(Bloomberg) -- Canadian Prime Minister Justin Trudeau said there’s no room for “rapprochement” with China as President Xi Jinping’s muscular foreign policy has made a normal relationship between the countries impossible, for now.
“China has made decisions over the past years that have made it more difficult — not just for Canada but for other countries — to engage,” Trudeau said in an interview Thursday.
The prime minister acknowledged that when he came to power in 2015, he had hoped to work toward a free trade deal with China. But the relationship between the two nations turned hostile in 2018 when Canada arrested Huawei executive Meng Wanzhou on a US extradition request, prompting China to detain two Canadians and impose embargoes on some Canadian food exports.
“Obviously we’ve had a challenging few years, as many people had. The arbitrary detention of two Canadians for political reasons put a real chill on the relationship,” Trudeau said. “But China is one of the most important economies in the world and it’s not a country that anyone can simply ignore.”
Trudeau made the comments during an interview in Singapore, which he visited as part of a trip through Asia to further trade ties and attend the Group of 20 leaders’ meeting. Trudeau visited Jakarta this week and met with President Joko Widodo, and he said Canada is on track to sign a trade agreement with Indonesia in the next 12 months. His government plans to open a “trade gateway” in Singapore.
Expanding trade with a number of Asian economies and reducing reliance on China is one of the goals of Canada’s Indo-Pacific strategy. China is Canada’s second-largest trading partner, after the US.
Trudeau said the relationship between Canada and China is “probably stable” right now, but there’s lots of room for improvement.
“It’s not deteriorating right now, but it has not gotten as much better as perhaps we would’ve liked after the Michaels situation was revolved,” he said, referring to the two detained Canadians, Michael Kovrig and Michael Spavor, who were released in 2021. A US federal judge dismissed the charges against Meng at the Justice Department’s request.
Trudeau’s government has been dogged by allegations that it mishandled or ignored evidence of China interfering in Canada’s federal elections. The claims prompted Canada and China to expel diplomats earlier this year.
Trudeau appointed a watchdog to investigate the allegations, but that person resigned amid opposition criticism that he held too many personal ties to Trudeau to be objective.
After weeks of negotiations with opposition parties, Trudeau’s government announced Thursday that it will launch a public inquiry into foreign meddling. Marie-Josée Hogue, a Quebec Court of Appeal judge, will chair the probe into alleged interference by China, Russia and other state and non-state actors, it said.
In the interview, Trudeau also said his government was moving forward with a foreign agent registry, similar to ones that exist in the US and Australia. But he said his government is approaching it carefully, concerned about the risks and referencing “moments in our history” when such tools have been misused.
Trudeau’s government has responded to the US-led effort to accelerate the development of cleaner technologies, including electric vehicles. Canada hopes to become a global supplier of critical minerals and a crucial piece of the North American EV supply chain, but that dream comes with a cost: matching the billions in subsidies offered by the US Inflation Reduction Act.
Trudeau said industrial policy was “smart policy,” up to a point. Canada began deliberately investing in the green transformation of its economy well before the US, he argued.
“Our closest trading partner went through a four-year stretch where investment in green or fighting climate change was simply not a priority,” he said. “So President Biden has stepped up with a massive Inflation Reduction Act that is all about trying to catch up to where other countries like Canada have been moving.”
There are areas where Canada must deal with China, including on climate change, Trudeau said.“We have to be eyes wide open as we engage,” he said. “But we also need to look where we actually can cooperate together.”
--With assistance from Karthikeyan Sundaram and Tassia Sipahutar.
(Updates paragraph 11 to reflect the announcement of a public inquiry.)
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