Harnessing a Middle-Power, Non-Zero-Sum Approach to China and the Indo-Pacific

Stephen Nagy

Does the rise of China necessarily signify the potential decline of Western influence?

The rise of China is probably a net good. The Chinese government has transitioned 500-600 million people out of utter poverty into a position where they can start to consume and produce goods. We benefit directly as Canadians. China, because of its immense resources, is a critical partner in dealing with climate change, properly regulating AI, and probably thinking about new solutions to climate change challenges that we’re facing. I think that China has huge potential to have a positive impact as well. To think that China’s rise comes at the loss of the so-called West is probably unproductive. It does face challenges. The challenge of China’s rise is mostly due to the nature of its government, its oppressive tendencies, and its human rights violations.

China thinks very differently about security and international institutions. We should not mince our words. It wants to change international institutions, so they’re less rules-based. Things like human rights are not universal. When we think about the rule of law, that rule of law is not something that they are advocating for. They advocate for rule by law. I think that there are some huge benefits from China’s rise, but there’s a real challenge posed by China’s rise as well. This has less to do with the decline of the West but with the rise of the rest. This is really important. It’s the so-called post-WWII order that has allowed the rest to rise to be more prosperous, to be more stable, and to be able to deal with food security issues. In a sense, the rise of the rest has been because of the so-called West. I think that this is an important thing for us to continue to focus on as we advocate for the current system that we enjoy.

What kind of international actor should Canada be, what kind of international actor are we at present—is it too late for us to play a substantive role in shaping the global order in the medium term? How do we face up to the geopolitical realities of today?

I would like to emphasize how I think some of our allies and friends may be thinking about Canada as a global player. What we often hear from friends in the region is, Canada has a decadent foreign policy, that it’s a little bit detached from the region’s priorities, and that it doesn’t have the expertise that it needs to engage in the region in a sustained, meaningful, and results-oriented way. I think that this is an interesting contrast for us to think about from let’s say, the Japanese and the Australians, who have moved away from normative approaches to middle power diplomacy, so focusing on human rights and human security, the right to protect issues in countries. They’ve really moved towards a very pragmatic, interest-based approach to how they engage in the region. That’s a non-zero-sum approach.

Is this the way Canada should go? I personally think this is the way Canada should go. We need to be thinking about what the region wants. What are the comparative advantages that we can deploy in the region? I mentioned energy security and critical mineral security as key areas or trade advocacy. I think that these are things that the region wants, and that would make Canada have an impactful, stable, sustainable, and meaningful role that not only benefits the region but benefits Canada and Canadians, as well as our national interests. I often hear criticisms about some of the more value-laden policies within the region. I think this continues to be a problem. I think the progressive policies we have back home are great. I’m very wedded to them personally, but I think that they don’t fly very well in the region. They have serious security problems and that is the priority.

Perhaps Canada needs to listen to some of the voices of those regional players, and again, think about what the region wants. What are the kinds of interests that we need to secure in the region, and what resources do we need to deploy? In that sense, I’m a big advocate of what I call meet neo-middle power diplomacy, where we focus on result-oriented, realistic, pragmatic, ad hoc coalitions with other middle powers to achieve concrete objectives within the region. This could be insulating each other from economic cohesion, it could be pushing the United States to take different choices on trade policy—i.e., let’s get them back into the TPP, or let’s advocate for a new TPP that suits some of the domestic agenda in the United States.

Let’s think about how we can focus work on denuclearization. Let’s think about how middle powers can work together on cybersecurity in terms of confidence-building measures, but also capability-building measures. There’s a lot there. But you’ve probably noticed I didn’t talk a lot about human rights, human security, or the right to protect because I think that in an era of great power politics—competition between U.S. and China—we need to insulate ourselves from this competition, but also ensure that we’re shaping how these two states behave, that, again, requires a very pragmatic and realistic approach.

