How did we get here anyway...a very brief history
Ben Taddei
Partner and Chief Operating Officer at Conwest Developments Industrial Matters...Matter!
Fair warning folks…this article is a long one! But, the good stuff is at the end so read on! Go Canada!
If you think this information is useful please repost it. Thanks
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Good morning!
If you know me well, you’ll know that I read a lot. I also get my news from many, many, many different sources. I also spend a lot of time thinking about what all of the goings on in the world mean for me, my family, Conwest and everyone that works there, my community, my province and my country…our country…CANADA!
I get a lot of personal enjoyment learning about everything I don’t know…and I DON’T KNOW A LOT! I’ve proven that over and over to myself and to others over the years. Regardless, I enjoy learning. Also, I didn’t realize how much I enjoy sharing what I’ve learned with others until about 15 years ago. Maybe that’s part of the aging process. Who knows?
I also enjoy forecasting, looking into the future, looking around corners. Why? Well, on a very basic level, it’s my job. But on a deeper level it forces me to work hard to try to figure things out in this big “game” we call life. Oh yah…and it’s really hard to do!
Once I develop a thesis, I attach risk to it by “saying it out loud.” I put it in writing. How? Lots and lots of emails to my partners, our staff, and peers. Lots of coffee meetings, lunches, panels etc. And most recently on LinkedIn. And I often refine my thesis as new information becomes known.
On July 21st, 2024 I introduced my Industrial Matters…Matter initiative. Here’s the link.
It starts with a quote from Robert F. Kennedy Sr., (President John F. Kennedy’s brother). It goes like this… “There are those who look at things the way they are, and ask why…I dream of things that never were, and ask why not?” ?
The main points in the article are that Canada is suffering an economic and social malaise due to multiple decades of a lack of focus on the policies we need in our Country to grow the economy in a dynamic and competitive world. Also, I discuss why our manufacturing industry, primarily the sectors that lever our resource base are floundering.
Then, on September 14th , 2024 I published “From Bad to worse.”
Here, I introduced the mantra “Show up! Stand Up! And Do Something!”
The main point? Here it is…
“I think part of the problem is that the real estate industry has been too passive in getting its message out. Industry participants sit in these liaison meetings, afraid to rock the boat. We don't advocate strongly enough. We ask polite questions with no action items and no follow up. We need to amp it up. All of us. Every day, all the time. Tell the decision makers what we need to deliver the housing. Be direct. Be bold. Be collaborative and always look for the win/win/win. Everybody needs to win.”
And today, on Sunday morning, as I read the news, I continue to come to terms with the fact that many people don’t really know where we are, how we got here, where we may be going and what we need to do to achieve shared prosperity in Canada.
So…I thought I would try to do my small part and put out some facts, some thoughts and some ideas on the aforementioned.
Here we go…
So, where are we now?
As I’ve written we are at the beginning of the creation of a new world order. This is well documented. The rules-based order created by the USA and its Allies after WWII is shifting in many ways. On a macro level it’s becoming multi-polar and bi-lateral. It’s also becoming more nationalistic and transactional. The world is moving to a “stop the car” and “get your house in order” mentality. Here are some examples:
Due to the Ukraine/Russia war, western Europe will rearm quickly. Watch this recent video of the Lithuanian Minister of Defense for example. Her message? The EU needs to rearm immediately.
The middle east is being reordered. The Abraham accords laid some of the groundwork for this to happen a couple of years ago. The war in Gaza and the subsequent involvement of other Arab nations in the negotiations for a permanent ceasefire and subsequent rebuilding of Gaza is taking an unprecedented approach.
This morning the Financial Times announced that President Zelensky said “he’s willing to step down as Ukraine’s president if the move secured Nato membership or lasting peace for Ukraine.” We'll see what happens.
Also, in the Financial Times this morning, Scott Bessent, The US Treasury Secretary wrote in an op-ed titled Economic partnership will protect the Ukrainian people and the US taxpayer that “The terms of our partnership propose that revenue received by the government of Ukraine from natural resources, infrastructure and other assets is allocated to a fund focused on the long-term reconstruction and development of Ukraine where the US will have economic and governance rights in those future investments. This structure and relationship bring the high standards of transparency, accountability, corporate governance and legal frameworks necessary to attract the robust private investment for postwar growth in Ukraine.”
Sidebar… did you know that a significant percentage of the critical minerals that comprise the basis for this deal are in some of the territory that Russia has taken control of in eastern Ukraine? This whole thing sounds like a “USA boots on the ground” initiative to me without them actually admitting it.
