Canada-China Relations Committee on June 17th, 2024

[The Chair, Liberal, Ken Hardie]

We're back in session. Thank you very much for your patience as we get everything all set up.

We are now in public and ready to hear from two very intriguing and interesting witnesses, I'm sure, as we look into our Indo-Pacific strategy. It's all about Canada-China relations at the root.

I'd like to now welcome our two witnesses. Jennifer May is Ambassador of Canada to the People's Republic of China, and she's appearing by video conference at some probably incredibly beastly hour of the day, I would presume. Oh, it's 12 hours away. That's 8 a.m. That's good.

David Morrison is the deputy minister of foreign affairs.

I understand, Mr. Morrison, you're going to begin with five minutes, and then we'll turn it over to Ambassador May for five minutes.

[David Morrison, Deputy Minister of Foreign Affairs, Department of Foreign Affairs, Trade and Development]

Thank you, Chair and members of the committee.

Thank you for the opportunity to provide an update on Canada-China relations.

Today I will share some views about Canada-China relations, reflections on my recent visit to Beijing, and highlight important elements of our overall approach to China. Then I'll be very pleased to take your questions.

China has changed dramatically in the last 10 years, as has the rest of the world. China is both more assertive internationally and more authoritarian domestically. It “is looking to shape the international order into a more permissive environment for interests and values that increasingly depart from ours”, according to Canada's Indo-Pacific strategy.

The strategy describes China as increasingly disruptive, and in that sense, the country's impact is global. That's why we have to be pragmatic. China is a trading partner and a key player in many international challenges. Given its size and influence, we need to co‑operate in looking for solutions, as the strategy recognizes.

China remains a major force in a wide range of issues affecting Canada, from global problems such as climate change to bilateral trade issues.

To put it simply, China matters whether in terms of climate change, development finance, the global economy, or as Canada's second-largest bilateral trading partner. Responsible management of relations with China is crucial to ensuring Canadians' security and prosperity in the years to come.

Canada's Indo-Pacific strategy is clear that advancing Canada's interests requires meaningful engagement, and active and frank diplomacy with China. My visit to China in April was a cautious step forward in this process.

In Beijing, I had wide-ranging discussions with my Chinese counterpart over the course of several hours. We exchanged views on how we are to manage bilateral relations, including Canada's commercial interests. We discussed sensitive issues such as foreign interference, human rights and cross-strait stability. We shared perspectives on global issues such as the Middle East, the Russian invasion of Ukraine, and North Korea.

I found the exchange to be meaningful, with both sides seeking a way forward that would, at the same time, align with respective national interests. Not surprisingly, Canada and China have different world views. One of my goals was for the Chinese side to have a clearer understanding of Canadian priorities and perspectives. I believe that was achieved.

Much work remains for us as we chart a path forward. I'm mindful of what Minister Joly has said about pragmatic diplomacy. It is during challenging times that such channels of communication become so important. Canada cannot ignore China, nor would that be in our interests. We need to talk to one another so that we can solve problems together. I am confident that we are in a position to engage China with eyes wide open, and with clarity about the opportunities, risks and challenges.

Issues of foreign interference by the PRC are well documented by this committee and in the public domain, including the recent reports of the National Security and Intelligence Review Agency, NSIRA, and the National Security and Intelligence Committee of Parliamentarians, NSICOP.

We have emphasized to Chinese interlocutors on numerous occasions that there is no tolerance for foreign interference on Canadian soil. This message has been delivered by the Prime Minister, the Minister of Foreign Affairs, and by Canadian officials at all levels. I delivered the same message again during my recent visit.

Efforts by Global Affairs Canada to address foreign interference are part of a whole-of-government approach led by the Minister of Public Safety.

Other recent Government of Canada strategic initiatives have focused on critical minerals, foreign investment and research security.

We have also invested in China-focused capacity building across the Government of Canada. We recognize that our relationship with China is a long game and that investments made today will yield benefits over time for our organization, for Canada and for Canadians.

Co-operation with allies is also key to building resilience to China's increasing power and assertiveness. This co-operation is ongoing, particularly within the G7, as you saw in recent days at the G7 summit in Italy.

