Good morning. As Washington and Beijing navigate an uneasy truce, Dan Wang – the author of a new book on the superpowers – argues that Canada risks drifting without the ambition or power to shape its place between them. That’s in focus today – along with a new report showing more Americans are travelling to Canada than vice versa.
Up first
In the news
Trade: Canada’s canola industry is facing steep losses and urging Ottawa to compensate farmers after Beijing announced a 75.8-per-cent preliminary duty on Canadian canola seed.
- Caisse CEO Charles Emond warned the full impact of inflation owing to U.S. tariffs has not been felt.
Travel: The union representing about 10,000 Air Canada flight attendants has issued 72-hour strike notice and could walk off the job at 12:58 a.m. ET on Saturday if a deal isn’t reached after talks broke down last night. The airline says it will begin cancelling flights tomorrow.
Banks: Canadian Imperial Bank of Commerce is shaking up its most senior leadership team, as Harry Culham prepares to take the reins from chief executive officer Victor Dodig.
Underwear: (And other inner garments.) Montreal-based Gildan Activewear is reportedly nearing a deal to buy Hanesbrands, potentially valuing the U.S. company at about $5-billion.
On our radar
- The Bank of Canada releases its summary of deliberations from its last rate decision. The bank held its benchmark rate and is widely expected to keep it at 2.75 per cent at its September meeting.
- Earnings we’re following today include Metro Inc., Hudbay Minerals Inc. and Linamar Corp.
Quoted
“They’re willing to support other industries in Canada. I sure hope they don’t forget about us.”
— Alberta canola farmer Roger Chevraux, on calls for financial support from the federal government
Dan Wang is currently a research fellow at Stanford University’s Hoover History Lab.matjaz tancic/Supplied
In focus
Canada’s ambition gap and the U.S.-China rivalry
Dan Wang has spent parts of his life in Canada, the U.S. and China. His forthcoming book, Breakneck: China’s Quest to Engineer the Future, contrasts China’s “engineering state” with America’s “lawyerly society.” Wang, now a research fellow at Stanford’s Hoover History Lab, spoke to me about where Canada fits and how smaller countries can navigate between two superpowers.
You describe China as an “engineering state” and the U.S. as a “lawyerly society.” Where does Canada fit?
China’s leadership has been dominated by engineers. In some years, the standing committee of the Politburo have all been engineering graduates. Half of U.S. presidents are lawyers. Superpowers narrow their view when they specialize, and that is part of why they are superpowers in the first place.
Canada, as a more reasonably sized country, is maybe more reasonable in all sorts of ways. But its power doesn’t measure up to the big players. At some point, it either has to build more of it or reconcile to that fact.
Smaller powers like Canada and European allies are often described as caught between two giants. Is there a model for success?
The U.K. has strengths in research and artificial intelligence. Singapore, essentially a big city-state, has carved out a role as a financial, logistics and tech hub. South Korea – not much bigger than Canada in population – is a technological powerhouse and a producer of global pop culture.
These countries straddle the U.S. and China effectively. Canada has to ask whether it’s in that league. Part of the answer comes down to power. Military power isn’t the only kind, but financial, technological and geopolitical power matter. The question is whether Canada has any of these in enough supply to deter either giant from stepping too hard on it.
Some argue Canada’s situation is different because of its geography – right above the U.S., which is unlikely to change any time soon. Do you buy that as a fatal limitation?
I don’t think that’s enough. Proximity to the U.S. shouldn’t mean it lets its power dissolve. South Korea has maintained cultural and technological power despite living next to a very threatening neighbour.
Has relying on the U.S. for security made countries like Canada less strategic?
Europe and Canada have not had to think as deeply about strategy because they’ve been so aligned with the U.S. That’s made it easier to let the Americans take care of security. But countries need to recover their ability to think hard about strategy and power.
Much of your work examines how China uses infrastructure as a lever of ambition. Canada often struggles to build big projects quickly or affordably. What lessons can we take without importing China’s politics?
In both the U.S. and China, there’s a strong national security consciousness. The military has outsized influence – in the U.S., the defence secretary can outweigh other cabinet members, and (President) Xi Jinping chairs the Central Military Commission in China.
Both countries are dynamic and allow for a lot of ambition. In Canada, many of my more ambitious friends moved to New York or San Francisco. Some came back, but many felt constrained at home. The question is whether it can harness that ambition there instead of funnelling it south.
What fosters that constraint?
I spent the better part of a year working at Shopify in Toronto, and it felt quite exceptional relative to the rest of Canadian culture. Perhaps it was no accident it was run by a non-Canadian who tried to foster a bit of California culture. Founder Tobi Lütke tweeted about “tall poppy syndrome” when the Canadian media wrote about Shopify at a low point.
Canada hasn’t done a great job of creating global brands. Economic performance since 2008 hasn’t been stellar. Governments have welcomed more immigration, which I’m in favour of, but haven’t built enough housing or expanded medical services. That strains the system and fuels discontent.
But the bigger issue for Canada is a lack of ambition and a tendency to argue itself out of doing harder things.
You write about the dangers of social engineering in China. How do you distinguish between constructive and harmful state planning in a Canadian context?
In much of the West, the state has ceded manufacturing under the belief it could move to China without consequences. Now that’s being debated in the U.S.
In housing, governments control zoning, but local homeowners often block new construction – that’s true in Toronto as well as in many U.S. cities. Canada isn’t “lawyerly” in the American sense, but it still has mechanisms that let local resistance block projects. Over the past decade, there’s been more discussion of cultural issues and land acknowledgements than of the economic and strategic challenges we face.
Charted
Due North
Trump is obsessed with trade deficits. But as The Globe’s Jason Kirby reports, he may have just wiped out one of America’s biggest trade surpluses with Canada – in travel services.
- In June and July, there were more U.S. residents crossing into this country than Canadian residents returning from travel to the U.S. – a sharp reversal, according to preliminary international arrivals data released by Statistics Canada.
Bookmarked
On our reading list
Setting down in Canada: The CEO of MDA Space says more Canadian headquarters are needed to fix the country’s productivity crisis. He’s right, Rita Trichur writes.
Shohei the money: A Hawaii real estate investor and broker are accusing the Los Angeles Dodgers superstar of tortious interference in a US$240-million luxury housing development.
Word I will be using all day. Tortious: A term describing behaviour that constitutes a tort. (Tort: Any behaviour outside a breach of contract that may be sued upon as a civil wrong.)
Morning update
Global markets were on the rise as investors cheered mild inflation data in the United States and signs of resilience in major economies, and expectations of a U.S. rate cut buoyed demand for riskier assets.
Wall Street futures were in positive territory, while TSX futures pointed higher after Canada’s main stock market closed at a fresh record high yesterday.
Overseas, the pan-European STOXX 600 was up 0.4 per cent in morning trading. Britain’s FTSE 100 edged up 0.12 per cent, Germany’s DAX gained 0.81 per cent and France’s CAC 40 climbed 0.46 per cent.
In Asia, Japan’s Nikkei closed 1.3 per cent higher, while Hong Kong’s Hang Seng advanced 2.58 per cent.
The Canadian dollar traded at 72.66 U.S. cents.