The Middle Power and the Middle Kingdom: Securing CanadaÕs Place in the New China-U.S. Economic and Strategic World Order

Although the United States is finally showing signs of some slow economic recovery, in global terms North America is in relative decline as large emerging-market economies, particularly China, show much more promise for growth. But Canada, having relied on a north-south pattern of diplomacy and trade with the United States, is not well positioned to become part of this new economic world order. China is paying attention. It has not escaped notice among the Chinese that Canada has been largely absent from the Asian region and its institutions in recent years, relying only on the inertia of a few longstanding bilateral relationships. An occasional visit to China by Canada’s prime minister is not an encouraging sign — for Canada or China — of the Canadian government’s commitment to building a more robust relationship, particularly when other countries have ongoing dialogue with China at the highest levels. And Canada’s hesitance to join the Trans-Pacific Partnership, and a generally half-hearted attitude toward striking Asian free-trade deals, cannot have left China believing that Canada is serious about pivoting toward the Pacific. Indeed, new restrictions that further obstruct the ability of state-owned enterprises, from China and elsewhere, to invest in Canada likely signals that we are even outright hostile to the idea of forging deeper Asian ties. If Canada is to ensure that it is strategically well positioned for an era of rising Asian power, it must learn to think more like a Pacific nation, and not strictly an Atlantic one. The expanding Asian middle class will soon demand improvements in health, education, financial, environmental and urban services: These are things that Asians know Canada can do well, and they would welcome Canada’s expertise in developing these services. But Canada must show itself eager to integrate further with Asia, deepening relationships in the region’s nascent economic and security institutions. Canada can also begin acting on longstanding recommendations that it promote itself as a Pacific “location” for Asian multinationals: Calgary marketed as a global centre for unconventional energy research; Vancouver as an ideal headquarters for Asian multinationals operating in the West; and Toronto as a Pacific-oriented international centre of yuan-based finance. Rightly or wrongly, Canada is developing an international reputation as a difficult place to invest, and a country that is fairly indifferent to the potential that is already beginning to unfold in China and elsewhere in Asia. With so much of our economic future at stake, it is a reputation we must immediately begin working to reverse.