Canada’s Indo-Pacific Strategy and Its Potential Challenges: Insights from ADB Chief Economist

OTTAWA — Asian Development Bank (ADB) chief economist Albert Park says Canada’s Indo-Pacific strategy could fail if Ottawa tries to pit those countries against China.

“It’s good for Canada to establish closer ties with all the countries in the region,” he said. However, many Asian leaders do not want to choose a side.

According to him, the strategy could meet the huge infrastructure needs of the region.

Canada is one of the founding members of the Bank. Since 1966, it has provided loans to Asian companies on the continent, from Kazakhstan to the Fiji Islands. Most of its funding comes from Japan and the United States.

The establishment has a keen eye on the economies of the region. It recently published a report on new macroeconomic trends and inflation and growth forecasts for each country.

The ABD expects stronger growth in the region. It forecasts that inflation will fall back to pre-pandemic levels at a pace that may vary from country to country. Everything will depend on events on a planetary scale, in particular the continuation of the war in Ukraine.

According to Mr. Park, the important factor is China’s willingness to reopen its economy. Severe measures aimed at combating the COVID-19 pandemic, including the closure of factories, have disrupted supply chains. While Chinese consumers continued to shop online, they spent little on services.

China accounts for half of Asia’s gross domestic product. It is the most important trading partner of almost all the countries of the continent.

“The region is more closely tied to China than any other major power today,” Park said. China is the elephant next to which everyone sleeps in Asia.”

The Canadian government announced in November its intentions to strengthen its ties with Asian countries. If he intends to continue his trade with China, he intends not to become dependent on this power from an economic point of view. Canada will try to prevent China from being active in strategic sectors in the country.

For Mr. Park, the balance would not be easy to achieve since almost all Asian countries want to maintain good relations with Washington and Beijing.

“A majority of countries are relentlessly preaching for open trade and greater regional and global economic integration,” he said. There is some resistance against policies that can harm shared growth and the prosperity of countries in the region.”

Mr. Park believes that Canada’s bet to invest in infrastructure in Asia can benefit all parties.

Canada has pledged to invest $750 million to support infrastructure development in Asia. This promise comes as the Liberal government cut spending on foreign aid. Prime Minister Justin Trudeau defended himself by saying that several emerging countries wanted to develop their infrastructure.

Mr Park declines to comment on Canada’s domestic policies, but says there are “great financial needs” across Asia for bridges, ports and roads to deal with climate change.

“The needs are there. Canada can focus on the things that are consistent with its own agenda on climate change, gender politics and whatever is on its mind. This promotes engagement, knowledge and networking.”