OTTAWA — A Conservative government would renounce Canada’s membership in the Chinese-sponsored Asian Infrastructure Investment Bank, the party’s platform says, one of several ways it proposes to stand up to China’s recent aggression.

The move would be symbolic, a poke in the eye of a major power whose treatment of Canadians, from arresting Michael Kovrig and Michael Spavor to blocking canola imports, has been increasingly hostile since Canada detained Huawei CFO Meng Wanzhou on a U.S. extradition warrant in 2018.

Canada has a long history of helping fund international development banks.

Besides joining the then-new World Bank in 1945, Canada is a founding member of the Philippines-based Asian Development Bank, joining in 1966, and has been a member of the African Development Bank since 1982 and part of the European Bank for Reconstruction and Development since it was formed in 1991 to help former Eastern Bloc countries as Soviet communism collapsed. Deciding to join the new AIIB in 2017 with a $256-million pledge was in keeping with that history.

But those investments get little hard return in either direct dollars or acquired knowledge from cooperating on projects they fund, said Nathalie Drouin, a business professor at the Université du Québec à Montreal who specializes in the management of large infrastructure projects.

“I am not sure that the Canadian government has learned that much … in terms of innovative practices, governance and decision-making processes, project delivery [or] community engagement,” Drouin told The Logic by email.

The European bank, for instance, notes Canadian consultants got a contract through the bank worth over €3.4 million—in 2018. Even the World Bank sent Canadian companies only US$15.6 million in business in 2019–20, according to a legally mandated report to Parliament.

The same report devotes just three paragraphs to Canada’s involvement in the AIIB, mainly about how Canada had “advocated for a stronger focus on climate change, green projects, inclusive growth and gender equality.”

Canada is “a small fish in the big pond,” Drouin said, and its participation in international development banks is more a matter of political positioning than anything else.

“Now, everything Canada uses comes from Germany, or the United States or France,” said Paul Cadario, a Canadian now retired from 37 years in increasingly senior positions at the World Bank. “You look at the sorts of things that are financed, typically, under infrastructure, and you say, ‘Well, where are the Canadian players in these markets?’”

SNC-Lavalin has been a successful engineering company, he said (and it’s now freer to compete internationally after an early release from a 10-year ban on World Bank contracts over corruption). Bombardier used to make rail cars, but finalized the sale of that division to France’s Alstom this year and is now only in the jet business.

Internationally, we’re buyers in the infrastructure industry, not sellers. But political positioning in the multilateral banks is important, Cadario said.

Cadario’s time at the World Bank included several years managing the World Bank’s dealings with China. He said that as much affection as he feels for the country, he’s been horrified by the behaviour of its government under President Xi Jinping.

“I’m shocked and appalled at the treatment of the Uyghurs. What’s going on in Xinjiang—there is absolutely no excuse, and China has no defence, but they’re doing it, anyway,” he said. “I share the outrage of not just Canadians, but everybody else, about what they’ve done. Xinjiang, what they’ve done in Hong Kong, and what they’ve done to two Canadians in retaliation for the detention of the Huawei princess.”

But, he said, the AIIB is not part of the problem. China has much more worrisome ways of influencing international development: state-owned enterprises and banks that exist explicitly to advance China’s interests.

“These banks operate all over the world, including Latin America. And those are the projects where the lending terms aren’t quite so transparent. And where the environmental and social standards don’t necessarily have to follow international standards…. And they might involve claims on government assets. And their lending is far, far greater than AIIB’s,” said Cadario, now a distinguished fellow at the University of Toronto’s Munk School of Global Affairs and Public Policy.

One infamous story involves Hambantota International Port in Sri Lanka. It ended up in Chinese control because of either (depending whose take you trust) devious “debt-trap diplomacy” on China’s part or a conscious decision by a Sri Lankan government dealing with a separate national-debt crisis to lease it to a Chinese company for desperately needed foreign currency.

Either way, the critical part of the arrangement was with the Export-Import Bank of China (EXIM), one of those state banks.

Unlike the AIIB, EXIM is also one of the major funders of China’s colossal Belt and Road initiative aiming to make it easier to transport Chinese goods to the West. The array of projects, from highways to pipelines to ports to power stations, is so vast it’s hard to be certain what to include and what to leave out, and tracing their financing is even more difficult. But a 2018 report from the OECD estimated China had put US$420 billion into Belt and Road projects; just US$2.3 billion had come through the AIIB, versus US$80 billion from EXIM and US$110 billion from its sister institution, the China Development Bank.

The following year, a report from Canada’s Centre for International Governance Innovation put the value of China’s spending on Belt and Road between 2014 and 2018 at US$573.3 billion, of which US$7.5 billion had come through the AIIB.

That same report concluded that the AIIB would be a better vehicle for financing Belt and Road, from the rest of the world’s perspective, than Beijing’s opaque state-owned institutions.

“If one is worried about China, and the nefarious impact it could have on global development, that’s where one should be focusing,” Cadario said. “But you can’t. It’s sort of hard for a country like Canada, or even the United States, to focus on that. Because Canada and the United States are not members of the boards of state-owned banks in China.”