environmental issues as well, which will affect us all if climate change continues unabated. As a global citizen, despite its economic power, China has a long way to go in assuming a leadership role because of its human rights record. It can, however, be an arbiter of conflicts, such as that with North Korea.

13On the positive side, despite early fears of repression, citizens of Hong Kong were able to mark the twentieth anniversary of the Tiananmen Square Massacre without incident. It is also not surprising that, in the Fraser Institute’s annual report of 2008, Hong Kong retained its status as having the greatest degree of economic freedom in the world. Recently, Shanghai hosted its first gay pride festival, which would have been unthinkable a mere decade ago.

14With respect to Taiwan, since the election of Ma Ying-jeou as President, China’s cross-Strait relationship has improved dramatically. In late April China Mobile announced that it would acquire twelve percent of the third largest provider in Taiwan, Far EasTone, in the amount of US$ 525 million, which is the first-ever investment from China in Taiwan. Another significant development this May was when Beijing agreed to let Taiwan have observer status at the World Health Assembly in Geneva, using the name “Chinese Taipei.”

15In 2006, when the Harper government discontinued Canada’s dialogue with China on human rights, citing ongoing concern over China’s lack of progress, President Hu Jintao snubbed Prime Minister Harper at an economic summit in Vietnam. So why, with Colombia’s dismal record on human rights and its violent past as a narco-state, did the government conclude a free trade deal with that country this March? I don’t want to suggest that the previous Liberal government had sufficient foresight to move from its dependence on US trade to recognize the economic importance of China. There was dialogue, and there were a few Team Canada missions, but it is only recently that the Liberals have recognized Canada’s need to look towards the emerging economies in Asia. The Harper government has taken pains to criticize China’s human rights record publicly at every opportunity, meeting with the Dalai Lama at the Prime Minister’s Parliament Hill office. The Prime Minister also refused to attend the Beijing Olympic Games. There has been little contact at senior political and diplomatic levels. This is a major impediment to engagement, since Chinese culture places great importance on long-term personal relationships.

16Members of our present government seem to be ignorant of the fact that, while we need China, China does not need us. China has a global reach and has also negotiated a free trade pact with ASEAN countries. China is Canada’s second largest trading partner overall, and our third largest market for Canadian merchandise exports, just behind the United States and the United Kingdom, and yet eighty percent of our merchandise exports still go to the United States, with only about two percent going to China. Despite the tremendous commercial potential of China, Canada lags behind in foreign direct investment there, which is less than one percent, and China’s investment in Canada is at a similar level.

17Canada is also failing to take advantage of its biggest long-term asset, the 250,000 Canadians, many of whom are young professionals, who live in Greater China. Particularly regressive is the new citizenship law that took effect this April, and created a two-tiered citizenship that will affect the Canadian diaspora. The Asia Pacific Foundation of Canada urges Ottawa to update its understanding of the global knowledge-based economy and to “embrace Chinese transnationalism.” Chinese civilization has been around for thousands of years and we have long memories, so I am very puzzled by the government’s recent about-face regarding restarting dialogue with China. The visits of Ministers Stockwell Day and Lawrence Cannon to China, with an upcoming visit planned for Prime Minister Harper, seem like a good start, but not nearly enough to build any kind of permanent relationship.

18The Harper government has done some things right. The significant appointment of David Mulroney as Ambassador to China will, I hope, enable a more sustained approach involving high-level officials in the Department of Foreign Affairs and International Trade. Another positive recent appointment was that of Dashan as the Canadian Commissioner General for the Shanghai Expo.

19Canada has finally identified China as one of the priority countries in its Global Commerce Strategy and has stated that it wants to double the level of bilateral trade by next year. As of 2008 we suffered from a substantial trade imbalance with China, with imports surpassing exports by a ratio of four to one. Given the diminishing opportunities for exports to the United States, it is important that Canada revitalizes our relationship with China. However, it will take more than stated goals on paper. Canada is not spending very much on the Global Commerce Strategy, just $50 million, an amount that many of our competitors would direct towards one single country.

20Unlike Australia, Canada has failed to have a “whole government” strategy toward China. Australia has had this approach since the 1980s, involving immigration, post-secondary education and trade with an Australian brand. Australia’s approach emphasizes a constant flow of positive visits between senior-level officials. For example, in 2008 the Prime Minister of Australia visited China twice, the Governor General went to China, the Minister for Trade visited China three times, and no less than five other ministers with various portfolios went to China. Australia also maintains a number of ongoing bilateral dialogues with China on trade, resources, aid, defence, human rights, climate change and regional security, and is working actively towards a free trade deal with China. On human rights, Australia’s policy revolves around dialogue, technical assistance and an incremental approach. Its Department of Foreign Affairs and Trade notes that, “though progress is slow, this approach is preferable to the alternative—public condemnation of China—which is often counterproductive.” The policy notes that while differences on human rights exist, substantial progress has been made by China over the past thirty years. Australia’s overall two-way trade was more than AU$ 67 billion in 2008, an increase of 28.3 percent year on year, and more than fourteen percent of Australia’s merchandise exports go to China. Needless to say, our government has much to learn.

21Given Canada’s status as an exporter of natural resources, our leadership in scientific research and environmental technology, and our role as the Asia–Pacific gateway, China should be our natural ally. For Canadian corporations, Hong Kong, and now increasingly, Taiwan can be our gateways into China. China’s Foreign Minister, Yang Jiechi, was in Ottawa this Tuesday, taking the initiative to turn the page on the rocky relationship that exists between the Harper government and China. I am sure that all of us will be watching to see what follows.

22As is often the case, the Canadian public is ahead of the government. A poll by the Asia Pacific Foundation of Canada, taken three years ago, found that most Canadians identified China as the export market with the greatest potential, way ahead of the United States, and sixty percent of Canadians believed that the rise of China was more of an economic opportunity than a threat. The Canadian government needs to make China a priority, so that other countries will not continue to realize substantial gains at our expense, and Canada will not become irrelevant on the world stage.


Chancellor Emerita of the University of Toronto. The Honourable Vivienne Poy is a historian, author, fashion designer, entrepreneur, corporate director and volunteer with a number of cultural, educational and social organizations. Born in Hong Kong, she was educated in Hong Kong, England, and Canada. She completed an Honours B.A. in history at McGill University, followed by an MA and PhD in history from the University of Toronto. She also completed a Diploma in Fashion Arts at Seneca College. Her academic interests, and her 4 books, focus on the history of the Chinese in Canada, the history of Hong Kong and of modern China.
In 1998, Senator Vivienne Poy was the first Canadian of Asian descent to be appointed to the Senate of Canada. Over the years, Vivienne Poy has been involved with many cultural, educational and philanthropic causes across Canada. As a Senator, and an active member of the Asian Canadian communities, she was instrumental in having May recognized by the federal government as Asian Heritage Month in Canada. She is also committed to building bridges of understanding between Canada, and the Asia Pacific region. As a result of her leadership in politics, the community and education, she has received many awards and honours including being voted by Canadians as one of 2010’s Top 25 Canadian Immigrants in Canadian Immigrant Magazine, as well as receiving the inaugural Golden Mountain Achievement Award at the 150 Years in Golden Mountain Celebration in 2008 in Victoria.
In recognition of her national and international achievements, she has been awarded several honorary degrees from universities in Canada and around the world

© Les Presses de l’Université d’Ottawa | University of Ottawa Press, 2011

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