Meet China's stealthy number two who helped secure a trade deal with Carney

OTTAWA — Billed as a mere informal chat on the sidelines of a broader international gathering, Prime Minister Mark Carney met last Halloween with Chinese President Xi Jinping in Gyeongju, South Korea for about 40 minutes.  

The discussion, which focused on thawing the frosty relations between their two countries and resetting trade, concluded with an agreed path to try to move forward and an invitation for Carney to visit Beijing.  

But that visit, which concluded earlier this week with a potentially important trade deal between the two countries, was not officially at the invitation of Xi.   

The four-day visit, the first by a Canadian prime minister to China since 2017, was, according to Carney’s social media posts, officially at the invitation of Premier Li Qiang, the country’s inconspicuous, number two political figure and widely seen as the principal manager of China’s massive, fast-growing economy.  

It was also Li, not Xi, whom Carney spoke to on the phone on June 5 as the Canadian leader attempted to begin the process of improving relations between the two countries. According to reports, the two men talked about the importance of moving on from the acrimony, global challenges, potential trade and investment opportunities, and where they might have the pieces for a potential deal: Canada wanted easier access to the Chinese market for its energy, agriculture and seafood, while China wanted to sell electric vehicles (EVs) in Canada and an end to what they viewed as holier-than-thou preaching on human rights and other matters.  

But before any of that might be possible, the two sides had to re-establish a level of trust after almost a decade of hostility.   

They agreed to stay in touch.  

On September 23, Li and Carney met in person in New York City at a United Nations General Assembly session. They further discussed the bilateral relationship and their key issues, which led to a meeting five weeks later in South Korea between Carney and Xi.  

When Carney finally arrived in Beijing last week, he also met with Li, before the final touches on the trade deal were resolved.  

Xi is China’s unquestioned top political boss, widely seen as the country’s most powerful leader since Chairman Mao Zedong, who ruled the People’s Republic of China from its inception in 1949 until his death in 1976. And Li, like all successful second-in-commands, is well aware of the org chart and Xi’s dominance of his government and country. But it was Li and his officials within the Ministry of Commerce of the People’s Republic of China (MOFCOM), which is responsible for international trade and foreign investment, who did much of the heavy lifting from the Chinese side on the recent work to normalize relations with Canada and, ultimately, to land the trade deal with Canada.  

Xi likely would have signalled that he supported the notion of a deal with Canada and approved the broad strokes, analysts say, but it was Li and his team who would have executed the plan and worked with Ottawa to hammer out the details.  

“He doesn’t make policy,” said Jeremy  Paltiel, a China specialist and political science professor  from Carleton University in Ottawa, of Li. “He carries it out.”  

The deal carried out between the two countries is expected to expand trade, but perhaps just as importantly, signals that Canada-China relations are indeed on the upswing and perhaps back to something resembling normal.   

The agreement was essentially a swap of much lower tariffs on Chinese-made electric vehicles (EVs) being allowed into Canada for lowering tariffs on Canadian agricultural and seafood products headed to China. The deal also represented a key shift in Canada’s relationship with a key trade partner and the first major concrete step in the Carney government’s efforts to diversify trade away from the United States since U.S. President Donald Trump imposed hefty tariffs on some important Canadian industries.  

Speaking to reporters in Beijing, Carney called the visit “historic and productive” and said that Canada must continue to be ambitious and pragmatic in diversifying trade.

While the talks between Carney and Li clearly played a major role in greasing the wheels that led to the trade deal, China specialists say Li will go to great lengths to avoid taking too much credit for it. He appeared in some photos to mark the visit with Canada, but tends to stay out of his boss’s limelight.  

As the country’s top manager of the economy, Li, 66, focuses largely on trade and investment issues. Not surprisingly, Li, head of China’s executive branch and the second-ranked member of the Chinese Communist Party’s Politburo Standing Committee, is seen as more pro-business and supportive of free markets than his boss, while Xi focusses more on political, military and security matters.  

Like many number twos, Li walks a tightrope balancing the interests of his own power base while dutifully serving the boss’s agenda.   

While the power gap between Li and Xi is considered a significant gulf, the premier appears to have stabilized his role at the top of the Chinese government. Known as a behind-the-scenes manager, Li is not seen as charismatic or one who tries to get on the public radar. 

So who is he? And how does he go about his business?     

Li succeeded Li Keqiang, who had been China’s premier for the previous decade before dying from a heart attack at the age of 68, just seven months after retiring. Unlike his predecessor, Li rarely uses flowery rhetoric or slogans that might be seen as trying to build a personal brand, nor does he tend to espouse his personal policy views.

Instead, he’s more of a stealthy policy wonk or a chief operating officer who relies on economic data and meetings with business leaders and foreign diplomats to quietly forge a path forward and support his president.

This has not always been the way with Chinese premiers. The country’s first premier, Zhou Enlai, who held the post from 1949 to 1976, was very visible both domestically and internationally, sometimes as much as Mao. Other premiers, such as Wen Jiabao, 2003-13, who billed himself as the “people’s premier,” were much more visible.

That’s not Li’s style.  Since his ascension less than three years ago, Li – similar to Carney – has been trying to enhance trade to refuel a slowing economy.   

