‘Hostage diplomacy’ spat between China and Canada hits home

For years Jeff Ball, the president of a 20,000-cattle beef production company in southern Alberta, has been pushing their high-end Wagyu brand into China, visiting often to set up a network of distributors on the ground.

Those trips have come to an abrupt end, however, after a diplomatic spat between Canada and China has made a market that once seemed the most viable alternative to the United States much more fraught. The arrests of two Canadian men in China shortly after Huawei Chief Financial Officer Meng Wanzhou was arrested in Vancouver, British Columbia, in December are widely perceived here as a form of “hostage diplomacy.” And they have altered the paths of Canadian farmers, ranchers, businesspeople, and professors.

“I decided to stop going there. It’s not worth it,” Mr. Ball says. “You just don’t know what local law enforcement would do.”

The arrest of Ms. Meng on an extradition request by the U.S. has generated an angry response from Beijing directed squarely at Canada. But the targeting of other foreign nationals, whether on drug charges or with “exit bans” that the U.S. State Department has cautioned its travelers about, has many worried that China is engaging in a new form of aggressive diplomacy, one that goes against international law and diplomatic practice as it vies for superpower status.

Melanie Stetson Freeman/Staff

Jeff Ball, president of Ballco Group, says the Chinese ban on Canadian beef is having an immediate effect on ranchers and those in the industry.

While “hostage diplomacy” itself is not the general norm, it could fit into a larger pattern of asymmetrical responses that China is employing to test the limits of the Western alliance, says John Hemmings, director of the Asia Studies Centre at the Henry Jackson Society think tank in the United Kingdom. “I think the long-term strategy is to begin to weaken the bonds between the U.S. and its allies,” he says.

China’s moves

China detained the two Canadians, Michael Kovrig and Michael Spavor, on espionage allegations, and has also sentenced a Canadian to death for drug trafficking and has banned imports of Canadian canola, pork, and beef, all since December. And in mid-July, Chinese police detained or arrested more than a dozen foreign citizens – including at least one Canadian and four British individuals – as part of alleged drug cases involving students and teachers.

Western allies have defended Canada, but it’s unclear how robust their support has been, which may owe to a changing global order. When Canada sought U.S. support for the detained Canadians ahead of the Group of 20 summit in Osaka, Japan, in late June, Geng Shuang, a spokesman at the Chinese Ministry of Foreign Affairs, responded with derision. “Canada shouldn’t naively think that gathering so-called allies to put pressure on China will work,” he said.

Indeed, Canadian Prime Minister Justin Trudeau said he was confident that the issue of the detained Canadians was raised by U.S. President Donald Trump in a bilateral meeting there with Chinese President Xi Jinping. But Mr. Trudeau said little else.

“Canada is in a difficult spot because the world is in a difficult position of figuring out how to adapt to a changed China, a China that is more assertive internationally, more interventionist in its economy, and tighter politically,” says Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic & International Studies (CSIS) in Washington.

The treatment of detainees in China doesn’t compare with Ms. Meng’s reality, as she continues to live on bail in her multimillion-dollar home in Vancouver, free to visit most of the city except during a nightly curfew. Canadian officials say Mr. Kovrig and Mr. Spavor are enduring a difficult situation in detainment. They are allowed no family or lawyer visits. They get only a brief, monthly consular meeting.

Colin Robertson, vice president of the Canadian Global Affairs Institute, says that Ms. Meng’s stature among the Chinese elite accounts for Beijing’s harsh response. But there are also geopolitical calculations. “With the ongoing dispute on trade with the U.S., Canada becomes a kind of surrogate for the U.S. You make an example of Canada, [like] the Chinese expression ‘you kill a chicken to scare the monkey,’” he says.

And making an example of Canada carries far less risk. “It’s much easier for them to turn the screws on Canada than on the United States,” he says. “The Chinese and the Americans want to avoid out-and-out confrontation.”

From the U.S. vantage point

The U.S. is not untouched. A State Department advisory in January urged Americans in China to exercise increased caution “due to arbitrary enforcement of local laws,” the warning reads, including “exit bans.”

