
Chapter 1:
Principles of Economics
Canada Rebuffs China's Warnings Over Huawei
January 18, 2019

Prime Minister Justin Trudeau responds to questions during a news conference following a cabinet retreat in Sherbrooke, Que.
“...But if the Canadian government does ban Huawei from participating in the 5G networks … I believe there will be repercussions,” Chinese Ambassador Lu Shaye commented at a news conference Thursday. Beijing has already arrested two Canadians on allegations of endangering China’s national security and imposed a death sentence on another for drug smuggling -- what appears to be retaliation for the arrest of Huawei CFO Meng Wanzhou. Though this linking of events reflects the fallacy of single causation, it still holds validity. In response, Canada’s Ambassador John McCallum has suggested that “the best policy right now is for Mr. Trudeau and Foreign Affairs Minister Chrystia Freeland to continue to push Beijing to release Canadians Michael Kovrig and Michael Spavor and grant clemency to Robert Schellenberg, who faces the death penalty”, which is a recommendation supporting the normative economics value statement that “it is not in the interest of corporate China that the Chinese government arrests people to use as bargaining chips.” Considering analytical economics though, Mr. McCallum said he has been speaking to Canadian business executives relating to their investment choices, and “by and large Canadian businesses want to continue moving forward in China.” How the Canadian government plans to move forward with resolving this dispute will be key in deciding how effective future trade negotiations will be between Canada and China.

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