After a few decades as the fastest-growing major economy in modern history, China’s pace has slowed over the last few years to what would still be incredible growth for most countries.  

The economic hot streak kicked off with Deng Xiaoping’s decision in the late 1970s to open an economy that had previously shut out most foreign investment and trade. With a population that now sits at about 1.4 billion, China was filled with untapped potential as a producer and eventually consumer. The new market-oriented economy soon began posting an incredible run of many years of double-digit economic growth as exports and foreign investment soared.  

The initial phase of reforms led to broad industrialization that began in the 1990s as the Chinese economy became known as “the world’s factory” before moving up the innovation food chain: from an economy producing mostly cheaper commodity items at a lower cost than elsewhere, to more innovative and technical goods.   

Over the last decade or so, growth has slowed to an average of more than 6 per cent, marred like other economies by the pandemic years. By comparison, most advanced, western economies, which are considered more mature and therefore not able to sustain soaring long-term growth, have grown during this period by about 2-3 per cent a year.  

According to a new report, both China and Canada will endure more sluggish growth in the coming years. Export Development Canada, Canada’s export credit agency, forecasts that growth in China won’t exceed 4.3 per cent over the next four years, and will remain below 2.5 per cent in Canada during that same period.  

As Canada tried to pivot and diversify in the wake of the Trump tariffs, China — the world’s second-most populous country and Canada’s number two trading partner after the U.S. — was an obvious target.  

“Canada needs a functional relationship with that country,” said Pascale Massot, a political economy professor and China specialist at the University of Ottawa.    

But relations between Canada and China were very poor.  

After a relatively positive relationship for many decades that had belied the two countries’ political and cultural differences, Canada and China have been mostly at odds for about the last 20 years.      

China didn’t appreciate former prime minister Stephen Harper’s criticisms of its human rights record, his comment that Canada won’t “sell out its values for the almighty dollar,” nor his visits with the Dalai Lama, which were viewed as interference in its domestic affairs.  

Beijing also didn’t appreciate the emphasis of Harper’s successor, Justin Trudeau, on advancing equality, human rights and other non-economic issues abroad, efforts that were sometimes seen as attempts to shame or lecture.    

Canada, meanwhile, didn’t appreciate that China was doing those things, nor its efforts, according to the Canadian Security Intelligence Service (CSIS), to influence Canadian elections in 2019 and 2021.  

The relationship took a sharp turn for the worse in December, 2018 when Meng Wanzhou was arrested in Vancouver by Canadian authorities at the request of the U.S. The Americans wanted Meng, chief financial officer of Chinese telecom giant Huawei, extradited so that she could be charged with misleading financial institutions about her company’s dealings with Iran, which may have violated U.S. sanctions.   

Days later, China arbitrarily detained Canadian citizens Michael Kovrig, a geopolitical advisor and former diplomat, and businessman Michael Spavor and accused them of espionage. The “two Michaels” were held for more than 1,000 days before being released the same day that Meng was freed from house arrest in Canada.  

But the friction didn’t stop there.   

In 2024, Canada followed the lead of the U.S. and some other western countries in slapping 100 per cent tariffs on Chinese-made electric vehicles (EVs), an important strategic sector for Beijing. Those EVs, well regarded and considerably less expensive than those made in the west, were considered a threat to the domestic auto industry and Canada’s relations with the U.S.  

Beijing responded by slapping 100 per cent tariffs on key Canadian exports canola oil, canola meal, rapeseed oil, peas, and 25 per cent tariffs on pork, fish and seafood products.  

The new deal between the two countries eliminates or winds down many of those tariffs, while satisfying the economic and political needs of each country. Canada needs to diversify its exports, analysts say, while China gains a greater foothold in North America for its EV industry, while finding a degree of rapprochement with their primary rival’s neighbour and ally.  

So how did Li get to where he is?   

Born in the smallish city of Rui’an (population: 1,125,000), in the eastern, coastal province of Zhejiang, Li joined the Chinese Communist Party in 1983 and rose the ranks over the ensuring decades. In the mid-2000s, Li developed a relationship with Xi when both worked in Zhejiang province.   

In 2017, Li was named a member of the CCP Politburo, and five years later became party secretary of Shanghai, where he cemented his pro-business reputation.  He has since publicly called on the international community to fight against protectionism and earlier this month visited Guangdong where he called for “extraordinary” measures to increase economic growth. The thawing of relations and the trade deal with Canada are consistent with his world view and policy priorities — perhaps more so than Xi.  

The same is true of Carney, who has made diversified trade a top priority since taking office. The deal may come with additional risk for Canada, however, as it must remain conscious at all times of upsetting the mercurial and unpredictable Trump, just months before an  upcoming review of the governance of North American trade. There may be no more sensitive subject in Washington than the advances of the ambitious and fast-rising China.  

From the perspective of Canadian trade, there’s no comparison between the two as trade partners. Accor ding to 2024 data, 75.9 per cent of Canadian merchandise exports go to the U.S., and about 4.1 per cent bound for China.  

Carney – and Premier Li – hope to narrow that gap.  

National Post

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