China flexes economic muscles with exporters

Canadian farmers might feel hurt and alone in the abuse they are suffering from China’s belligerent government.

But in being hit in the pocketbook by China, Canadian farmers are sharing a situation being experienced by a growing cohort of targeted developed world industries.

“China is having disputes with an awful lot of countries simultaneously,” said Charles Burton, a senior fellow with the Macdonald-Laurier Institute.

“There are just so many examples of China seeking to leverage our economic dependence on that market to achieve political purposes.”

Indeed, just in late April, China dramatically denounced an Australian government suggestion that it might hold an inquiry into the origins and the handling of the COVID-19 pandemic, and directly threatened to restrict some of Australia’s agricultural exports to China.

“The Chinese public is frustrated, dismayed and disappointed with what Australia is doing now,” China’s ambassador to Australia, Cheng Jingye, told the Australian Financial Review, threatening repercussions to three economic sectors.

“Maybe the ordinary people will say ‘Why should we drink Australian wine? Eat Australian beef?'”

While that is not a specific threat of government action, China has previously used a network of government-friendly organizations, media and social media within the country to whip up hostility to nations with which it is having political disputes.

Australia, with even more agricultural export exposure to the giant Chinese market than Canada, has been having increasing troubles with China in recent years.

That situation is shared by a number of Asian nations, including Japan, South Korea, Taiwan and the countries surrounding the South China Sea.

China also has political disputes and has taken trade action against a number of European nations. It has terrible relations with the Czech Republic, bad relations with Sweden, and for years strangled its imports of Norwegian salmon over the awarding of a Nobel Prize to a Chinese human rights activist. The dispute with Norway appears to have ended in 2019, after almost a decade of import blocking.

It isn’t just small- and medium-sized European countries China is trying to pressure through trade threats. Germany is considering whether to allow Huawei equipment into its coming 5G network, but most German politicians are worried by the company’s close ties to the Chinese communist regime.

“If Germany were to make a decision that led to Huawei’s exclusion from the German market, there will be consequences,” China’s ambassador to Germany, Wu Ken, said in January.

“The Chinese government will not stand idly by.”

Across the Atlantic, the United States-China relationship continues to grow worse, with the U.S. actions against Chinese imports seeming to moderate in late 2019, before the COVID-19 pandemic spurred further American hostility. U.S. President Donald Trump’s administration has suggested China kept crucial coronavirus information hidden from foreign health officials, and some Trump officials have alleged the possibility that the virus escaped from a Chinese laboratory.

It is in that context that the Australian controversy has erupted.

“The concern over COVID-19 is becoming a major focus for unusually strident statements and threats of coercion against nations that are questioning (the origin and handling of COVID-19,)” said Burton.

While China has thundered at any Canadian government criticism of its actions or behaviour, mostly recently denouncing Foreign Minister Francois-Philippe Champagne for criticizing the arrest of democracy activists in Hong Kong, Canada’s response to China’s continuing antipathy has been extremely restrained, Burton said.

“Canada has been much more accommodative to the Chinese regime than many other countries,” said Burton.

Burton said whether or not Canada’s approach is effective is an open question. Many countries have disputes with China, and there have been a range of responses to its actions.

China’s outbursts at trading partners might appear emotional, but Burton said they are refined and focused toward creating domestic pressure within the targeted countries, hitting some products and avoiding others.

“China is doing this in a way that is calculated,” said Burton.

The root of China’s ability to use trade barriers to create political pressure on foreign countries comes from exporters in those countries yearning for access to China’s giant market. That access can be withheld, even informally, as expressed by China’s ambassador to Australia in the present COVID-19 situation.

Burton said that means exporters need to realize they will continue to face risk from future political disputes.

“It does seem that China is becoming more bold and more blatant in their responses,” said Burton.

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