On September 4-5, Shanghai Institutes for International Studies (SIIS) and the Institute of Asian Research of University of British Columbia (IAS) jointly hosted a conference on “China-Canada Relations：New Dimensions in Cooperation” in Hangzhou. Participants include officials, academics, and entrepreneurs from China and Canada, discussing the general trends of China-Canada relations, China-Canada Economic, energy and environment cooperation, China-Canada cooperation in regional and global institutions and broader global economic and political issues. This was the second China-Canada dialogue of this type after 2010.

1. General trends of China-Canada relations and the significance of this conference

The overall opinion was that in recent years China-Canada relations were entering a new height in many substantial areas from commerce, energy and environment, education, tourism and so on. Mutual visits of leaders strengthened the relations. The Conservative Harper government adopted a proactive and pragmatic approach toward China, which meant deepening cooperation with China had received common support of both parties of Canada.

A participant from Canada pointed out the bilateral relationship needed more caring and attendance at this time of fast development. This type of “track 2” conference, defined as forums for “experts to express opinions about policy-oriented issues from an informal perspectives”, could promote real exchanges, critical opinions, and connecting theory with practice. The first dialogue in 2010 focused on history, while this second one was to look forward.

2. Prospects of China-Canada Free Trade Agreement (FTA)

Several participants confirmed the mutual complementarities in economy and called on the FTA to be signed as early as possible. One argued that Canada demanded more from China than the opposite. However, more emphasized FTA was good but certainly not great. More comprehensive economic cooperation beyond the Complementarities Study Report was needed. A lot could be done in investment. One quoted what we need was not a FTA but a “Wealth Generation Agreement”. Some raised the question about obstacles to a too ambitious agreement on both sides. One mentioned that trade data was confusing. What China got was only the volume of trade while the majority of profits went to Canada. A new framework to measure wealth generation was needed to let the public know more about the benefits of trading with China.

Several participants mentioned Canada-China relations were underperformed compared to Australia-China relations both economically and politically. In 2011 Australia was the 8^th trading partner of China while Canada was only the 13^th. In terms of GDP ranking in the world, Canada was the 10^th while Australia was 16^th. Geographical difference was one important reason. But one pointed out Canada had larger potential in the future. 

3. China-Canada cooperation in regional and global institutions

A Canadian participant pointed out that Canada and China had close cooperation on ASEAN security affairs in 1990s. The “new security concept” coined by China was the result of cooperation with Canada. Asia-Pacific structure has changed greatly. There were two suns in the sky. It was worth thinking about whether the existing regional architecture was enough to deal with the China-US conflicts and whether Canada could play a role somewhat different with that of US in this region. Canada had expressed its interest in participating the East Asia Summit.

Chinese scholars commented that US did not want to see another sun while China did not want to be the sun. What’s more, what we need to deal with were not only the relationship of “two suns”, but also the separation of “two skies” in the Asia-Pacific region: one was economic and the other was political.

Another participant compared the Asia-Pacific power relations as a body (US) with two wings. The body would have no place if the two wings were too closer. US pivot to Asia broke the original power balance in the region, which represented the evolution of US strategy from anti-terrorism to rebuilding advantages over regional powers. The real purpose of the US in restructuring the regional architecture was to maintain its dominance instead of pushing closer regional integration. China lacked a conceptual framework and therefore did not have incentives to strengthen cooperation with Canada. But a Canadian participant argued that the fundamental purpose of US re-engagement with Asia, whatever called, was to find growth to absorb its huge debt.

A participant raised four scenarios for the future of Asia-Pacific regional architecture: US primacy, China primacy, fragmentation and ASEAN-centered. The first two were less likely as US lacks capability and China lacks both capability and willingness while ASEAN countries were not willing to see any power dominance. Powers would keep dialogues to prevent the third scenario, such as China advanced the concept of “new type of power relations”recently. The fourth scenario was most possible as all actors would feel relatively comfortable. But there was comment that the third scenario was the reality.