Bessent goes on to say, “President Trump’s innovative approach represents a new model for productive international partnership.” Hmm? Is this the model for Trump’s “new deal” with Canada? “Economic partnership?”
How did we get here?
To understand the present-day geopolitical tensions among the United States, China, and Russia, we need to explore the deep historical context that has shaped their respective ambitions, economic policies, and military strategies. The current competition for global influence is not a sudden occurrence but rather a culmination of centuries of economic, military, and ideological evolution. From the rise and fall of empires to the emergence of modern economic systems and strategic alliances, history has paved the way for today's global power struggle.
The Rise and Fall of Empires: China’s Century of Humiliation and Its Drive for Rejuvenation
For much of history, China was one of the most powerful civilizations in the world. The Qing Dynasty (1644–1912) presided over vast territories, a thriving economy, and a rich cultural legacy. However, as Western imperial powers expanded their influence in the 19th century, China found itself at a severe disadvantage.
The First Opium War (1839–1842) marked the beginning of what China refers to as its "Century of Humiliation." Britain, seeking to balance its trade deficit with China, flooded the Chinese market with opium. When the Qing government resisted, Britain launched a military campaign, ultimately forcing China into the Treaty of Nanjing, which ceded Hong Kong to Britain and granted foreign powers extraterritorial rights in Chinese ports. The Second Opium War (1856–1860) further weakened China, leading to even greater foreign control and economic exploitation.
By the late 19th and early 20th centuries, internal strife, foreign invasions, and economic stagnation had left China in disarray. The fall of the Qing Dynasty in 1912 led to a period of political fragmentation, with warlords, foreign powers, and revolutionary movements vying for control. The Japanese invasion of Manchuria in 1931 and the subsequent occupation of large portions of China during World War II further exacerbated the country’s suffering.
After World War II, the Chinese Civil War between the nationalist Kuomintang (KMT) and the communist forces led by Mao Zedong resulted in the victory of the Communist Party of China (CPC) in 1949. Mao declared the founding of the People's Republic of China (PRC), marking a new chapter in the nation’s history. However, the early decades of communist rule were fraught with economic failures, political purges, and social upheaval, including the disastrous Great Leap Forward (1958–1962) and the Cultural Revolution (1966–1976), both of which severely disrupted China’s development.
China’s Economic Reforms and the Road to Superpower Status
Following Mao’s death in 1976, Deng Xiaoping emerged as China’s paramount leader and initiated a series of economic reforms that transformed China’s trajectory. In 1978, Deng introduced market-oriented reforms that opened China to foreign investment, decentralized economic control, and emphasized technological advancement. The Special Economic Zones (SEZs) established in cities like Shenzhen became hubs of rapid industrialization and economic growth.
Throughout the 1980s and 1990s, China positioned itself as a global manufacturing powerhouse. The country leveraged its vast labor force, low production costs, and increasing technological capabilities to attract multinational corporations. Forced IP transfer from foreign companies looking to do business with China aided in the Country's rapid transformation. By the early 2000s, China had joined the World Trade Organization (WTO), further integrating itself into the global economy. This period saw unprecedented GDP growth, with China becoming the world's second-largest economy by 2010.
However, China's leadership understood that continued reliance on foreign technology and Western markets posed long-term risks. The 2008 financial crisis exposed vulnerabilities in the Western-led economic system, reinforcing Beijing’s desire to build a self-sufficient and innovation-driven economy. To ward off a financial calamity, in 2014/15 China shut the door on outbound capital flows.
Xi Jinping’s Economic and Military Vision (2014-Present)
When Xi Jinping became General Secretary of the Communist Party of China in 2012, he inherited an economy that had grown exponentially but was still reliant on foreign technology and investment. Xi’s administration sought to shift the country’s focus from low-cost manufacturing to high-tech industries.
The Made in China 2025 initiative, announced in 2015, aimed to position China as a leader in sectors such as artificial intelligence, semiconductors, biotechnology, and aerospace. The China Standards 2035 policy followed, aiming to set global technical standards in emerging industries. These initiatives were accompanied by the Dual Circulation Policy, which sought to reduce dependence on Western markets by fostering a self-sustaining domestic economy while continuing exports.
Parallel to its economic strategies, China launched an ambitious military modernization program. Xi emphasized the development of the People’s Liberation Army (PLA) into a world-class military capable of projecting power far beyond China’s borders. China significantly expanded its naval capabilities, increased the production of advanced weaponry, and pursued cutting-edge military technologies, including hypersonic missiles and cyber warfare tools.
