The Spectre of Sinophobia

As Chinese investment in Canada grows, we should take care not to repeat the mistakes of the past says Hugh Stephens.
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March 18, 2013
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In August 1907, under the sponsorship of the Trades and Labour Council, and with the participation of seven unions, the Asiatic Exclusion League of Canada was established in Vancouver. Its self-declared goal: “to keep this province and this dominion for the white man by excluding any further oriental immigration”. One outcome of this movement was the race riot that targeted the Chinese and Japanese residential and commercial areas of Vancouver, resulting in considerable property damage. The history of the restriction of Chinese immigration to British Columbia is well known, beginning with the introduction of the head tax in 1885 and culminating in the almost complete exclusion of all ethnic Chinese immigrants through the Chinese Immigration Act of 1923.

In 2012, two unions, the International Union of Operating Engineers and the Construction and Specialized Workers Union went to the Federal Court for a judicial review of the federal government’s decision to allow HD Mining International to bring in 201 Chinese temporary workers to work at a coal mine in Tumbler Ridge, BC. These unions were supported by the United Steelworkers which commissioned a study to investigate the background and ownership of the Chinese-owned mining company at the centre of the dispute.

Is there a connection between these two events, more than one hundred years apart?

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Back in 1907, and earlier, complaints from labour circles in British Columbia centred on the role of Chinese (and Japanese) labour in undercutting wages and strike-breaking. In part, the protests were directed as much at employers such as James Dunsmuir, who repeatedly used Chinese labour in his Vancouver Island coal mines to break strikes and keep wages down, as against the workers themselves, but removal or exclusion of the workers was seen as the remedy. There was also fear that if strict restrictions were not imposed, the relatively small population of British Columbia at that point would be swamped by “Asiatics”  It has been argued that the anti-Chinese exclusion measures were directed more at protecting domestic labour rights than preserving a particular racial ratio.  Whatever the true motivation, it is probably fair to say that there was a mixture of motives, some rooted in racism, some in economic fear. Judging by some of the inflammatory rhetoric at the time, racism as it was expressed in that era was certainly part of the mix. It is worth noting that in 1923, the year that Chinese were excluded from immigrating to Canada, over 133,000 immigrants from other sources entered the country, and that over the next seven years, while almost no immigrants of Chinese origin (a total of 50 were admitted between 1923 and 1947 when the Act was repealed), almost one million new immigrants were granted entry.

Fast forward to today, and the Chinese miners case. Why did this particular temporary foreign worker (TFW) case attract so much attention?

Temporary foreign workers have been coming to Canada for decades although there have been significant changes to the program in recent years. In earlier times they were known as seasonal workers; they picked apples in the Okanagan and harvested crops in Ontario. When the season ended, they went home, usually to Latin America or the Caribbean. What has changed is that many of today’s “temporary” foreign workers can stay on for years. Their conditions are similar to seasonal workers, in that they are tied to a particular employer – some would say at the mercy of a particular employer, since they cannot change jobs and may end up stuck in an abusive working environment without effective recourse. And yet, for all intents and purposes, they are just like new immigrants, except that eventually most have to leave. While there is an exit ramp for some highly skilled or especially needed temporary foreign workers (such as domestic caregivers) who can use their time in Canada to qualify for citizenship, most temporary workers are required to return to their country of origin when their contract is completed. Some companies have come to rely heavily on the TFW program. Tim Hortons, for example, has brought in over 14,000 temporary workers over the past five years to work in its franchises, many in northern Alberta and British and Columbia but also right across the country. While occasional reports of abuses of the system perpetrated by employers such as Tim Hortons have attracted the attention of the labour movement, little attention has generally been paid to this influx, even though these workers must be displacing Canadians, including recent immigrants, for these entry-level jobs. If there are so many temporary foreign workers in Canada (400,000 at last count), why have 200 Chinese miners become such a flashpoint?

