The China Crisis

Justin Trudeau is facing a COVID Crisis. But just around the corner is a China Crisis. Robin Sears writes:

It’s essential when dealing with authoritarian governments to analyze carefully what really worries them, and what they will ignore. Any economic measures we might take they could care less about, as China could easily hurt us more.

Secondly, it is important to sort the must-haves: from the nice-to-haves. It would be a huge victory if Canada could help prevent Chinese spies from repressing foreign organizations and corporations in Hong Kong. We can’t.

We have two musts: the two Michaels and Beijing agents’ threats on Canadian soil against Chinese Canadians. Kovrig and Spavor must be allowed consular visits again, and then be released. Those Communist Party of China United Front workers who are dispatched to apply pressure on Canadians critical of the CCP should be arrested, named and shamed, criminally charged if not diplomats, sent home if they are.

These are Canada’s policy musts today, and the prime minister should cite them publicly and often. We have tried private diplomacy for more than 18 months now. It is time to go public. Will this provoke a CCP backlash? Perhaps, but the risks of not doing so are rising for Chinese Canadians and the two Michaels.

It's also vitally important to understand China's end game:

It is Taiwan that is President Xi Jinping’s endgame. He has pledged he will achieve unification while he is in office. He will fail, but he can make life much harder for Taiwan. A strong cross-pressure of regular public condemnations from as many of the OECD nations who are willing would be profoundly humiliating.

Getting there, however, will not be easy:

Xi faces his own dilemmas, he is engaged in a game of chicken with Trump. The CCP does not want to lose control in Hong Kong, but almost as badly it does not want to see Hong Kong’s status as an Asian financial capital destroyed. The city’s stock exchange is dominated by more than 200 listed mainland corporations, for whom access to global capital markets through Hong Kong remains key. If the property market were also to crash, in the wake of a collapse of the Hang Seng index, the cost would be in tens of billions of dollars for Chinese citizens and SOEs.

The Hang Seng has already sunk to a valuation of only 10 times underlying earnings, less than half that of the NYSE. If the Americans do pull Hong Kong’s special status, they would be signally to the 1,300 American corporations there, “Time to leave!” That would really be the beginning of the end for one of the most beautiful multicultural cities in the world. What seemed unthinkable only months ago — that the giant American banks, technology, and professional service firms would leave — now seems possible.

And, finally, working things through will take a long time:

In the Cold War, it took decades for the West to develop an effective set of political and economic levers to restrain the Soviet Union. But economic pressure, public humiliation over the treatment of dissidents and a visible and unmatchable military commitment on all of the Warsaw Pact’s borders led to the Soviets’ collapse.

The struggle to force China to accept the costs, obligations and responsibilities of a superpower requires different tactics. But two things have not changed since that earlier global battle: such a campaign can work only with the closest unity of strategy and tactics by the greatest number of nations; and by carefully choosing a short list of vulnerable targets of pressure wisely.

Trump's America First mentality won't work. But a global alliance of like-minded countries could.

Image: Canadian Business