This committee will have heard recently—I believe it was on May 27—from stakeholders about the importance of Canada's exports to the Indo-Pacific, and more specifically China, particularly in the agricultural sector. The Government of Canada is engaged in ongoing efforts to support the diversification of Canada's trade with the entire Indo-Pacific region. Canadian agricultural companies continue to focus on the China market, not least because of the purchasing power of that market and competitive pricing. This focus is despite well-known risks. This is, of course, how our free market system works, with individual enterprises free to pursue opportunities as they see fit. Of course, the fact that China's energy and food security remain reliant on imports will continue to offer significant opportunities for Canadian businesses well into the future. Indeed the growth we have witnessed in Canadian exports to China over the past two years is a testament to this, as most of it has been in commodities such as iron ore and canola.

China remains Canada's second-largest bilateral trading partner and the third-largest merchandise export market after the U.S. and the EU, but it is important to put this into perspective. Canada's exports to China formed only 4% of our global exports in 2023. By comparison, we still export more to the state of New York. However, China also remains the second-largest economy by nominal GDP in the world. Its purchasing power remains attractive to companies that are looking for new markets, including in the clean-tech and life sciences sectors, and it continues to grow quickly. This is why direct engagement with China is imperative if we are to continue to support Canadian companies that remain committed to the market, while addressing the challenges that prevent new Canadian entrants that are interested in the market. Doing this requires a prudent approach, one that balances support for strong bilateral trading relations with efforts to protect Canada's overall economic interests.

As for where we go from here, we are focused on diplomacy. We are taking a patient and steady approach, with a clear-eyed view of what is important for Canada and Canadians.

I thank you for the opportunity to address you today on the state of Canada-China relations.

Thank you for your attention.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Morrison.

We'll turn now to Ambassador May for about five minutes. You can go a little over, as Mr. Morrison did.

[Jennifer May, Ambassador of Canada to the People’s Republic of China, Department of Foreign Affairs, Trade and Development]

Thank you very much, Mr. Chair and members of the committee.

Good evening, everyone.

I would first like to thank you for inviting me to appear before the House of Commons special committee on Canada-China relations. I'm very pleased to have the opportunity to appear before your committee this evening.

I was appointed ambassador of Canada to the People's Republic of China on September 23, 2022, after serving in Hong Kong from 1998 to 2000 and then in Beijing from 2000 to 2004.

In my almost two years on the job, I have lived through the final stages of China's zero COVID policy, the gradual opening and the resumption of business as usual.

I came to China with a clear mandate from Prime Minister Justin Trudeau and Minister of Foreign Affairs Mélanie Joly, namely to strengthen our dialogue with China to support Canadian interests while defending and promoting our values at every step.

Since my first day in China, I have met with and continue to meet with a wide range of stakeholders in government, business and civil society in both China and Canada to better advance Canada's interests in China.

Our China strategy, which is part of Canada's Indo-Pacific strategy, is being implemented through the greater China network. This network is made up of Canadian missions in Beijing, Shanghai, Guangzhou, Chongqing and Hong Kong, as well as representatives from eight federal agencies and five provinces—Alberta, Quebec, Ontario, Saskatchewan and British Columbia.

What does this mean, concretely? Underpinned by our Indo-Pacific strategy, I have five priorities for my team in China that we continue to deliver on.

First and foremost is ensuring the safety and security of Canadians and our missions. Our consular team is committed to assisting Canadians and their families in China, including advocacy efforts to ensure Canadians detained in China receive fair and equal treatment under local laws.

This entails engagement with Chinese officials, and I am pleased to announce that we re-established our consular dialogue this spring. Continuing engagement on consular issues with Chinese officials is essential to supporting Canadians on the ground in China.

The second priority is promoting democratic norms and effective multilateralism, including human rights, media freedom and respect for international law. In all of my interactions with the Chinese Ministry of Foreign Affairs and other interlocutors, global and sensitive issues such as the wars in Ukraine and the Middle East, cross-strait relations and foreign interference are always at the top of my agenda.

I also regularly raise human rights issues with Chinese officials. This is an important part of my work, and our team is actively engaged on a daily basis in educating the Chinese public on Canadian values.

Tomorrow I'll be going to Xinjiang. It will be the first visit by a Canadian ambassador to the region in over a decade. I will use the opportunity to share Canada's concerns with regional leaders and to assess the situation on the ground.