A critical component of China’s military strategy was its assertion of sovereignty over the South China Sea, where it constructed artificial islands and fortified them with military installations. The ultimate red line remained Taiwan, which China views as an inseparable part of its territory.
The U.S. Response: From Engagement to Confrontation (2017-Present)
For decades, U.S. policy toward China was based on engagement, with the belief that integrating China into the global economy would lead to political liberalization. However, by the time Donald Trump took office in 2017, this approach had shifted dramatically. Trump’s administration labeled China a strategic competitor and launched a trade war, imposing tariffs on billions of dollars’ worth of Chinese goods. Chinese companies like Huawei faced bans and sanctions, and Washington strengthened military cooperation with Taiwan.
Joe Biden continued many of these policies but focused on rallying allies against China. The AUKUS Pact between the U.S., UK, and Australia provided Australia with nuclear-powered submarines, countering Chinese naval expansion. The Quad Alliance between the U.S., Japan, India, and Australia was strengthened to contain Beijing’s influence in the Indo-Pacific.
Biden also introduced advanced semiconductor sanctions to limit China’s access to high-tech chips crucial for its AI and military advancements. The goal was clear: to slow China’s technological rise and maintain American dominance in critical industries.
Russia’s Role in the Geopolitical Struggle
Russia, while not a formal ally of China, became an essential partner in countering Western influence. Since the 2014 annexation of Crimea, Russia faced increasing Western sanctions and sought closer economic and military ties with Beijing. Moscow supplied China with advanced military equipment, while Beijing provided Russia with an economic lifeline amid sanctions.
China has maintained a delicate balance in its relationship with Russia, especially following Russia’s full-scale invasion of Ukraine in 2022. While China has increased trade with Russia, it has been careful not to violate Western sanctions. Beijing benefits from a distracted and weakened Russia, which reduces U.S. focus on the Indo-Pacific. This is a major motivation for the current USA administration in its pursuit to end the war between Ukraine and Russia.
The Road Ahead: Uncertainty and Strategic Competition
The world is now in a new era of great-power competition. The United States and its allies are working to contain China’s rise, while China and Russia seek to challenge Western dominance. Key questions remain:
And more specifically for Canadians, the question of how Canada fits into this new world order remains to be seen. ?Personally, as I’ve written in previous posts, the larger geo-political forces will force us into a new, security based economic union with the USA. It will also force us to take a very offensive posture with the USA in order for us not to become even more beholden to our bigger brother next door. In a nutshell, for Canada, a strong offence is a strong defense.
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OK, so now what? Where might we be going?
Navigating the Shift in U.S. Industrial Policy: Implications for Canada and Strategic Responses
Its a well documented fact that the USA has been pursuing a reindustrialization strategy since Trump 1.0. Biden accelerated and magnified same during his administration. Now under Trump 2.0 its same, same x 100X. And the world is feeling the USA's protectionist stance to rejuvenate America's industrial base and restore its economic competitiveness.
At the heart of it is the negative impact of free trade policies, which have seen the offshoring of manufacturing jobs, significant trade deficits, and an erosion of industrial capacity in the U.S. Nationalists in the USA have called for higher tariffs, government loans and subsidies, and tax incentives for manufacturing aims to reverse these trends. While these policies are intended to bolster the U.S. economy, they will undoubtedly have significant consequences for Canada and other NATO allies.? It's crucial for Canadian businesses to consider the potential ripple effects on our economy and trade relations that will emanate from the USA’s new, MAGA industrial policy.
For Canada, our deeply integrated supply chains with the U.S. mean that any disruption in trade flows can have far-reaching effects. Higher tariffs could lead to increased production costs and higher prices for goods traded between our countries, impacting everything from agriculture to the energy sector. The uncertainty surrounding U.S. trade policy could create economic instability for Canadian businesses, particularly small and medium-sized enterprises that rely heavily on the U.S. market.
Moreover, these policy shifts may prompt NATO allies to reassess their strategic dependencies on the U.S. for critical industries and defense capabilities. It could lead to increased investments in our own industrial and defense sectors to ensure self-sufficiency and resilience. Enhanced cooperation and strategic planning within the framework of NATO will be essential to navigate these changes and maintain collective security and economic stability.
As we move forward, it's imperative for Canadian businesses and policymakers to develop strategies that mitigate these potential impacts and maintain economic stability. This may involve seeking new markets, diversifying supply chains, and investing in workforce development and innovation. By fostering a sense of economic nationalism and prioritizing our own industrial interests, we can build a more self-sufficient and resilient economy.
Below is a list of policy suggestions for Canadians to consider. We are working on many of these but now its time to unleash our potential. We are facing an existential threat due to the changing new world order. Its time to Show up! Stand up! and Do Something!
