Canada Needs a New China Strategy

For decades, Canada’s approach to China worked well enough. We maintained diplomatic ties, expanded trade and navigated disagreements without major crisis. China was a rising power, but the rules-based international order was generally stable, and our alliance with the United States gave us a natural anchor point for our own strategy. That era is long over. Today, China is the world’s second-largest economy and a technological superpower increasingly willing to use economic leverage as a geopolitical tool. At the same time, American leadership has become unpredictable, with Washington abandoning trade agreements and challenging international institutions. Canada now faces a world where neither superpower can be counted on to uphold the rules-based order we depend on as a middle power.

Canada’s China policy has become a case study in reactive diplomacy. We impose tariffs when Washington does. We condemn human rights abuses in press releases. We worry about technology risks without building the capacity to manage them. We lack a coherent strategy that serves Canadian interests in a world that has fundamentally changed. 

The economic stakes make our reactive approach even more troubling. Canada’s stance toward China overlooks a critical reality: disentanglement is neither feasible nor cost-free. Chinese trade supports over 365,000 Canadian jobs and accounts for $120 billion in annual bilateral exchange. As Canada seeks to expand its presence in Asia through its Indo-Pacific Strategy, we must contend with the fact that 40 to 50 per cent of those markets remain China-centric. Abrupt disengagement with China would devastate canola exports, disrupt supply chains and heighten our dependence on the United States, which already absorbs 75 per cent of Canadian exports. Rather than posturing for political optics, Canada must pursue pragmatic engagement with China, anchored in diversification and reinforced by clear guardrails.

Our current approach often uncritically mirrors Washington’s moves, and this is no longer viable. Consider the 2024 EV tariffs imposed shortly after the U.S. enacted similar measures. The government offered no independent economic rationale, instead opting for policy coordination with Washington. These tariffs lack formal World Trade Organization justification. Canada cited concerns about Chinese overcapacity, but bypassed the dispute settlement mechanisms the WTO provides for exactly these issues. When we bypass the WTO, we signal to China, and the world, that rules only matter when they are convenient. By imposing tariffs for political optics rather than through rule-based process, we undermined our credibility as defenders of global trade rules.

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This matters because of how middle powers operate. Canada lacks the military or economic weight to impose our will unilaterally. Instead, our influence comes from championing international institutions, convincing other countries to agree to frameworks we prefer. Our credibility is our currency. Other countries follow our lead because they believe it serves everyone’s interests. When we abandon the very institutions we claim to champion, we surrender the moral authority that makes our middle-power diplomacy possible.

That moral authority extends to how we advocate for human rights. When we condemn violations, we generally argue on moral and cultural grounds. Ottawa declared China’s treatment of Uyghurs a genocide in 2021, and spoke out against the 2020 Hong Kong crackdown and the detention of Canadians Michael Kovrig and Michael Spavor. These positions are morally necessary, but Chinese officials dismiss them as Western interference, creating diplomatic gridlock.

There is a better approach: anchor our advocacy in international treaties China has already endorsed. China’s treatment of Uyghurs could violate the Convention Against Torture, which Beijing ratified. Similarly, the Hong Kong crackdown breaches China’s commitment to the International Covenant on Economic, Social and Cultural Rights. When we speak out on a human rights violation but frame our concerns as treaty compliance rather than cultural conversion, we make advocacy more credible and harder to dismiss. These are not Canadian values being projected outward, but shared legal commitments that China voluntarily accepted.

Beijing’s increasing authoritarianism makes even treaty-based approaches difficult, but they at least provide firmer ground than moral appeals alone.

The same pattern of reactive policymaking appears in how we handle technology. Canada spent years deliberating whether to ban telecommunications company Huawei’s equipment from our 5G networks over fears that Chinese law could compel the company to enable espionage, ultimately following the American lead in 2022. We ordered TikTok, a Chinese-owned company, to dissolve its Canadian operations in November 2024 on national security grounds, but allowed Canadians to keep using the app. This half-measure satisfied no one. Both cases revealed that Canada lacks the institutional expertise to assess complex technology risks in real time. We need agencies that can evaluate foreign technology systematically, distinguish genuine security threats from competitive concerns, and develop frameworks that protect critical infrastructure while keeping Canada globally competitive. 

China leads in several technological domains such as 5G, green energy and electric vehicles. We need forward-looking strategies to engage with Chinese tech selectively, like allowing Chinese solar panels and batteries where they strengthen climate goals, but restricting access to telecommunications infrastructure and advanced computing that could compromise security. We also need to emphasize reciprocity. For decades, China has required foreign automakers to partner with Chinese firms and share technology as the price of market access. When Chinese firms invest in Canadian innovation sectors, we should require similar arrangements that ensure mutual benefit. 

This selective engagement requires what Canada currently lacks: a coherent strategy for dealing with our industrial relationship with China. Canadian businesses operate in China without adequate guidance from Ottawa about what sectors are national priorities or what risk thresholds apply. An effective strategy would classify sectors into three tiers: strategic priorities like critical minerals (e.g. lithium, cobalt), clean technology and agricultural exports, where private-sector engagement should be encouraged with safeguards; controlled sectors like AI, quantum computing, telecommunications and semiconductors, requiring security review; and exit sectors like surveillance technology and military dual-use applications, which are deemed too risky for Canadian industry exposure. Canada needs to invest in state capacity, building agencies like those in Australia or Germany that can assess technology risks and enforce strategic investment rules in real time. This is the strategic coherence that every serious economy requires in an era of supply-chain weaponization.

Canada has avoided a comprehensive China strategy because any coherent approach requires difficult trade-offs: trade versus security, moral advocacy versus diplomatic pragmatism, alignment with Washington versus pursuit of independent interests. Taking a position invites criticism, so successive governments have preferred ambiguity. The consequences are mounting. Without clarity, we lurch from crisis to crisis, unable to give businesses guidance or build capacity to manage technology risks.

The path forward also requires recognizing fundamental changes in mainland China. China’s working-age population is projected to fall by 200 million by 2050; this demographic decline will shift its economy from export-driven manufacturing to domestic consumption. An aging China will import fewer manufactured goods, but more food, energy and services. Nations positioned to supply these changing demands will prosper. 

Developing a coherent China strategy requires investment in expertise, institutions and diplomatic capacity. It demands political courage to make trade-offs explicit and occasionally disagree with Washington when Canadian interests diverge. Every month without a China strategy costs Canadian businesses certainty, workers jobs, and our credibility in international circles. Canada built its prosperity navigating great power competition with pragmatism and principle. That capability remains, but will atrophy without use. The question is not whether Canada can afford to develop a coherent China strategy, it is whether we can afford not to. Because the alternative, muddling through on reaction and improvisation, is already failing.

Reza Hasmath is a professor of political science at the University of Alberta