Canada’s economy caught in hardball China-U.S. 5G squeeze play

Only in Canada can we take a hostage and be held for ransom at once.

I’m referring to the mess of Meng and the hassle of Huawei, the gift that keeps on giving. It must make Justin Trudeau happy he legalized weed in time to self-soothe the migraine that comes when you are jammed between the rock and the hard place.

Through no particular fault of its own, Canada has found itself in roughly equal measure pressed by China to release the Huawei CFO and pressed by America to release the hounds on the company’s technology.

In recent weeks it was becoming clear that clarity was becoming elusive on the testy Trudeau decision on whether Canada would permit the Chinese telecommunications giant’s technology to drive our country’s 5G revolution. He didn’t want this to become an election issue, even if industry was demanding an answer on the multibillion-dollar question, so the can was being kicked down the road.

Where nearly 130 countries have said yay or nay and staked positions on the matter of security and surveillance that skeptics assert will be Huawei’s eventual stealth strategy, the Trudeau government has dithered as it conducts the proverbial Canadian study. We may see 6G before the call comes.

That all may be moot, though, because America is heading down the path of blacklisting Huawei. In recent days a variety of international firms have scrambled to find a different supply chain to save themselves from the wrath of Trump – or more significantly, a rule-laden government that has more of an attention span than the president’s Twitter stream.

Third-country suppliers to Huawei need to apply to America for licences if U.S. content amounts to more than one-quarter of their product’s value. Very quickly, the list of unfriending is lengthening: Google, Panasonic, ARM, with many more to come. To simply be associated with Huawei has been stock-toxic in the last week.

That all could change, of course, tomorrow morning when Trump publishes his daily newsletter on Twitter before catching Fox & Friends. But the United States appears on a certain course to make Huawei an object lesson in its effort to teach China about trade.

In case you wonder if this hits home, well, it hits home. The Organization for Economic Co-operation and Development is predicting nearly three-quarters of a point will be shaved from the globe’s economic growth by year after next. 

A trade dispute left unsettled even in the next few weeks could be the catapult we didn’t need into recession.

The U.S. president has always said trade wars are short-lived, handily won escapades. He has yet to concede that consumers, not manufacturers, pay the price of tariffs. He seems willing to risk his developed economy to make the larger point about trade advantages enjoyed by China over the last four decades as a developing economy.

China’s Xi Jinping appears equally intent on serving notice that his country will not be dictated into concessions. His consul general in Vancouver last week told a conference that China is prepared in challenging circumstances to fully defend itself.

Moreover, when the two countries’ values appear to be widening, there is little reason to be optimistic that trust between them will somehow coalesce.

What we are left with in Canada is almost nothing helpful in this predicament: Huawei-sponsored research at our universities, two of our three telecom companies in cahoots and a CFO stuck in Vancouver fighting extradition in a process that may follow a Stanley Cup parade (OK, I exaggerate slightly). China doesn’t like our canola now, has taken a couple of our countrymen prisoner and can exert all sorts of pain upon us. As, of course, can America if we saddle up with Huawei.

Let’s get this straight: we took Meng Wanzhou into tow, and we will pay the price as a result.

Makes you want to run off to an island somewhere. If only the world were still built simply like that, instead of one with that much-craved 5G, where none of us will again be able to hide out. Even if China isn’t watching, so many others will be. 

Kirk LaPointe is editor-in-chief of Business in Vancouver and vice-president, editorial, at Glacier Media.