The third priority is promoting Canadian trade and economic interests, including by advocating for the resolution of market access barriers. For example, we have resumed consultations with China's Ministry of Commerce, Ministry of Agriculture and Rural Affairs and the Civil Aviation Administration of China.

However, let me be clear: It is not business as usual in the China market. Our trade commissioner service team works to ensure Canadian exports are treated no differently in that market from those of competitors from the U.S. or the EU, but we do it in a way that makes sure they are also aware of the risks, with eyes wide open. At the same time, there are sectors where we don't actively support the expansion of trade and investment, and we actively encourage Canadian businesses already active to diversify both within and beyond the China market.

Through our trade program within the greater China network, we help Canadian businesses trying to navigate the Chinese market find opportunities that are consistent with Canada's economic and national security interests. I returned to Canada to speak with with industry representatives, academics and provincial government officials to better understand the reality of today's China and what we mean by “informed engagement”.

Despite these challenges, China remains Canada's second-largest bilateral trading partner, even though only 4% of Canadian exports go to China. China's influence on global trade, the global economy and supply chains is a reality that requires active diplomacy.

My fourth priority is supporting the building of a sustainable green future, including climate change commitments. The environment remains an area of pragmatic co-operation and dialogue between Canada and China.

We have been working in close collaboration with the China Council for International Cooperation on Environment and Development for over 30 years.

Steven Guilbeault, Minister of Environment and Climate Change, went to Beijing last year and worked with his Chinese counterpart at the United Nations conference on biodiversity, or COP15, held in Montreal. These are examples of how we can work together on areas of common interest.

In addition, where it makes sense, we support Canadian clean-tech companies and their green growth solutions.

Finally, the fifth priority is supporting a high-performing China team and China expertise across the public service to help build China-focused analytical capability. I am pleased to report that our greater China network team is working to advance these priorities through constructive engagement and by building regular communication channels at all levels. This pragmatic diplomacy approach also means it will be clear about where our values and interests diverge. Visits such as the official visit by the deputy minister of foreign affairs in April are opportunities for productive and constructive discussions with senior officials.

We need to be realistic and clear-eyed about our expectations for engagement. However, the only way to understand each other and address very difficult issues is through communication. Minister Joly's and Minister Blair's recent discussions with their Chinese counterparts, in Munich and Singapore respectively, are proof of that.

I believe that dialogue helps to address misperceptions and potentially contributes to tangible progress on Canadian priorities vis-à-vis China.

With that, Mr. Chair, I'm very happy to take your questions.

[The Chair, Liberal, Ken Hardie]

Thank you, Ambassador May.

We'll get to the questions now. We have Mr. Kmiec for six minutes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Chair.

First, Deputy Minister, I heard both you and the ambassador mention pragmatic diplomacy and pragmatic engagement, that type of terminology.

I have the Global Energy Monitor here, and I want to mention it, because both of you mentioned climate change and the importance of working with the PRC on it. It seems to me that the PRC says one thing and does another. According to the Global Energy Monitor, the PRC has an estimated 114 gigawatts of capacity approved that use coal power, and they started construction of 70 gigawatts in 2023. For 2022, 104 gigawatts were approved, and 54 gigawatts were under construction.

How can we believe anything they have to say on climate change when they are not going to meet any of their 2025 climate change goals? All the while they're using Canada's good name through this organization that's been mentioned now multiple times and that Minister Guilbeault is the executive vice-chair of.

[David Morrison]

As with many things, when it comes to China, there's a duality here. I believe that the statistics cited in terms of building coal-fired plants are probably correct, and that obviously pulls in one direction. China is also the world's, I believe, by some measure, largest producer of photovoltaic solar panels.

We have real issues with how and where those are produced, but they are helping. China's production is helping countries around the world transition off dirty fuels. If you look at what they're doing on electric vehicles, again, we have some challenges with that, but they're making even inexpensive electric vehicles for their own market, which is a huge market. That will help China and therefore the world meet its climate goals. As I said, with much of China, it's kind of a dual story.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Through the chair, you said “duality” and “dual story”. Is it fair then to say that they say one thing and do another and that Canada seems to just be playing along with it and doing nothing? You mentioned renewable energy and solar panels. They are built with Uyghur forced labour. You didn't express any concerns about that. Why?

