Canada does US bidding again: China Daily editorial

The Joe Biden administration has been cooking up one plot after another to exclude China from the global industry and supply chains. The latest US machination has two parts. The second one first.

The Canadian Department of Innovation, Science and Development published a statement on its official website on Wednesday, announcing the "divestiture of investments by foreign investors in Canadian critical mineral companies". But all the three companies the department identified as "foreign investors" are Chinese enterprises: Sinomine (Hong Kong) Rare Metals Resources Co, Chengze Lithium International and Zangge Mining Investment (Chengdu) Co.

Giving the reason for the decision, the Canadian department echoed the US administration: "investments threaten our national security and our critical minerals supply chains". Not surprisingly, the department didn't say how do the three Chinese enterprises threaten Canada's national security or supply chains.

Mineral resources are critical to a country's development. Therefore, a government being sensitive about foreign investment in the sector is understandable. But Canada is selectively sensitive to foreign investors in its mining sector.

By expanding its concept of "national security" at will, Canada is hurting, not protecting, the supply chain as it claims. Canadian enterprises need capital to mine lithium, and a market to sell the products, including electric vehicle batteries, made from it. And China is the largest market for, and largest producer of, EVs. In fact, EVs accounted for 18 percent of all new cars sold in China in the first half of 2022, prompting The New York Times to say "For China's Auto Market, Electric Isn't the Future. It's the Present".

By ordering the divestiture of Chinese companies' investments in mining, Canada could plug the flow of capital into its mining sector and deny it access to the largest EV market.

Now to the first stage of the US plot. Funding under the US Defense Production Act should be limited to domestic sources. But to make Pentagon funding available for certain mining operations, the White House has adopted an interpretation of military-sharing agreements from the 1950s and 1960s to declare that Canadian companies are "domestic" sources.

The move will also give the US easier access to unique raw minerals and materials, which are mainly produced and processed by China.

But by doing so, the Biden administration has violated international relations norms, as Canada is not part of the US. The move is also an attempt to undermine globalization, as it will disrupt the global supply chains.

Canada should stop dancing to the tune of the US and discriminating against Chinese enterprises. Instead, it should create a fair and open business environment for all companies.