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Huawei executive arrest milestone marks two-year diplomatic deep-freeze

Meng Wanzhou entering B.C. Supreme Court on Oct. 1, 2019. (via Glacier Media)

Dec. 1 marked the two-year anniversary of the arrest of Huawei Technologies Co. Ltd. CFO Meng Wanzhou in Vancouver.

Those looking for evidence of the monumental shift – socially, politically and economically – in the Canada-China relationship since that pivotal event need look no further than the latest poll numbers.

In an Asia Pacific Foundation of Canada’s annual survey released last week, every graph charting public attitudes toward China reveals a dramatic drop – with 2018 being the turning point. The percentage of respondents who thought China’s rise was an opportunity rather than a threat, for instance, was 60 per cent in 2018, prior to Meng’s arrest. Today, it’s 35 per cent.

On a scale of one to 10, China’s overall favourability rating fell from 4.9 in 2018 to 3.6 today. Support for a free-trade agreement also dropped dramatically from 59 to 33 per cent, while those with views that China’s overall human-rights situation has deteriorated in the last decade rose to 60 per cent (up from 41 per cent in 2016).

Much of the animosity can be traced to the Meng arrest on Dec. 1, 2018, in Vancouver on a U.S. extradition request on fraud and money laundering charges. China, which considers the move politically motivated as a way to secure the Huawei executive as a hostage in U.S.-China trade negotiations, quickly and harshly responded by arresting two Canadian citizens (Michael Kovrig and Michael Spavor) on espionage charges.

Meanwhile, commodity exports from Canada to China have been put under a microscope, with some goods like canola and meat largely banned from the Chinese market. In a Canadian economy looking poised to shift more trade focus to its second-largest trade partner just years before, Beijing’s moves popped a rosy bubble for many about China’s recent rise.

“It has certainly cast a chill over some people doing business in China,” said Sarah Kutulakos, executive director of the Canada China Business Council (CCBC).

Kutulakos referred to the CCBC’s poll in May that showed 79 per cent of its members found their business had been hurt by the ongoing Ottawa-Beijing friction. About 43 per cent found business itself was down (after a record year in 2018), and that bleak picture has not changed as 2020 wore on.

“I’d say it’s pretty much status quo,” she noted. “It’s divided along the lines of the question, ‘Is your business aligned with China’s policy and development?’ Our exports to China are actually up 2.5 per cent this year because China keeps buying what we are supplying, so if you are in their five-year plan, there’s business to be had.… But every government representative is going to state very clearly their positions on the challenges right now, and those positions haven’t changed.

“We’ve seen in our survey that some business people – until the two Michaels are released – they do not want to go to China. They would ask themselves, ‘What if the next one is me?’”

University of Ottawa scholar and veteran Canada-China tech sector expert Margaret McCuaig-Johnston said one of the biggest signs that the relationship remains fractured is that top-level minister contact between the two countries has been reduced to almost a standstill.

That means that even if trade has continued, there is a clear divide between the two sides that has not even begun to be mended. McCuaig-Johnston also noted that, while the Liberal government under Prime Minister Justin Trudeau has taken a softer tone with China than other western leaders have, the tone is shifting.

“Things have been really difficult for the last two years, but the political parties are coming together now and seeing things the way they are,” McCuaig-Johnston said. “I think that the opinion polls have been very important for the Canadian government to see that public opinion has gone in the other direction. So I think we are seeing that the public opinion has turned so strongly against China that the government cannot ignore it.”

While Ottawa has not officially banned Huawei from taking part in Canada’s 5G networks, major telecom firms like Telus Communications Inc. (TSX:T), Bell Canada (TSX:BCE) and Rogers Communications Inc. (TSX:RCI.B) have already signed on with rival Ericsson (STO:ERIC.B) for their 5G plans this year. Meanwhile, Ottawa continues to engage countries like Great Britain, Australia, New Zealand and the European Union on partnerships promoting a liberal-democratic global order – an effort that will likely be boosted by the election of Democrat Joe Biden in last month’s U.S. presidential elections.

McCuaig-Johnston said the detention of the two Michaels was for many the turning point.

“It’s a nasty tactic that they have been doing for many years, and because in some cases it has worked for them, they keep doing it,” McCuaig-Johnston said, pointing to cases of Japanese citizens being arrested in the Senkaku Islands dispute a decade earlier. “This is a bizarre and medieval tactic that China is using, and they use it because they know we care about individual people – and they don’t. For them, human rights is having pulled millions of people out of poverty – which is commendable, but that’s not the same as individuals having rights.”

Vancouver immigration lawyer and policy advocate Richard Kurland said there does not appear to be a quick solution to the Meng case.

He noted the BC Supreme Court’s decision last week to shift its abuse-of-process argument portion of the Meng hearings from February to April, which would push a decision on the case further into next year.

And he added that if Meng loses her bid to fight off extradition, she still has several appeal avenues that may delay the process for years.

That is why, given the economic damage the incident is doing to Canada, Kurland thinks Ottawa should drop the extradition case if the Biden White House does not do anything substantial to relieve the stress placed on Canada in what he sees as a Washington-Beijing issue.

“In Canada, the law entitled the justice minister at any time to shut down an extradition case,” Kurland said.

“Ottawa can, after a review of the evidence, decide to terminate, so the Americans can withdraw the extradition request, or we can exercise our law. We’ve paid the economic price. Enough.”

McCuaig-Johnston, however, disagreed.

She said Canada must maintain its role in upholding its values on the global stage.

“Extradition happens very often with the United States because we have an extradition treaty. So if we want to terminate, there has to be a legal reason to do so. If we make this a political decision, it tells China that we would cave under political pressure – and that’s not a message that a ‘middle power’ like Canada wants to send to the world.”