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Simple Deal: Canada Gets Money, and China Gets Canada

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Our security elites know better, but they're not talking.

Most Canadians understand why our political and business leaders have been doing everything they can to noisily sign trade agreements and commercial deals with China. We might even agree with some of it.

Who doesn't like pandas and jobs? Canada's China play certainly makes some tactical sense, at least in the short term. But it's the long term that poses the problem.

The threat to Canada's viability as a sovereign nation that is embedded in a closer relationship with China lies not in the tactics, but in the strategy.

The security sector in Canada is populated by a lot of smart people: intelligence experts, current and former military leaders, defence-industry executives, prominent academics, and journalists. They cut their teeth working closely with U.S. and UK security agencies and military forces -- our traditional imperial allies. And they have monitored the economic ascendance of China very closely, informed by a continuous, thick, real-time flow of data and analysis.

What, actually, do they know? Above all, they understand that China seeks predictable, permanent access to the commodities it needs, through decisive influence over the national economies that house those resources.

And our security experts recognize that China deploys a creative mix of methods to achieve these objectives, including:

1) Espionage: Human spies who, among other things, use sex to motivate their sources, cyber spies that break into online systems to steal secrets, and front companies that are positioned in pivotal sectors like oil -- espionage is a favorite tool in the Chinese economic toolbox;

2) Equity Investment: Direct investment by state-controlled Chinese firms -- at first in small and unremarkable amounts, and, later, through large and influential (often with veto rights) equity stakes -- in foreign companies in the energy, mining, finance, and communications sectors;

3) Debt investment: China's offering of large lines of credit to local firms or governments, sometimes targeting specific sectors or projects, or else made generally available, is a method that is evident in poor and rich countries alike;

4) Use of Chinese labour: One technique here is to require that workers on, say, an Australian mining project speak Mandarin fluently, a measure that inevitably results in Chinese workers populating project enclaves while limiting local employment benefits;

5)Construction of government buildings: Chinese companies have built new headquarters for host -government ministries, including, alarmingly, those of the Defence ministries of some poor countries;

6) Labeling opponents "enemies of the state:" In an irony of ironies, this method is catching on in Canada, along with its moronic twin label, "foreign funded radicals"; and

7)Waiting: More important, China is very good at waiting, over decades and even over generations, for the cumulative efforts of their methods to take full effect. Taiwan is the classic case here. However, the list of other countries where this waiting game is playing out is growing.

One of these countries is Australia, which has been grappling with the effects of increased trade and investment with China. A recent business press headline encapsulated the grand bargain now under public debate: "The deal is simple. Australia gets money, and China gets Australia." With its small population and open, resource-rich economy, Australia has much in common with Canada.

In recent years, fears of China's economic might and lack of sustainable local economic benefits have turned public opinion, and even the preferences of Australian investors, against further economic integration with China. Indeed, in late 2011, almost 60 per cent of Australians approved of U.S. leadership in the ASEAN region, while only 23 per cent approved of China's leadership role in the region.

Our spooks and warriors know all this and much more about China. But on this file, right now, they are looking the other way.

Why have they gone quiet?

Maybe the security people are confused, internally gridlocked. After all, these are the same folks who are taking us into the North American security perimeter that is led by our erstwhile best superpower friend, the United States. Now we're playing with America's rival. Still, our security sector has proven many times it can handle (and, indeed, often creates) ambiguity, so that can't be the reason for its failure to speak up.

Or perhaps our security elites have seen the sheer strength of the Chinese intelligence network and war machine and they have already thrown in the towel. This is very unlikely, though. For whatever critique we may hold of them and their deeds, our security specialists aren't cowards.

A better explanation, though, involves the upcoming federal budget.

It could be that, in order to limit the damage they would otherwise sustain from the government's intended cuts, CSIS, the Department of National Defence, related agencies and firms, and the security sector's associated talking heads, have simply decided to sit this one out on the sidelines, to take a pass. The price for raising the hard questions on China could be too high.

Nor is the long game a political priority, it would seem, for Stephen Harper. It's a reasonable bet that he'll be gone by the time the full impact of China's deep imperial reach fully penetrates the critical sectors of our economy. By 2020, China is widely expected to become the world's largest economy.

In the 30 years between 2020 and 2050, coping with stepped up economic incursions and acquisitiveness by China could well become the prime function of the Canadian state on almost every important policy front.

My question to our security elites, therefore, is simply this: What is your plan for ensuring Canada remains a viable sovereign nation while it strengthens its economic ties with China?

We need you to come clean with Canadians.

Speak up.