The State Department is advising U.S. private sector organizations operating in China to conduct business through a Chinese employment lawyer, “especially when laying off workers, cutting off a supplier, or any business operation that may have negative consequences,” a State Department official said in an emailed response to questions. U.S. travelers in China should carry a copy of their passport with them “at all times,” the official said.

The Chinese government “frequently deploys extralegal tactics to compel U.S. citizens to resolve business disputes,” including the use of exit bans that prohibit the departure of an individual from China, the official says. It has also imposed exit bans on U.S. citizens “not accused of any wrongdoing ... in an attempt to lure others, typically family members, back to China from abroad.”

“U.S. officials, including the Secretary of State, regularly raise the issue of exit bans with the Chinese government and will continue to do so until we see a transparent and fair process,” the official said.

China’s detention and questioning last month in southern China of a U.S. executive from Koch Industries was seen by some analysts as a not-so-subtle warning to other foreign executives that Beijing could make things very difficult for foreigners and their firms if they choose.

“The number of foreigners being explicitly harassed has not risen a lot ... but there are enough additional incidents for those to be lessons to others to be aware that China could make examples of them,” says Mr. Kennedy of CSIS. “The Chinese are making a lot of people nervous.”

For now experts on U.S.-China relations say that despite the tensions, overall business exchanges and travel are relatively unhindered. “People are still trying to find ways to build bridges and to create businesses,” says J. Norwell Coquillard, executive director of the Washington State China Relations Council, a Seattle-based organization dedicated to strengthening ties with China.

Mr. Coquillard, who lived in China for 18 years, says his friends there tell him that official scrutiny of foreigners has increased, for example with police knocking on the doors of foreigners and asking to inspect mandatory residence permits. “It’s making people a little uncomfortable,” he says, “but it’s not serious enough that anybody who’s trying to build a business ... is going to take it as a major problem.”

Increased harassment would be self-defeating, says Mr. Coquillard, because the U.S. business community historically has comprised some of China’s biggest supporters. It also confuses the country’s message of reform and opening, as it seeks to draw investors and international students.

Canadians’ opinion

Already China’s moves have worsened public perceptions in Canada, with a new Research Co. poll showing 67% of Canadians think the country should not work to establish closer ties with China.

Even though many Canadians have lamented being squeezed by an American decision – and perhaps wish in hindsight that Canada had turned a blind eye – they wouldn’t support a government that “kowtows” to Chinese demands, says Gordon Houlden, director of the University of Alberta’s China Institute in Edmonton.

In fact, when Jean Chrétien, the former prime minister, suggested the Canadian government drop extradition proceedings against Ms. Meng to end the diplomatic rupture, he faced a backlash. Chrystia Freeland, Canada’s foreign minister, said it would set a dangerous precedent that could encourage other countries to detain Canadian citizens as bargaining chips.

In the meantime, universities, businesses, and individuals struggle with how to minimize their own risks.

Kee Jim, managing director of Feedlot Health in southern Alberta, says that many ranchers, like Mr. Ball, have hesitated about dealing with China, both for their personal safety and because of the uncertainty China has thrown into their market with the beef ban from last month. “It’s very frustrating when you are building a market and it’s suddenly gone,” Dr. Jim says. “We are collateral damage to other issues.”

David Wright, a senior fellow at the Centre for Military, Security & Strategic Studies at the University of Calgary, says that Canada is stuck in a modern Cold War – but this time it’s much more personal. Mr. Spavor is his student and good friend, for example.

In Alberta, the Chinese have invested significantly in the oil sector. They form significant immigrant communities in Calgary, as well as Vancouver and Toronto. Professor Houlden notes that Canada’s relationship with Asia, in terms of percentages of population, compares to the U.S.’s with Latin America.

“China is here. During the Cold War, the Soviet Union was not here. There was no economic integration. People weren’t studying Russian in schools. There were no Russian restaurants,” Dr. Wright says. “The world is in fact getting smaller. And great power confrontations are going to distress many lives.”