Ottawa halts participation in China-led development bank

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The federal government is halting Canada’s activity with the China-led Asian Infrastructure Investment Bank and reviewing membership in the entity after its communications chief resigned and publicly accused the multilateral development institution of being an agent of Beijing.

The bank’s global communications director, Bob Pickard, announced his resignation on Twitter Wednesday and recommended that Ottawa quit the bank because it was “dominated” by members of the Chinese Communist Party. He cited his Canadian citizenship when departing the Asian Infrastructure Investment Bank (AIIB).

“As a patriotic Canadian, this was my only course,” Mr. Pickard said of his resignation. “I don’t believe that my country’s interests are served by its AIIB membership.” He decried what he called the bank’s toxic culture and its role as a “People’s Republic of China instrument.”

The AIIB, which was founded in 2016 with the stated goal of supporting development across Asia, described the allegations as “baseless and disappointing.”

Deputy Prime Minister Chrystia Freeland told reporters after Mr. Pickard’s resignation she was immediately freezing ties with the institution, reviewing Canada’s involvement and investigating his accusations.

“I learned of the resignation from the Asian Infrastructure Investment Bank by a Canadian citizen who voiced serious concerns regarding the bank,” she said. “The government of Canada will immediately halt all government-led activity at the bank and I have instructed the Department of Finance to lead an immediate review of the allegations raised and of Canada’s involvement in the AIIB.”

She said she was not “ruling out any outcome” after the review but she did repeat past concerns about authoritarian governments such as China.

“As the world’s democracies work to de-risk our economies, by limiting our strategic vulnerabilities to authoritarian regimes, we must likewise be clear about the means through which these regimes exercise their influence around the world,” she said.

Ms. Freeland last fall embraced the idea of “friend shoring,” or shifting trade to friendly partners and like-minded democracies – an approach that would curb some commercial relations with countries such as Russia and China. Asked to define it back then, she said “we need to be very careful not to have strategic vulnerability to authoritarian regimes.”

Ottawa joined the AIIB in 2017, putting up US$995-million for a 1-per-cent stake – one of the first Western countries to do so, alongside Belgium and Ireland. Since then, the bank has grown to more than 100 members, with Germany, South Korea and Australia all making major investments, taking stakes of between 3 and 5 per cent each. China remains the largest shareholder by far, controlling more than a quarter of all votes.

Beijing’s influence over the bank and its perceived use as a tool of Chinese foreign policy has led some in Canada to call on Ottawa to leave the AIIB, particularly as relations with China have worsened. In 2021, then-Conservative leader Erin O’Toole urged Prime Minister Justin Trudeau to cancel a US$40-million payment to the bank amid China’s detention of Canadians Michael Spavor and Michael Kovrig.

Ottawa has acknowledged some criticisms about the bank, at least privately. In a 2019 briefing book prepared by Global Affairs Canada and later published by a House of Commons committee, the agency grouped the AIIB alongside Chinese President Xi Jinping’s signature Belt and Road Initiative – both of which it said were designed to leverage China’s “economic prowess to gain regional influence and export its model of governance around the world.”

In an interview, Mr. Pickard said in his time working at the bank, “it became very clear to me that the power structure inside did not match what board members such as Canada and others have been led to believe.”

“In the bank, just about every department has a Communist Party member, including my department,” he added. “Is that the way things should be done in a multilateral institution? They always claim it is apolitical, but inside it’s very political, and Communist Party political.”

Under Mr. Xi, there has been a major drive to reassert Communist Party control over private business, with companies such as Alibaba and HSBC setting up internal party committees to help them “adhere to correct political directions and maintain political integrity,” according to Chinese state media.

Mr. Pickard said he believed party influence at AIIB “has increased over time, in terms of numbers and in terms of influence.”

He said even after a year and four months on the job at the bank he was still unable to explain what benefit the bank served for Canada. “I was still scratching my head, wondering what it is I could communicate to my compatriots about the value of their membership in the bank,” he said. “And I was looking for that narrative, but there was nothing there. Nothing. Zilch. Nada.”

He said representatives of China’s ruling Communist Party are seeded throughout the bank. “Party people are distributed throughout the bank. Many departments, including mine, have a Communist Party member. And that person often plays almost like a secret police or informative role, where it all reports up into the president’s office when the party influence is strongest,” he said.

“So nobody should believe that this organization in any way is actually operating as it pretends to,” he said. “The power, at least in terms of the everyday operating sense of the bank, it’s all in the hands of party members.”

Ms. Freeland remains a governor of the Asian bank for now, with her alternate being Rob Stewart, deputy minister of international trade.

James Moore, who served as a minister under former prime minister Stephen Harper’s government, said on Twitter Wednesday he was proud the Conservatives had resisted entreaties to join the Chinese-led AIIB.

Reached later, Mr. Moore said the Conservatives regarded the bank as a political exercise by Beijing to win influence across Asia. “The bank was seen as a geopolitical validation exercise by the Chinese government rather than a substantive opportunity for Canada,” he said. “That thesis has proven to be true.”

Conservative foreign affairs critic Michael Chong said Mr. Pickard “has confirmed what we have been saying for many years, that the AIIB is a tool for the Chinese Communist Party.”

“Clearly the AIIB is not aligned with Canadian interests and values,” Mr. Chong told The Globe, adding it was “better to withdraw now rather than later,” given the bank was “still ramping up, it has much bigger ambitions than its current footprint.”

For his part, Mr. Pickard said that as the “senior Canadian at the bank,” he had been unable to come up with a single reason for his country to be a member.

“I hope that our government will realize that it should not be part of this organization, which serves to increase China’s power,” he said.

In an e-mailed statement, the AIIB said Mr. Pickard’s “recent public comments and characterization of the Bank are baseless and disappointing.” It confirmed he had resigned as director general of the bank’s communications department, a position he had held since March, 2022.

“Throughout this time, the bank has supported and empowered him to perform his role,” the statement said. “We are proud of our multilateral mission and have a diverse international team representing 65 different nationalities and members at AIIB, serving our 106 members worldwide, many of whom have been with us since our formation in 2016.”

The Chinese embassy in Ottawa pushed back as well. “The claim that ‘AIIB is controlled by the Communist Party of China’ is nothing but a lie,” the embassy said in a statement, adding the bank has “rigorous internal organizational procedures and decision-making mechanisms.”

Margaret McCuaig-Johnston, former executive vice-president at the Natural Sciences and Engineering Research Council (NSERC) and now an advisory board member with the China Strategic Risks Institute, said Canada knew in 2016 what it was getting into because of rules requiring Communist Party cells in organizations in China.

The presence of party units in China-based companies has long been a fact of doing business in the Asian country, where the law requires companies, including foreign firms, to set up a party organization, but these rules have been enforced more strictly under Mr. Xi.

“Canada invested in AIIB knowing that it was essentially Chinese-run. In all organizations larger than four people there must be a party committee,” she said. “These committees have become much more pro-active in the past five years, and are now substituting their own decisions for those of management.”