One participant raised the issue about values in international institutions. The theme of global governance has shifted from common right to common interest and now to common values. Existing institutions were based on western values and needed to integrate more eastern values, especially Chinese values. Canada played a leading role in international (environmental) organizations 20 years ago, but quitted today. G8 leaders were absent from Rio 20 while emerging economies were very active. In the past, western countries pushed for socialization of China and India, while today we need mutual socialization. One Canadian participant commented that there was no difference between western and eastern values. Differences lied in different institutions and structures, e.g., IMF negotiation was relatively easy as it was all about numbers while UN was more complicated. Climate change negotiation was like the Doha Round involving too many actors. Like China, Canada preferred to adopt a voluntary approach and promote cooperate within a small group.

Participants also touched upon the issue of multilateral cooperation within G20. They confirmed the role played by G20 in countering the crisis, promoting international coordination in macroeconomic policies, commodities, development etc.. Canada co-chaired the Mutual Assessment Process. China and Canada could strengthen cooperation on dealing with the Europe debt crisis, countering protectionism and climate change. As for UN, Canada was not willing to see the expansion of UN Security Council since it would further marginalize the small non-permanent members like Canada. China and Canada could also consider more cooperation in maritime, arctic, border issues.

4. China-Canada energy and environment cooperation

Participants pointed out the exploration of shale gas would make America the capital of the world. China and Canada cooperation in energy was entering a “golden age”, however, many political and legal obstacles needed to be overcome.

A Canadian participant mentioned that Canadian society was stuck between environmental and rational opinions. The latter simply listed the numbers Canada would gain from exporting energy to China. Three logics beyond the pure rationalism were needed to break the deadlock. First was the logic of global energy balance supplier. Canada could play a role of stabilizer for Chinese energy supply. Second was the logic of environment protection. Chinese pollution was the result of global industrial transfer and therefore was a global issue. Third was the logic of climate change. More import of oil and gas would help China reduce coal consumption and carbon emissions.

The pending Nexen case was hotly discussed too. Several participants from two countries coincided that Canadian government’s investment approval process was lack of transparency. The “net benefit for Canada” requirement was questionable. The 7^th indicator was added not long ago asking about the incentive behind the investment, which was very subjective. Recently Prime Minister Harper said the importance of public opinion should be considered, which actually made the judgment even more subjective. Canadian government should go beyond the debate and look more strategically at the implications of Chinese investment in Canada, since it would direct the behaviors of Chinese national companies toward more international rules and norms and reduce its investment in those unstable areas in Africa, etc..

5. Broader international economic and political issues

A Canadian scholar pointed out China-US conflicts were inevitable and had started to play out. It could upgrade from soft balancing to hard balancing. Innovative approaches were needed and small countries including Canada could play larger roles. This was further elaborated by Chinese scholars. Peaceful rise would constrain not only China but also other emerging powers. US did not believe in it, while Canada could act as an “honest broker” since it was more objective and had no concern about loss of dominance. This would be in the interest of the system and Canada itself. Another Chinese expert mentioned Chinese foreign policy saw great powers as the key, developing countries as the base, and international institutions as forums, but said nothing about the place of middle powers. The crisis provided a window of opportunity for China to cooperate more with Canada, which should be grasped timely.

A Chinese scholar analyzed the three dualities about the complexities and limitations of Chinese power: power v. influence; power v. institutional power; public v. individual and social power. Future developments of Chinese power could be looked from five perspectives: economic power; governance power; soft power; shaping power of regional order and the coordinative power. Canadian participants pointed out that China was both developed and developing. Differences should not hinder cooperation. But power was a concept seriously misunderstood. Just as one could not put a lipstick on a pig, government could do nothing about soft power.

Another Canadian participant mentioned, the Complementarities Study report was too limited; the two countries should adopt a new model, such as exploring some mutually acceptable norms in specific areas. Norms were not standards. They had ethic dimensions and could be adjusted according to circumstances. “Best practice” in industries was a case. Energy and environment, coastal water, food security and others were areas that these norms could be developed by the two countries.

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