One factor may be that mining is a far more unionized sector than food service, although there is an active union in this industry, the United Food and Commercial Workers union. Moreover,  it is certainly debatable whether HD Mining undertook a serious search for Canadian workers before it resorted to seeking miners from China on the grounds that no qualified Canadians were available. Nevertheless, when one considers the small number of these workers in relation to the widespread TFW phenomenon, the Chinese miners story has attracted disproportional amounts of media attention And despite the fact that over 11,000 of Tim Hortons 14,000 temporary workers come from the Philippines, we do not see headlines protesting the influx of Filipino workers, or Mexican workers (the next largest source country for Tim Hortons temporary employees). When there is media coverage it is about foreign workers generally, except in the case of Tumbler Ridge where the focus is on Chinese workers, employed by Chinese companies that are controlled by the Chinese government which may result in the introduction of lax Chinese safety and environmental standards.

We cannot read the minds of those protesting the arrival of the Chinese miners, but we can examine the documents that were produced to question their role. In the report commissioned by the United Steelworkers (USW), most of the focus is on the status of the “shell company” that filed the application to bring in the miners. There is speculation that the company is ultimately controlled by some level of government in China, as indeed many Chinese resource enterprises are. The report focuses on China’s long term strategy to obtain access to overseas resources; its accumulation of significant foreign reserves; and the common practice of sending Chinese nationals abroad (over 325,000 according to sources quoted by the study) at low, exploitive wages with the possible introduction of the kind of inadequate safety standards that led to 2000 deaths in Chinese coal mines in 2011. There is an underlying current of fear and conspiracy in the document – fear that Canada is being manipulated by a powerful and autocratic state, that Canada is being taken for a ride. As the USW report ominously states, “British Columbians and Canadians should consider whether the financial might and industrial power of the Chinese state might lie behind projects such as these northeastern coal mines”. Whether it is a fear of being swamped by cheap Chinese labour or fear of being exploited by the Chinese state, what the events of more than a century ago and today seem to have in common is fear of the might of China, or "sinophobia".

For Chinese companies wanting to do business in Canada today, this has several implications. First, no matter how much we might like to pretend otherwise, there is a local historical legacy of intolerance to be overcome that does not attach to companies from Europe, the U.S. or, interestingly, even Japan. Second, the reputation of Chinese state-owned enterprises (SOEs) in the developing world is less than stellar; the methods employed by SOEs in Africa and elsewhere, including bringing in Chinese contract labour to execute projects, won’t fly in North America. Third, there is a residual legacy of suspicion of China arising from its autocratic system of government and periodic heavy-handed suppression of dissent. All this means that Chinese companies coming to Canada have a high bar to overcome, higher than would be the case for non-Chinese companies. There is an implicit bias against them with the result that they bear the burden of proof that they will be good corporate citizens.

This was clear from the attention that the CNOOC-Nexen case attracted. CNOOC played its cards well, kept a low profile during the review period, and made the kind of commitments that made it easier to find that its acquisition brought net benefit to Canada. Despite all that, it was a close-run thing, not helped by the reputational burden that all Chinese companies carry. At the same time as the CNOOC review was underway, British Columbia unions were targeting HD Mining and Chinese telecommunications giant Huawei was being accused by the U.S. Congress of stealing U.S. technology. That is the kind of collateral damage that no company needs but the reality is that media and public attention with regard to future investments in Canada by Chinese-based companies will focus on the nationality of the investor and its connections to the Chinese state.

China bears some of the responsibility for this state of affairs, but it is working on problem areas. Many of its companies sprang from and still have connections to state-owned enterprises. That will continue to be the case until China completes the restructuring of its industry, which is underway. China’s environmental record is poor and its mine safety record appalling. But the Chinese government has acknowledged this and the new leadership is focusing on fixing the problems.

Chinese companies should expect to conform to Canadian standards when they seek to operate in Canada and, fairly or not, they should  expect to have to go the extra mile to prove their bona fides. What they shouldn’t have to do is play on an uneven field simply because they are Chinese. But the ghosts of 1907 linger on. As a result, in order to be successful, Chinese companies coming to Canada will not only have to be absolutely scrupulous in playing by the rules, they will also have to be seen to be playing scrupulously by the rules. They will need to manage media relations with extra care and be willing to go the extra mile to be good employers and good corporate citizens. Then and only then will the ghosts be finally laid to rest.

The Canada-China Opportunities in Transition conference, organized by the National Capital Branch of the Canadian International Council, will take place on Friday, March 22 at the Chateau Laurier Hotel in Ottawa.