Global Affairs warned Trudeau gov’t about Chinese development bank Canada has joined

 Published on Feb 26, 2020 

Prime Minister Justin Trudeau and Premier of the State Council of the People's Republic of China Li Keqiang hold a joint press conference on Parliament Hill in Ottawa on Thursday, Sept. 22, 2016. iPolitics/Matthew Usherwood

Global Affairs Canada warned the Trudeau government that China is using the Asian Infrastructure Investment Bank (AIIB) to advance its economic influence and authoritarian model of governance around the world, new documents reveal. 

In 2016, the Liberal government moved to purchase a 1-per-cent share of the Beijing-headquartered bank at a price of $256 million over five years. 

At the time, Finance Minister Bill Morneau framed Canada’s membership in AIIB, which offers financing for infrastructure projects in developing nations, as good for global economic growth and opportunities for Canadian businesses. 

But documents provided to the House of Commons’ Canada-China relations committee show diplomats recently warned the Trudeau government that Beijing is using multilateral forums such as AIIB and its “Belt and Road Initiative” to “leverage its economic prowess to gain regional influence and export its model of governance around the world.”

READ MORE: Trudeau says Canada seeking to join Chinese investment bank

“Beijing commands new political leverage over an increasing number of vulnerable democracies in Latin America and the Caribbean, indirectly solidifying its preferred model … in the region,” the document said. 

The partially redacted briefing papers, which were prepared for Foreign Affairs Minister François-Philippe Champagne, offer a candid assessment of Canada-China relations beyond the typical talking points presented by federal ministers.

In it, the department said Beijing has demonstrated “readiness and ability to use aggressive political and economic measures to punish Canada … and to propagate norms of international relations inimical to Canadian interest.”

“(China) promotes perspectives on governance, economic security, and human rights that diverge in fundamental ways from Canada’s.”

Canada now needs to take account of “Beijing’s long-term strategic challenge to Canada’s interests and values,” it added.

The Liberal government has faced calls to take a tougher stance on Beijing since bilateral relations tumbled over the December 2018 RCMP arrest of Huawei executive Meng Wanzhou and subsequent detentions of Canadians Michael Kovrig and Michael Spavor in China that Ottawa calls “arbitrary.” 

China has also restricted certain Canadian exports, such as pork and canola seeds, which the document noted increased Canada’s trade deficit for the first half of 2019.

The Conservatives have demanded for Canada to withdraw from the AIIB, citing concerns over the use of taxpayer dollars to prop up an institution linked to a regime that does not follow the rule of law.

Figures tabled in Parliament last month showed USD$79.6 million, in two annual instalments, has been transferred to AIIB to date. The attached response said Canadian firms Hatch and TD Securities have engaged with the bank on its business. Budget legislation allows Ottawa to provide AIIB as much as $470 million to increase its stake.

AIIB is viewed as a counterweight to the American-led World Bank, and is part of China’s Belt and Road Initiative to develop trade infrastructure in poor countries using what the U.S. has described as “debt-trap” repayment obligations.

The U.S. has unsuccessfully opposed Canada and its allies, including the U.K. and France, from joining the bank.

The briefing note said the establishment of the AIIB exemplified how “China is no longer a rules-taker, but increasingly a rules-maker in the global arena.”

“The Chinese government also seeks to promote its ideology by inserting Communist Party of China language in multilateral documents, challenging universal rights with appeals to sovereignty and majoritarianism,” the note added.

“This new-found voice in multilateral forums has allowed China to project its national interests globally and set a path for the CPC to seek a … place on the world stage.”

In particular, it noted that China’s “range of leverage and intimidation” towards democratic self-ruled Taiwan, which Beijing considers a renegade province, “is likely to test the limits of the current rules-based system.”