Asia, Asia-Pacific, Indo-Pacific, what’s the difference? Why are we focusing on the Indo-Pacific now? The centre of gravity of the global economy is in this region that stretches from the western Indian Ocean, through the eastern Indian Ocean, and the South China Sea in the Pacific. This is where the biggest middle-class populations are emerging. That means more consumers of Canadian products, Canadian energy, Canadian agricultural products, and critical minerals. A lot of our wealth will be derived from this region. That means we need to be engaged in the region. At the same time, there are a lot of hotspots within the region, whether it’s Taiwan or the Korean Peninsula, Senkaku Islands, the South China Sea, or the Himalayan plateau, between India and China. It’s really important that Canada keeps their eyes on these issues.

If something happens within the region, it could disrupt the whole region’s economy. This will have a spillover effect on Canada. Just to give you some numbers, about 5.5 trillion U.S. dollars go through the Indian Ocean and into the South China Sea up towards China, Japan, and Korea. That’s a lot. If this does get disrupted it will impact Canadian people. You might be saying, well, what happens over there doesn’t really matter. Actually, it does. Critical minerals would be shut off and semiconductors are shut off if there is a conflict. How will this affect the Japanese and Korean corporations that employ hundreds of 1000s of Canadian citizens in their automobile companies in Ontario? We’re deeply connected. I think that Canadians need to learn and have a much better understanding of the Indo-Pacific region, what it means for Canadians, how our national interests are wedded to the region, and why we need to continue to invest in the region.

Is Canada willing to risk economic and diplomatic fallout by taking a principled stand against China’s reunification efforts, potentially disrupting its own trade relationships and strategic partnerships? Can Canada effectively advocate for a peaceful resolution to the Taiwan question while simultaneously benefiting from China’s economic largesse and contributing to its rise?

Well, I think that we should be. We should read the Chinese tea leaves about what Chinese leaders have consistently said about Taiwan. They say they prioritize a peaceful reunification, and that they don’t give up the right to use force. We should read the Chinese tea leaves and see that this is a priority issue for them and that they continue to have flexibility in terms of how countries engage with Taiwan as a political entity through the One China policy, as long as they’re not advocating for independence, calling Taiwan a nation-state, or welcoming their President to come to Ottawa to speak in front of parliament.

I think there are a lot of ways that we can continue to engage with China, but at the same time, ensure that the reunification process, if it happens, happens on the terms that the Taiwanese and the Chinese agree upon together. It is something between them. We need to be thinking creatively about how we can work with Taiwan to deal with global issues. I think that the new Canadian Indo-Pacific strategy is interesting because it finds ways to work with Taiwan, New Zealand, and Australia on indigenous issues, climate change, and some economic issues at the non-state level. It’s a way to have our cake and eat it too, in terms of how we want to benefit from China’s trade. We want to make sure that peace and stability continue across the Taiwan Straits. At the same time, we maintain our one-China policy.

How can Canada overcome the perception that it lacks the ambition to think big and play a more assertive role in international relations? What steps can the country take to ensure that it is not only seen as a “nice” nation but also as a strong and influential player in global affairs, especially the Indo-pacific?

This is not a liberal versus conservative, or Trudeau versus Harper discussion, I think, Canadian foreign policy since the 2000s has not been at the forefront of proactive advocacy of certain issues, aside from human security. From my understanding, it’s somewhat systematic. That means that we need to have a reality check concerning how we want to be engaging in the world. I think that realization is important. For one, an accounting of what kinds of resources we have, and how we want to deploy them to solve the issues that are facing Canada, but also some of our partners is important.

Ukraine is one, I think Taiwan is another issue. Broader institutional paucity in the Indo-Pacific region, and maybe the Korean Peninsula and North Korea are some issues that I think Canada can provide some resources for. On the Ukrainian front, training, and providing some arms to the Ukrainians are some key things that I think Canada can do to enhance their credibility. Thinking about this in terms of not months, but years, and providing a strategic plan moving forward detailing how Canada would like to see this move forward. We need to bring some more credibility on the North Korean front. We’re already there.