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Leveraging Canada's Resource Sector
Canada’s resource sector has long been a cornerstone of the nation's economy. Our vast natural resources, including oil, natural gas, minerals, and timber, have provided a steady stream of revenue and employment. However, to ensure long-term economic stability and growth, it is essential to strategically leverage these resources in the short/medium term while simultaneously investing renewable energy and in high-value manufacturing sectors. We have neglected our resource base for too long.
Diversification of Export Markets
One of the most critical strategies for leveraging Canada's resource sector is to diversify export markets. Over-reliance on the U.S. market makes Canada vulnerable to policy changes and economic fluctuations south of the border. By expanding trade relationships with emerging economies and strengthening ties with existing partners in Asia, Europe, and Latin America, Canada can reduce its dependency on the U.S. and create more resilient economic pathways.
Actions to Diversify Export Markets:
Value-Added Processing
Another key strategy is to invest in value-added processing of natural resources. Instead of merely exporting raw materials, Canada should focus on processing and refining these resources domestically. This approach not only creates high-value products but also generates employment and stimulates technological innovation. For example, instead of exporting crude oil, investing in domestic refining and petrochemical production can lead to the creation of higher-value products such as plastics, chemicals, and synthetic materials.
Actions to Enhance Value-Added Processing:
Sustainable Resource Management
Sustainable resource management is paramount in ensuring the long-term viability of Canada’s resource sector. Implementing stringent environmental regulations and adopting best practices for resource extraction and processing can minimize ecological impact and enhance the sector's social license to operate. Investing in renewable energy sources, such as wind, solar, hydrogen and hydroelectric power, can also complement traditional resource extraction and contribute to a diversified energy portfolio.
Actions for Sustainable Resource Management:
Indigenous Partnerships
Collaborating with Indigenous communities is crucial for sustainable resource development. Indigenous communities often hold significant land rights and have a deep understanding of the local environment. By forming partnerships and involving Indigenous communities in resource management and decision-making processes, Canada can promote inclusive growth and ensure that resource development benefits all stakeholders.
Actions to Foster Indigenous Partnerships:
Research and Development (R&D)
Investing in research and development (R&D) is essential for innovation in the resource sector. By funding R&D initiatives, Canada can develop new technologies and processes that enhance resource extraction efficiency, reduce environmental impact, and create new high-value products. Collaborations between industry, government, and academia can drive innovation and position Canada as a leader in resource technology.
Actions to Promote R&D:
Building Up High-Value Manufacturing Sectors
To complement the strategic leveraging of the resource sector, Canada must also focus on building up high-value manufacturing sectors. High-value manufacturing involves producing complex, technologically advanced products that command premium prices in global markets. By investing in these sectors, Canada can create high-paying jobs, stimulate economic growth, and enhance global competitiveness.
Advanced Manufacturing
Investing in advanced manufacturing technologies, such as automation, robotics, and additive manufacturing (3D printing), can revolutionize Canada's manufacturing sector. These technologies increase production efficiency, reduce costs, and enable the production of highly customized products. By adopting advanced manufacturing techniques, Canadian companies can compete on a global scale and attract foreign investment.
Actions to Promote Advanced Manufacturing:
Clean Technology
Clean technology, or cleantech, is another high-value manufacturing sector with significant growth potential. Developing and commercializing clean technologies, such as renewable energy systems, energy-efficient appliances, and sustainable materials, can address global environmental challenges and create new economic opportunities. Government incentives and funding for cleantech startups can accelerate innovation and commercialization in this sector.
Actions to Promote Clean Technology:
Aerospace and Defense
Canada needs to meet its obligations under NATO and increase its spending on defense. But if we’re going to do this why not also spend the money within Canada, on goods made in Canada? The aerospace and defense industry is a critical high-value manufacturing sector that can drive economic growth and technological innovation.
And finally, and in my view, most importantly....
Reset our national mindset
We've been neglecting the creators, the innovators, the entrepreneurs, the nation builders far too long in Canada. We have become complacent. But now, the world is changing fast and our neighbour, our trusted ally, is taking advantage of our self-inflicted weaknesses. It's time to take our future back. The alternative is not a good one.
Now you know why Industrial Matters....Matter to ALL of us.
Recruiter
1 周Great article Ben Taddei!
Real Estate Leader / Management Consultant
1 周The opportunity to “change the game” is in our control. Canada ???? has an opportunity to play an even larger role in the new world dynamics. Ben, another well written well thought out point of view. Happy to repost and keep up the momentum.