Jeff Scott: The Countryside View – China and trade

China is having a fight with Canada. We detained Meng Wanzhou for the Americans, because they want her to be extradited to the United States to face charges of conspiracy to commit bank fraud. She also happens to be the deputy chairwoman and chief financial officer of China’s largest private company, the telecom giant Huawei. China obviously did not like this, so they banned the import of all canola from Canada, on the grounds that they had found “hazardous organisms” in previous shipments.  Definitely a trumped up charge, since they revoked the import licences of 18 separate Canadian traders. Presently, 40 per cent of the canola seed that Canada grows is exported to China to be made into cooking oil and for animal feed. This is costing Canadian farmers $1.5 billion.

China, being a totalitarian state, has no problems linking its trade diplomacy with its foreign policy. Therefore, when a country displeases them, they retaliate in an indirect and ham-handed way. Canadian farmers are not alone in being treated this way. After the United States imposed tariffs on Chinese products because of the theft of intellectual property by Chinese companies, the Chinese, in return, imposed a 25 per cent tariff on American soy beans. They then cancelled orders, whereby the shipments of soybeans to China dropped from 60 million tons to 70 thousand. The Norwegians had the audacity to award the Nobel Peace Prize to Chinese dissident Liu Xiaobo, and the Chinese government banned the import of Norwegian salmon. The Australians excluded Huawei from its next level internet service because of fears that the Chinese government would use it to spy on other countries and their citizens. In return, the Chinese port of Dalian was closed to Australian ships carrying coal, leaving millions of tons of shipping vessels idling for months out in the ocean. The South Koreans installed THAAD anti-missiles to ward off North Korean nuclear missiles, something that the Chinese, again didn’t like. They banned all tour groups from going to South Korea, which crippled the country’s tourist business.

This method of bullying countries into getting them to override their own concerns, institutions, and laws is something that only a centralized and all-powerful government would try. In the short term, this may achieve what they want, but it is a very dangerous game to play when you have 1.3 billion people and almost no resources. The first thing that happens is that the farmers who used to rely on sales to China will just switch crops. No soybeans or canola planted means no soybeans or canola available when the Chinese want to buy them after this spat is over. Centralized governments have never understood the independence of farmers.  Another consequence is that no one wants a customer who is unreliable; they don’t want to invest billions of dollars into mines, farms, or shipping only to have orders arbitrarily cancelled for false reasons. The western countries just might decide to play by the same nasty rules, and deny the Chinese the raw materials that they desperately need, such as iron ore or oil. Hardball tactics have become common in the world today. Those same Western countries could actually start to work together and collectively deny the Chinese of all coal, soy beans, canola and salmon, which would put them into a real quandary.

Finally, the Chinese should not play such games with countries that they are going to need when the have a crisis.  For example: China has over 400,000,000 pigs on small farms all over the country. Their population gets most of their dietary protein from these animals. Their pigs are now getting sick with African swine fever and 20 per cent of the animals have already become infected and have died. The Chinese are going to have to import an awful lot of pork from the exact same countries that they have been yanking around. They had better learn how to play nice in the market place of the Western economy, or their people are going to starve for the lack of government wisdom.

Jeff Scott is a former councillor for the City of Kingston (Countryside District), and has contributed editorial content local publications for a number of years. He continues to live, work and write in the Countryside district of Kingston, and runs his own blog, The Countryside View. Visit his Facebook page at www.facebook.com/jeffscottthecountrysideview to read more of Jeff’s content.