The NEON operations that Canada is engaged in to prevent sanctions evasions are well respected by the Japanese and the South Koreans, and they would like more of it. So how can we do more of those kinds of activities to help with the denuclearization process on the Korean Peninsula? I think there’s a real role for Canada to work between Japan and Korea in terms of fostering new trilateral formulas of cooperation, to deal with either its historical issues or to provide another platform for the three countries to cooperate. On the Taiwan issue, I think that we need to continue to demonstrate that we are providing credible resources to ensure peace and stability across the Taiwan Straits. That may be diplomatic resources, i.e., working with the Japanese, within the G7 context with the Taiwanese to say that we support peace and stability across the Taiwan Straits, or perhaps enhancing the deterrence capabilities, enhancing the diplomatic capability so that they can be a more effective player in the international community.

I also mentioned the paucity of institutions within the region. I think here, what I mean by this is, the Indo-Pacific region is very heterogeneous, with lots of different kinds of economies, and lots of different kinds of political systems. Some countries are very developed, some countries are not developed. How can we get these countries to cooperate? Trade agreements, contributing to infrastructure and connectivity are areas we could contribute. We can do this bilaterally or multilaterally. It could be through enhancing the resilience of supply chains by working within the pre-existing Supply Chain Resilience Initiative between India, Australia, and Japan, or offering new initiatives to create more resilience and institutionalization of the region so that it’s more stable.

I don’t think this is brain surgery. Rather, I think it’s thinking about how we use our resources, effectively. Lastly, on this, I think, I would really like to see the government invest in educating strategic thinkers and thinkers that have experience in the Indo-Pacific region. We need China experts. Of course, we need Japan experts, we need regional experts. This means investing in our universities and programs that give language training, the opportunity to go study abroad, deep insight in terms of grand strategy and strategic thinking, and great power politics, with an area studies approach. I can’t tell you how important I think this is.

I often look at what kinds of job postings exist in Canada. The kinds of university faculty that universities are recruiting are not focused on great power politics, grand strategy, Indo-Pacific Studies, or China and Japan studies. The progressive cultural issues are important, but again, I don’t think it’s preparing Canada to engage with this region. We need regional experts and country-specific experts.

China’s post-pandemic rebound hasn’t necessarily materialized. It faces mounting economic obstacles, declining trade and foreign investments, and a shaky housing market. What are the ripple effects of a potentially faltering Chinese economy on Canada’s economic well-being, considering supply chains, trade relationships, and socioeconomic impacts that can cascade through the international system? How can Canada address the challenges this could pose to us?

China is facing some real serious economic headwinds. Some of them are structural or associated with demographic issues. All the infrastructure that could have been built to create jobs can no longer sustain the economy, the property market is in real trouble, and I think the zero COVID policy really fractured the confidence of ordinary Chinese citizens to be consumers to invest. As a result, the economy may be entering a long-term period of deflation. Deflation means they don’t consume as much, property prices decrease, and this means that they may not be as active consumers of Canadian products, whether it’s agricultural or otherwise, and this will impact the Canadian economy.

So, what can Canada do? I think that Canada must continue to find comparative advantages that probably won’t be affected by these issues. I think that we need to be, again, thinking about diversifying our trade within the region. Japan is a great partner, South Korea, Southeast Asia, and perhaps India. We need to change our economic portfolio so we’re not so dependent on the Chinese economy, but that doesn’t mean decoupling. That doesn’t mean we don’t invest in China, but we try to ensure that we diversify in a way so that we’re less susceptible to any structural downturns in the Chinese economy.

The geopolitics between the United States and China will further slow the economy, at least that’s my expectation. The Chips Act, which limits technology and dual-use technology, will further slow the economy. The question is, what businesses can Canada engage in, in China, that don’t fall within these categories? Will U.S. policies towards China make Canadian businesses bystanders or victims of U.S. foreign policy towards China? I think that we need to be much more aware of that. Lastly, I think, again, we need to strengthen relations within NAFTA 2.0. This means really focusing on our comparative advantages so that we can benefit from NAFTA 2.0, so that this market continues to grow and deepen, and Canada continues to be a critical partner so we can prosper.

It’s crazy not to use our energy and critical mineral comparative advantages to add value to the region, but also to ensure that the slowdown in China doesn’t affect the prosperity of Canadian interests. That goes to any engagement within the region. We need to have national interests and we need to try to achieve those national interests based on a strategy. I think not using those resources is not in our national interest.

