Mr. Speaker, I would like to begin by saying that I will be sharing my time with the member for Saint-Jean.
I think that multiple factors have contributed to the very real problem with the Canada-China relationship, whether it be in trade or diplomatic relations. One of the most significant of those factors is likely the fact that Canada is having a hard time understanding that China has become a major world power. I think it is important to understand the phenomenon to know how all this began. For a long time, China's national project, as it was called, involved transforming an empire into a country that would continue to integrate more and more outlying areas. That is how it was, historically speaking.
That caused problems for minorities, as we know, but these were basically internal issues that did not really disrupt the international order. China opened its borders to international trade primarily in the 1990s. This process began in the 1980s, but it accelerated dramatically in the 1990s and 2000s. Since then, the country has seen tremendous growth. It has been doing a lot of catching up and is now on the path to technological dominance in certain sectors. It is very important to understand what China's power is based on.
China's case is somewhat unique in that it has a vast pool of cheap labour at its disposal, due to demographic pressures exerted by rural populations, which have been migrating to cities over the past 20 years and more. China's policy basically consists of attracting as much direct foreign investment as possible. Most of the factories built in China produce goods for export to other markets, such as the United States, Europe and some Asian countries.
We are also seeing the emergence of a Chinese middle class that is huge by western standards. It is about 250 million strong. That is humongous. There is something I should clarify, however. China is often portrayed as just a successful example of trade openness. It is worth noting that the aggressive investment-seeking policy that has enabled China to take its place in the world was largely planned out by Beijing, which maintains strict capital controls. This allows it to control the exchange rate and keep it from rising. That is a problem that the world at large will have to address someday.
As a side note, after the Second World War, monetary matters and trade matters were split up, and two separate institutions were created to control them. After the Second World War, the great 20th-century economist John Maynard Keynes warned the authorities, and it turns out he was right. Now let me get back to China.
The Chinese strategy has always been to combine openness to trade with aggressive state intervention. China's strategy was well planned, and, for the most part, the state controls direct foreign investment within its borders. I also want to point out that there is another issue we need to address. This might be the elephant in the room. If one of our committees can take this on, why not? China's presence on the world stage also serves the interests of many multinationals that benefit from low Chinese wages to put downward pressure on labour costs in other manufacturing countries.
China also offers multinational corporations an excellent opportunity to relocate their businesses within its borders. We are all familiar with made-in-China products. I would not be surprised if many of the products in our parliamentary gift shop were made in China. This affects all areas of activity, such as mass distribution, as in the case of Walmart, as well as biotechnology companies. China is actually accumulating various technologies as Chinese companies acquire licences and by making massive investments in countries rich in natural resources such as rare earth elements. In technology, for example, the U.S. has had a negative trade balance with China since 2007, so for more than 10 years.
In a show of China's regional power, the Shanghai Cooperation Organisation held a highly successful meeting in Qingdao, China, the same weekend as the G7 summit fiasco in La Malbaie. One decision at this meeting was to adopt common tools. The Chinese president made one announcement after the other.
This new empire and China's new power policy have increased tensions with other countries. Some examples are tensions in the China Sea, increased control over Hong Kong and a hardened position on Taiwan. At the same time, the regime is centralizing and strengthening.
Canada has not managed to adapt in response to all of these changes. However, Canada and China have traditionally had good relations. Canada recognized that the People's Republic of China was the true government of China one year before the Americans. The Americans continued to claim that the Taiwanese government, post-Chiang Kai-shek, was the true representative of China. Taiwan occupied China's seat on the UN Security Council until 1971.
Just two years ago, relations were still rather good. During the Prime Minister's visit in 2017, the Chinese media gave him a pet name. At the time, there was even talk of undertaking a free trade agreement between Canada and China. That would not have been a good idea. The Bloc Québécois would have rejected the idea, but it is a good indication that relations were far from bad.
Ever since then it has been a series of blunders, gaffes and indecision from Canada, and relations began to deteriorate. They are now ice cold. China adopted a series of retaliatory measures following the arrest of Meng Wanzhou, blocked imports of Canadian canola and in June 2019, suspended all imports of Canadian meat. That hurt Quebec because the pork industry was exporting large quantities to China. Half of Canadian pork exports come from Quebec.
The Prime Minister tried to call the President of China, who did not return his call. Even the U.S. asked for Ms. Meng's extradition. The U.S. president has said that he is prepared to intervene and release Ms. Meng if this would result in a good trade deal for the U.S. with China. Canada has always defended itself by stating that the judiciary is independent of the administrative branch and that the government would not intervene, a position that was undermined by the U.S. president's comments.
Furthermore, not having an ambassador in China was not helpful. Even if the conflict with China has real repercussions on trade, this is not a trade conflict per se. It is a diplomatic conflict that must be resolved through diplomacy. In this regard, not having a Canadian ambassador in China for almost 10 months is gross negligence and a serious mistake.
Did Canada have a choice in going ahead with Meng Wanzhou's arrest? That may be a matter for debate. The independence of the judiciary is central to the proper functioning of any lawful society. However, Meng Wanzhou's case is rather unusual because she is not accused of a common law offence.
When the United States withdrew from the Iran nuclear deal and imposed harsh sanctions against Iran prohibiting all other nations from doing business with it, Canada, Europe and most other countries condemned the decision and said they would not follow suit. However, by arresting Meng Wanzhou for violating U.S. sanctions against Iran, Canada is endorsing the U.S. decision it condemned.
For years, the Americans imposed a strict embargo against Cuba and even penalized North American enterprises that did business with Cuba. Canada has always refused to co-operate with Washington by enforcing this extraterritorial law, which had a much greater impact on local populations than on the Cuban regime.
Once again, was Canada right to arrest Meng Wanzhou?
That is a legitimate question. We think a special multi-party committee that can take the time to study this issue thoroughly is a good idea.