A Macdonald-Laurier Institute Publication THE HARD EDGE OF SHARP POWER Understanding China’s Influence Operations Abroad J. Michael Cole October 2018 Board of Directors CHAIR Richard Fadden Pierre Casgrain Former National Security Advisor to the Prime Minister, Director and Corporate Secretary, Ottawa Casgrain & Company Limited, Montreal Brian Flemming VICE-CHAIR International lawyer, writer, and policy advisor, Halifax Laura Jones Robert Fulford Executive Vice-President of the Canadian Federation Former Editor of Saturday Night magazine, of Independent Business, Vancouver columnist with the National Post, Ottawa MANAGING DIRECTOR Wayne Gudbranson Brian Lee Crowley, Ottawa CEO, Branham Group Inc., Ottawa SECRETARY Calvin Helin Vaughn MacLellan Aboriginal author and entrepreneur, Vancouver DLA Piper (Canada) LLP, Toronto Peter John Nicholson TREASURER Inaugural President, Council of Canadian Academies, Martin MacKinnon Annapolis Royal CFO, Black Bull Resources Inc., Halifax Hon. Jim Peterson DIRECTORS Former federal cabinet minister, Blaine Favel Counsel at Fasken Martineau, Toronto Executive Chairman, One Earth Oil and Gas, Calgary Barry Sookman Jayson Myers Senior Partner, McCarthy Tétrault, Toronto Chief Executive Officer, Jayson Myers Public Affairs Inc., Aberfoyle Jacquelyn Thayer Scott Past President and Professor, Cape Breton University, Dan Nowlan Sydney Vice Chair, Investment Banking, National Bank Financial, Toronto Vijay Sappani Co-Founder and Chief Strategy Officer, Research Advisory Board TerrAscend, Mississauga Veso Sobot Janet Ajzenstat Director of Corporate Affairs, IPEX Group of Professor Emeritus of Politics, McMaster University Companies, Toronto Brian Ferguson Professor, Health Care Economics, University of Guelph Jack Granatstein Advisory Council Historian and former head of the Canadian War Museum Patrick James John Beck Dornsife Dean’s Professor, President and CEO, Aecon Enterprises Inc., Toronto University of Southern California Erin Chutter Rainer Knopff Executive Chair, Global Energy Metals Corporation Professor Emeritus of Politics, University of Calgary Vancouver Larry Martin Navjeet (Bob) Dhillon Principal, Dr. Larry Martin and Associates and Partner, President and CEO, Mainstreet Equity Corp., Calgary Agri-Food Management Excellence, Inc. Jim Dinning Christopher Sands Former Treasurer of Alberta, Calgary Senior Research Professor, Johns Hopkins University David Emerson William Watson Corporate Director, Vancouver Associate Professor of Economics, McGill University For more information visit: www.MacdonaldLaurier.ca Board of Directors CHAIR Richard Fadden Pierre Casgrain Former National Security Advisor to the Prime Minister, Director and Corporate Secretary, Ottawa Casgrain & Company Limited, Montreal Brian Flemming VICE-CHAIR International lawyer, writer, and policy advisor, Halifax Laura Jones Robert Fulford Executive Vice-President of the Canadian Federation Former Editor of Saturday Night magazine, of Independent Business, Vancouver columnist with the National Post, Ottawa MANAGING DIRECTOR Wayne Gudbranson Brian Lee Crowley, Ottawa CEO, Branham Group Inc., Ottawa SECRETARY Calvin Helin Vaughn MacLellan Table of contents Aboriginal author and entrepreneur, Vancouver DLA Piper (Canada) LLP, Toronto Peter John Nicholson TREASURER Inaugural President, Council of Canadian Academies, Martin MacKinnon Annapolis Royal CFO, Black Bull Resources Inc., Halifax Executive Summary ................................................................................................ 4 Hon. Jim Peterson DIRECTORS Former federal cabinet minister, Sommaire ................................................................................................................ 6 Blaine Favel Counsel at Fasken Martineau, Toronto Executive Chairman, One Earth Oil and Gas, Calgary Barry Sookman Introduction ............................................................................................................ 8 Jayson Myers Senior Partner, McCarthy Tétrault, Toronto Chief Executive Officer, Defining China’s Influence Operations ................................................................... 9 Jayson Myers Public Affairs Inc., Aberfoyle Jacquelyn Thayer Scott Past President and Professor, Cape Breton University, Dan Nowlan Drivers and agents of Chinese political warfare .................................................. 11 Sydney Vice Chair, Investment Banking, National Bank Financial, Toronto Case studies .......................................................................................................... 14 Vijay Sappani Challenges ............................................................................................................ 