How can Canada grapple with the challenges posed by China, Russia, and a potentially less reliable, more inward-looking United States?

Well, they’re different challenges. I think that our approaches need to be different. Let’s start with the U.S. I think that we need to continue to build strong government-to-state relations, and province-to-state relations, so that the best advocates for Canada will be state governors, and they will be speaking to political leaders in the White House and in Congress. It will be important moving forward to continue to build those really strong province-to-state and government-state relations to insulate us from some of the political challenges that are going to come as the United States work out the political challenges they’re facing.

With regards to the former occupant of the White House and the current occupant of the White House, over the long term, the relationship will continue to be one that’s complimentary within the NAFTA 2.0 context. We share many values with the United States. Many of our families are cross-border. I think that we need to continue to invest in that relationship.

As I mentioned, the Russia relationship is somewhat more complex in that, of course, Putin’s Russia has invaded a sovereign state and is using force to try to change the region’s security architecture and really reshape how Europe thinks about security. I think it’s in Canada’s interest to ensure that the EU remains robust and that NATO continues to expand. And that we incorporate Ukraine into NATO. I’m saying this not so much from the point of defending Ukraine from Russia. I think in the post-Russian invasion of Ukraine, we need to be conscious that Canada and Ukraine need to develop their military and security within the context of NATO.

It follows NATO’s norms, NATO’s laws, and NATO’s rules, so that the most well-armed state, right now in Europe, really is a state that is following rules and is not corrupt. To maintain stability. And dealing with Russia over the long term, we need to find a way to reengage with Russia—it won’t be under Putin, that’s my observation. We need to find a way to work with Russia to incorporate it into the European family in some way and de-escalate the nationalism that has emerged in Russia. It’s a long-term project, and we’re going to have to work with Europe.

Lastly, on the China front—China has been around for 2000 – 3000 years. It will be around for another 2000 – 3000 years. It’s not going away. It’s going to be the second largest economy, if it’s not already the largest economy, and we’re going to have a significant economic, diplomatic, and political sway. We need to find ways to work with China. It’s going to be a one-party state for some time, and it will share very different political values. But that doesn’t mean we don’t find ways to constructively work with China when we can.

But again, create resilience within our system so we’re not susceptible to political interference campaigns and so that our Chinese Canadian citizens are not manipulated by political interference or disinformation campaigns. It’s a complex engagement process that will take government, but it will also take us working with like-minded countries. As I mentioned, with the education comment earlier, we need to seriously invest in the skills of young people so that they can engage not only with China, but the region broadly so that we’re better able to negotiate the challenges of trying to move forward.

Is it realistic to expect that cooperative and mutually beneficial economic relationships can be maintained with China while also addressing concerns about political interference and coercive diplomacy?

There’s room for a public discussion about political interference in Canada, but it has to be done in a disciplined and open manner. At the same time, I think that as we try to address the issues of political interference, we don’t want to reveal all our cards about how we detected political interference, otherwise the Chinese will know how we figured out how they did it, and then they might change the tactics, and do it in a different way. As we think about, first, addressing these issues, I think there’s a place for public discussion. But there’s a place also for dealing with this behind closed doors so that we can continue to have effective policies to identify these issues.

We need to be mature in our approach and understand that a bilateral relationship of this magnitude has many dimensions and that if we only focus on one dimension, political interference, we’re going to lose salience in the other dimensions of the relationship. That means that we find ways to isolate different aspects of the relationship so that they don’t overlap with others. And this is extremely difficult, but I think that it’s something that we continue to need to focus on. Again, I think that a good way to do this is to work in multilateral partnerships to demonstrate to China that these kinds of tactics will have consequences on China, whether they’re economic or political, and try to discourage or de-incentivize using these tactics to shape our political system. There’s no easy solution. But it’s critical that we continue to try and find ways to deal with this.

Share the article :

Do you want to respond to this piece?

Submit and article. Find out how, here:


In order to personalize your user experience, CDA Institute uses strictly necessary cookies and similar technologies to operate this site. See details here.