China? With friends like this...

For 20 years Canada’s wide, open door immigration policy toward China has buoyed the country's real estate prices, auto sales, and food sales. For Canada’s exporters of raw materials, China has principally been a willing purchaser of low cost wood pulp and byproducts, as well as ores, nickel, copper, slag, ash and potash. Should we ask how much ‘value added’ participated in these exports? No. The answer is an embarrassment.

Canada’s overwhelmingly askewed trade ‘imbalance’ with China was -$23,610,999,607 for the first nine months of 2012. There is very little effort expended, or financial clout brought to bear on the evolution of Canadian ‘value added’. Canada has found it so much easier to sell raw materials, and to perform ‘banking’ tasks, than to manufacture finished, or even semi-finished products and then export them. Canada has for too long enjoyed picking the seemingly very low-hanging fruit.

The senior executives managing the handful of major banks who control Canada’s economic landscape have particularly enjoyed the past two supremely fruitful decades of low-risk real-estate and auto loan businesses to the newcomers. With the support of media such as the CBC, the Toronto Star, and the Globe & Mail, an echo chamber has muffled any and all pushback on anything related to China by members of parliament, or by a majority in the current crop of senior business leaders. Referring to the last Harper/Hu meeting, the CBC described it as, “exciting time.” No sign of critical, or discerning thinking there, but undoubtedly way too much breathless adulation.

Even evidence of surreptitious electronic espionage are dismissed, or muffled, lest they stir politically uncomfortable notions which might impact negatively on an artificial and unsustainably propped-up economy. There are bank bonuses to be cashed, cramped pigeon holes in the sky called condos to be sold, and foreign-made cars to be retailed. Distaste for all things 'politically incorrect', fear of reprisal, and fear of racist accusations have muffled the emergence of facts and realities.

China has fuelled Canada’s growth for two decades, and yet, scarcely a word is spoken or printed of China’s ruthless communist party, or that country's centrally manipulated economy, and the communist party's tight control over foreign asset acquisitions. Is there any real insight offered on the long term impact? Not an article in sight about China’s Princelings, and all those who are connected to them, or their direct impact on the Canadian financial and real estate machines. Reality, however, has a way or eventually floating to the surface, no matter how hard it is repressed. This week a couple of hard slaps to the face are waking us up to the harsh and brutal truth that China is not our friend, not our partner, nor is it our well-wisher. On two fronts, Canada and its real allies received a cold shower.

Yi Gang, the deputy governor of China's central bank threatened a currency war and stated that Beijing was “fully prepared,” for such, and “in terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries." Nothing subtle or quietly diplomatic about this throw-down of the gauntlet. He was not only addressing Japan, which has allowed the yen to slide, but he was delivering a thunderous warning to the West, including Canada which follows dutifully whatever The Fed dictates.

Also thunderous, though perhaps more troubling, was the news that Chinese anti-aircraft, heat-seeking missiles have been discovered in an Iranian shipment of arms heading for rebels in Northern Yemen. What could possibly go wrong when a cargo of Chinese missiles, 316,000 Kalashnikov cartridges, 63,000 PK machine gun cartridges, 12,000 cartridges for 12.7 millimeter DShK machine guns and 95 RPG-7 launchers, and 17,000 blocks of Iranian-made C-4 plastic explosives are introduced into the region? What could go wrong with such serious weaponry in the hands of terrorist?

Everything could go wrong. Flying cities known as commercial aircraft are particularly uncomfortable when heat-seeking missiles are heading in their general direction. Yes, what could go wrong when China-armed-Iran-armed terrorists come to your neighborhood?

In its own best interest, Canada should be more forthright with the realities presented by China and its communist government, and we should be reminded that Canada has an important international role to play in the support of its real allies, rather than bending just a little too far, suppliantly, to those who blow an ill wind.