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Business & Economics General

Living with China

A Middle Power Finds Its Way

by (author) Wendy Dobson

Publisher
University of Toronto Press
Initial publish date
Aug 2019
Category
General, Commerce, Asian
  • eBook

    ISBN
    9781487530976
    Publish Date
    Aug 2019
    List Price
    $40.95
  • Hardback

    ISBN
    9781487504823
    Publish Date
    Aug 2019
    List Price
    $40.95

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Description

Living with China urges Canadians to adopt a forward-looking China strategy that recognizes the significance of China’s history and values for its development model of authoritarian state capitalism and managed markets. Market reforms will be key drivers of China’s long-term growth, yet Chinese policy is ambivalent about the potential dangers of spontaneous market forces undermining the Party’s central goal of political stability. The tensions between market forces and state intervention and between political and economic goals are identified in the book’s early chapters that outline what Canadians need to know about the Chinese economy. The book also examines how Chinese enterprises are going global through direct investments and participation in the dynamic but troubled Belt and Road Initiative.

 

In an environment of rising tensions over trade and technology – evident in negotiating the USMCA with the United States and doing business with Huawei, the China-based telecommunication giant – Canada needs a China strategy. Living with China is one of the first comprehensive volumes on a forward-looking Canada-China strategy. The recommended strategy includes more leadership from top officials, building a Canada brand, strengthening our international human capital, addressing security issues, and negotiating bilateral trade and investment liberalization. Dobson also acknowledges the importance of addressing such key issues as intellectual property protection, cybersecurity, and value differences such as respect for individual rights.

About the author

Wendy Dobson, one of Canada's leading international economists, provides two unique vantage points based on her own experiences in the two countries and in the international system. One is top-down, informed by her role as Canada's Associate Deputy Minister of Finance responsible for international financial diplomacy in the G-7 in the late 1980s and more recently as a professor at the University of Toronto. The other perspective is bottom-up, drawing on her life and work in India in the 1960s, in a job that took her into politicians' offices and sent her into the villages, and her many visits to China starting in 1978, the year that its transformation began to emerge.

Since 1993 she has led research and teaching at the Rotman Institute for International Business at the University of Toronto's Rotman School of Management. She has published twenty books and many articles on Asia and the international economy. Between 1995 and 2002 she was the managing editor of the Hong Kong Bank of Canada's Papers on Asia, published by University of Toronto Press. One of her books, Multinationals and East Asian Integration, won the Ohira Prize in 1998 for the best English-language book on Asia, and several of her other publications have been translated into Chinese.

Wendy Dobson's profile page

Awards

  • Short-listed, Shortlisted for the 2019/2020 Donner Prize

Excerpt: Living with China: A Middle Power Finds Its Way (by (author) Wendy Dobson)

Preface

 

Canada is caught between two giant trading partners whose relationship has deteriorated as Americans challenge China’s development model of state capitalism and managed markets that puts Chinese enterprises first, at home and abroad. Canada, however, long used to a unipolar world dominated by the United States, lacks a China strategy. A foundation was laid in 2016 when Prime Minister Trudeau and Premier Li Keqiang agreed to a lengthy agenda for cooperation, including a possible free trade agreement. But in less than two years, the relationship between Canada and China plunged into a deep freeze when Meng Wanzhou, chief financial officer of Huawei Technologies, China’s huge, privately owned telecommunications conglomerate, arrived in Canada and the United States unexpectedly exercised a bilateral treaty to request her extradition to face criminal charges of banking and wire fraud, among others. Chinese leaders chose to blame Canada for her arrest.

 

These events reflect the shifting centre of gravity in the global economy, foreshadowed in my 2009 study, Gravity Shift: How Asia’s New Economic Powerhouses Will Shape the 21st Century, which anticipated the expanded economic significance of China and India by 2030. Today, just ten years later, the post–Second World War, Western-dominated world order is evolving into one with multiple players, each with its own system of governance, but also experiencing rising living standards and rapid technological change. Americans’ belief in their own primacy is increasingly out of step with this shift of gravity.

 

China’s relationship with the United States, meanwhile, has grown into a deep economic interdependence that is particularly valued by Chinese leaders who seek a stable international environment in which to pursue the country’s domestic development and continued rise. Americans, however, have come to regard China as a revisionist state, and as a strategic rival and security threat. Headlines focus on the hundreds of billions of dollars of US tariffs imposed on Chinese imports, but Americans are increasingly critical of China’s management of domestic markets and President Xi Jinping’s robust support for advancing China’s technological supremacy, not least through his Made in China 2025 strategy.

 

Canada’s own changing relationship with China is reflected in the transformation of the world economy. As a middle power, its diplomatic relations have stressed engagement and accommodation with China, but living with China has meant being pulled into the orbit of the deteriorating relationship between China and the United States. Pierre Elliott Trudeau once characterized Canada’s relationship with the United States as like a mouse living next to an elephant, but life with two restive elephants is far more complex. Canada’s ties with China are at their worst since the events of Tiananmen Square in 1989. Meanwhile Canada is caught in the escalating China-US feud over the Meng affair and, with the other members of the so-called Five Eyes intelligence partners, faces increased US pressure to ban Huawei from supplying equipment to 5G mobile wireless networks in North America and Europe.

 

Views differ on how to mend the rift and how long this might take. What is clear, however, is that Canada needs a comprehensive strategy for living with China. Canada can hedge its Asian bets by further developing other options – with Japan, the ten members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the Association of Southeast Asian Nations – but at the centre of any comprehensive strategy must lie China. Canadians must come to understand Chinese history, values, and institutions and their significance for the Chinese president’s strategies, long and short term, at home and abroad. What is the context for Xi’s energetic international economic policies and institutional proposals? What are the rationales for his politicization of markets and increasingly autocratic ways at home? These are topics in the first part of this book. The second part focuses on the context for Canada’s China strategy. Here I argue that the emphasis on negotiating a free trade agreement is not a strategy, and might be the wrong goal. A better understanding of China’s history and views should convince Canadians of the need for a multipronged strategy that includes trade, investment, security, and engagement with multilateral partners and the public – a strategy based on mutual respect, accommodation, and genuine discussion of differences in values and institutions.

 

A dynamic train of events will play out as Canadians prepare for national elections in October 2019. Key economic and technological issues likely will be on the agenda for debate, including those related to the US-China relationship, given the tidal wave of recent books on the subject. My own contribution, Partners and Rivals: The Uneasy Future to China’s Relationship with the United States, published in 2013, examined their potential global roles in the next half-century, and predicted that neither would be able to dominate the other. This study, Living with China, takes the perspective of a middle power’s evolving relationship with a fast-changing China, and aims to deepen Canadians’ understanding of the issues and options, recognizing that any strategy Canada chooses will reflect its deep integration with the United States.

Editorial Reviews

"In Living with China: A Middle Power Finds Its Way, Dobson provides a highly readable, concise and incisive review of the latest developments in the saga of China's emergence as a new global power."

The National Post, September 11, 2019

"Living With China is timely and not without controversy."

Blacklock's Reporter, August 31, 2019

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