Last week, former prime minister Brian Mulroney urged that this country begin an “urgent rethink” on its relations with China.
A front-page story in the Globe and Mail on Canada Day declared that the former Progressive Conservative PM had backed off on his previous suggestion of sending a high-level business negotiating team to Beijing to resolve Canada-China differences. Instead, he advocated a firmer stance.
“There has to be an immediate and urgent rethink of our entire relationship,” Mulroney told the Globe. That included kicking Chinese telecom company Huawei off Canada’s 5G systems and staying close to the U.S.-led Five Eyes spy network.
But those who think taking a hard economic line on China — a country that is neck and neck with the biggest economy on Earth — will change its aggressive and anti-democratic outlook must understand Chinese exceptionalism.
Change from within
Instead, as many China scholars have told me in the past, change within China must come from the Chinese people — and not necessarily as represented by the Chinese Communist Party.
That may seem far-fetched to those watching Beijing’s crackdown on Hong Kong, its vicious police tactics backed by central government financial support to help keep the Chinese region’s business community sweet.
As the New York Times reported last week, “The business world has largely fallen in line behind China’s campaign to tighten its grip on Hong Kong.”
JD.com, owner of this fresh food chain, raised $3.9 billion US in Hong Kong at the end of last month — one of many Chinese firms helping to keep the former colony’s economy healthy. (Tingshu Wang/Reuters)
While officials have offered moral and cash support for the former British colony, the most significant reason for the latest burst of business activity comes from a different source.
U.S. regulatory restrictions on Chinese firms and fear that the U.S. administration and Congress may impose financial penalties have made Hong Kong’s sophisticated marketplace a more-than-tolerable second choice to New York for raising cash.
As Walid Hejazi, an associate professor of international business at the University of Toronto’s Rotman School of Management, suggested in the context of threatened U.S. trade restrictions, squeezing China out can have perverse effects.
“Given there is a trade war, it can push China into doing things that could really help it over the longer term in terms of diversifying itself into Asia, into other markets, but also developing its domestic economy,” Hejazi told me at the time.
Like the U.S. in an earlier stage in its own development, China may be on the verge of building a domestic economy so large, exports become of decreasing importance.
Unlikely impact
Even if Canada and the U.S. could do without China’s increasingly high-level technology, of which Huawei is only a single example, even if they could withstand a reduction in the Chinese market for their exports of food and resources, the Asian country’s increasing self-sufficiency means some sort of new economic cold war is unlikely to have the desired impact.
Even if, as some credible sources have suggested, Chinese economic data is fudged, there is no question that the country’s economy is huge and growing. Beijing is spending a fortune on the education of its billion-plus population. It seems serious about trying to bring its poorest into the wage economy.
‘Poverty alleviation goals are more than a policy target. They are a major source of legitimacy both within China and globally’ <a href=”https://t.co/YdpHOIVVUw”>https://t.co/YdpHOIVVUw</a>
Condemned by human rights groups for forced birth control for minorities and other abuses, nonetheless the power of a command economy gives it strategic advantages at this point in its evolution. Unlike the U.S. and Canada, it does not have to negotiate with wealthy taxpayers to create university places or make what it considers to be essential investments.
But while Beijing rejects attempts at outside coercion, developments in Hong Kong may reveal a path to domestic transformation.
People power
While Beijing’s strong-arm tactics can work on powerless Uighurs, Hong Kong may be a Chinese microcosm of what can happen when an authoritarian government runs out of legitimacy with informed and educated citizens who do not want to be imposed upon.
People who think of South Korea and Taiwan as healthy pluralistic democracies may not realize that in my lifetime, both were run by nasty militarist — anti-communist in those cases — dictatorships. The running street battles between police and students before the removal of South Korea’s Park Chung-hee are legendary.
WATCH | Nathan Law flees Hong Kong:
‘I think the future’s grim,’ Law said, but noted he will continue to voice Hong Kongers’ demands for democracy. 2:09
Even as Hong Kong becomes more like China, the former colony may have inoculated the entire country with a taste for self-government and some ideas on how to get it. By alienating so many Hong Kongers, China has wasted an opportunity.
Now, the self-exile of Hong Kong democracy leader Nathan Law harks back to earlier times, when Russian anti-government leader Vladimir Lenin retreated to England and Vietnamese revolutionary Ho Chi Minh hid out in France.
Without even trying, places where you are allowed to think and say just about what you like create a refuge for dissent. Canada’s suspension of extradition rules is a sign that Hong Kong has strayed too far from that ideal.
Canada need not give up on China as a place where pluralism and democracy will one day help its people rule themselves.
In years gone by, North American economic sanctions may have had the clout to pressure even large countries into adjusting their policies. It is implausible to think that China, with an economy that the IMF says is still growing — while Canada, the U.S. and Europe will shrink about eight per cent this year — will be pressured.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