20 Co-Founder and Chief Strategy Officer, Research Advisory Board TerrAscend, Mississauga Responses and recommendations ....................................................................... 22 Veso Sobot Janet Ajzenstat Director of Corporate Affairs, IPEX Group of Professor Emeritus of Politics, McMaster University About the Author ................................................................................................... 24 Companies, Toronto Brian Ferguson Professor, Health Care Economics, University of Guelph References ............................................................................................................. 25 Jack Granatstein Advisory Council Historian and former head of the Canadian War Museum Endnotes................................................................................................................ 32 Patrick James John Beck Dornsife Dean’s Professor, President and CEO, Aecon Enterprises Inc., Toronto University of Southern California Erin Chutter Rainer Knopff Executive Chair, Global Energy Metals Corporation Professor Emeritus of Politics, University of Calgary Vancouver Larry Martin Navjeet (Bob) Dhillon Principal, Dr. Larry Martin and Associates and Partner, President and CEO, Mainstreet Equity Corp., Calgary Agri-Food Management Excellence, Inc. Jim Dinning Christopher Sands The author of this document has worked independently and is solely responsible Former Treasurer of Alberta, Calgary Senior Research Professor, Johns Hopkins University for the views presented here. The opinions are not necessarily those of David Emerson William Watson Corporate Director, Vancouver Associate Professor of Economics, McGill University the Macdonald-Laurier Institute, its Directors or Supporters. Copyright © 2018 Macdonald-Laurier Institute. May be reproduced freely for non-profit and educational purposes. Executive Summary n recent years, China has invested billions of dollars in an effort to boost its visibility and Iimprove its image abroad. Investments have been made in a global media presence, interna- tional partnerships, academic outreach, and the cultural industry. Although those efforts have paid dividends in some parts of the world, especially among countries in need of major infra- structure investment, China’s “soft power” remains clumsy and, especially under Xi Jinping, has frequently been undermined by China’s self-defeating bad behaviour. Given its inability to project a friendly face, the Chinese Communist Party (CCP) has had to increase its reliance on other, less overt ways of promoting Chinese interests internationally. The term sharp power describes what had hitherto been referred to as political warfare or influence operations. Sharp power encapsulates a strategy by autocratic regimes that “pierces, penetrates, or perforates the political and informa- tion environments in the targeted The Chinese Communist countries.” The CCP does so through co-opta- Party (CCP) has had to tion, bribery, incentivization, disinfor- mation, censorship, and propaganda, increase its reliance on among other methods. Examples in- clude Beijing’s influence over mul- other, less overt ways tiple Chinese diaspora community associations abroad, its cultivation of promoting Chinese of current and former politicians in Australia, Canada and elsewhere, and interests internationally. efforts to censor books and publica- tions critical of Chinese regime inter- nationally. Using various examples from around the world, this paper analyses the ideology that lies at the heart of the CCP’s influence operations abroad and examines the many agencies and mechanisms involved in these sharp power activities. Once we understand how sharp power is undermining our institutions, we must then ask, how should democratic societies respond? At the heart of the problem is the fact that while some sharp power involves clearly illegal activity, many other aspects of political warfare take place in the grey areas of our legal-demo- cratic systems – not strictly illegal, and difficult to pin down as traditional foreign espionage. The following are a few recommendations that, if adopted, should help democratic societies begin to better address the challenge created by CCP political warfare. Other countries more aware of this threat have already implemented versions of these solutions. This is a start, and not a full plan, to protect Canada from political warfare. 4 THE HARD EDGE OF SHARP POWER: Understanding China’s Influence Operations Abroad • Universities and think tanks must develop more rigorous curricula and research programs to ensure that we have sufficiently high-caliber expertise to address the challenges that arise from this new relationship. • Reduce the grip of pro-CCP board members on think tanks that focus on Asia. • Update the legal system to address the