[David Morrison]

I believe I did express concerns about that, with all respect.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I'd like to hear it again then.

[David Morrison]

Canada has been concerned for a very long time about the use of forced labour in Xinjiang and elsewhere, and it makes its concerns known. I believe we all just heard from Ambassador May that she's going to Xinjiang later today. We are engaged in efforts to ensure transparency in supply chains, including photovoltaic panels.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Morrison, when you met with the PRC foreign vice-minister in April 2024, did you raise the specific issue with them? Did you raise that they're going to miss all of their climate change goals because of their massive production, construction and operationalization of these coal power plants?

[David Morrison]

We discussed a range of issues, including climate change and human rights in Hong Kong, Tibet, Xinjiang and elsewhere.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

You did raise the issue of the coal power plants, the mass production, the hundreds of gigawatts of power they're putting on and the production.

[David Morrison]

I am not going to get into the details of everything I raised. I just gave you the wave-tops of the kinds of issues that we discussed, and those included climate change.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Is it fair then to say, based on this and the testimony you've given so far, that the executive vice-chairmanship by the environment minister of Canada on the executive committee of the China Council for International Cooperation on Environment and Development is simply a fig leaf being used by the Communist Party to hide this duality and that they're not going to meet any of their climate change goals, and we're simply playing along with it?

[David Morrison]

Mr. Chair, I would simply submit that the committee that Minister Guilbeault is the vice-chair of has been around for many years. It has allowed Canada and other countries to engage China in all manner of discussions about the environment, including climate change and biodiversity, and most countries that are members of the committee continue to find it a very useful forum.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Chair, I have a question for the ambassador.

She mentioned consular affairs. I would be remiss if I did not mention the case of Huseyin Celil, who is now in his 19th year of imprisonment in the PRC.

I'd like to hear from the ambassador regarding this Canadian, who is—I'll say it—illegally detained by the PRC. Has she raised the case with her counterpart? Could she give us an update on Huseyin Celil's case?

[Jennifer May]

Mr. Chair, regarding the situation of Huseyin Celil, who is a dual Canadian and Chinese citizen, yes, I have raised the case. There is a challenge there. Because of his dual citizenship, the Chinese authorities do not grant us consular access.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Kmiec.

We'll go to Mr. Fragiskatos, now, for six minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Thank you to the witnesses for being here tonight.

Mr. Morrison, in order for any country to really understand another, there has to be a basic level of expertise as part of that engagement.

What is Canada doing to increase its expertise in the Department of Global Affairs with respect to China?

[David Morrison]

Mr. Chair, predating the Indo-Pacific strategy, we had a “China uplift” injection of funds that allowed us to hire more people and increase our linguistic capabilities—to up our game on China, writ large.

As part of the Indo-Pacific strategy, that effort continues not just at Global Affairs Canada but also across the federal government. That's what made the Indo-Pacific strategy unique. It's not just a Global Affairs' strategy. It's a whole-of-government strategy. For example, Agriculture and Agri-Food Canada recently opened an office in the Philippines to promote Canadian exports.

We're helping to increase China literacy across the gamut in parts of the federal government.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

You mentioned agriculture. That's an area that has been an important sector, obviously, for Canada, writ large. With respect to the Chinese export market, I know it's important for the western provinces to see that continued level of trade.

What do you see, Deputy Minister, as areas of potential co-operation and tension, going forward in the relationship?

I'll go with the same question to Ms. May, subsequently.

[David Morrison]

Thank you.

Agriculture forms a large part of our exports to China. Last year, those exports were a record $30 billion. Most of those were commodities on the agriculture side—seed oils like canola—and iron ore. You talked about the west. However, from the east, there are a lot of seafood products exported to China. It really cuts across the country and across agricultural sectors.

In terms of where we expect challenges, we are having market access challenges for a couple of goods—beef and certain kinds of pet food. Part of my visit was to make the case for why restrictions on those Canadian exports should be relieved.

We can go to Jennifer, who will know more details.

[Peter Fragiskatos, Liberal, London North Centre, ON]

It's the same question for you, Ambassador.