China's ambassador to Canada says Ottawa's allegations of foreign interference in Canadian elections are hurting economic ties — but he insists his country isn't punishing Canada.

His comments come after years of diplomatic strain between the two countries.

Beijing detained Canadian citizens Michael Spavor and Michael Kovrig from late 2018 until fall 2021.

China meanwhile imposed multi-year bans on Canadian imports of meat and canola.

And a year after the Canadian government named China as a disruptive global force and declared Beijing as responsible for attempts at foreign interference, the Chinese government left Canada out as it loosened restrictions on group travel.

Analysts argue those moves amount to economic coercion aimed at changing Canadian policies.

But Chinese ambassador Cong Peiwu doesn't see things that way — and the head of a prominent business group that advocates for deepening trade ties argues it's time for a rethink.

"China is not using trade as a weapon to fight against Canada or punish Canada. I believe that if the relations, we want to set that back on the right track, of course we have to create conditions," Cong Peiwu said in an interview with The Canadian Press.

"The important thing that should be done here is to have a rational reading of what China looks like; what China's policy is."

University of Ottawa professor André Laliberté rejected Cong's claim that China is not punishing Canada.

"It's simply not what the evidence is showing," said Laliberté, who teaches courses on comparative politics in East Asia.

"That's a blatant case of saying, 'If you want to trade with us, you have to respect our conditions, period,'" he said.

Cong noted that trade between the two countries has continued increasing despite political tensions, with Beijing registering a 17 per cent rise in Canadian exports of manufactured goods for the first eight months of 2023, year over year.

The University of Alberta's China Institute attributes a rise in trade and investment to the boom following Beijing's COVID-19 reopening early this year. In an analysis last month, it notes that while China's economy has started slowing, "total Canada-China bilateral trade hit an all-time high last year, despite high tensions."

Those tensions have included the 1,019-day detention of Spavor and Kovrig, widely seen as retaliation for the Vancouver arrest of Huawei's chief financial officer Meng Wanzhou on a U.S. extradition warrant.

During that time, China banned imports of Canadian canola and pork, citing concerns about unspecified pests. A beef ban dating back to December 2021 remains in place, despite other countries lifting the temporary measure within months of the discovery of an atypical case of mad cow disease in Alberta.

In August, China excluded Canada when it lifted a COVID-19 ban on group tourism abroad. China's embassy in Ottawa said this is due to the federal Liberal government having "hyped up" the issue of foreign interference. That's despite talks between both governments aimed at increasing flights between the two countries.

In September, Ottawa appointed a judge to lead a public inquiry into foreign interference in federal electoral processes and democratic institutions, with a mandate that singles out "China, Russia and other foreign states or nonstate actors."

In an Oct. 20 interview, Cong suggested that Canada look for shared interests, instead of picking fights.

"We do hope and urge the Canadian side to have a rational perception of China and also to do things that work with the Chinese side toward the same direction, to do things on the basis of mutual respect and seeking common ground while reserving differences, to create a better atmosphere — rather than to be engaged in those setting up new obstacles, for the improvement of the relations," he said.

Lynette Ong, a prominent China expert at the University of Toronto's Munk School of Global Affairs and Public Policy, said Beijing has "a very tacit way" of retaliating against countries that aren't co-operating, by barring imports on arbitrary grounds.

"They use excuses, or reasons such as arbitrary health reasons. They would say that Canadian beef products, pork and canola oil doesn't pass some sanitary requirements — and they are in charge of all the tests, so … there's nothing that Canada can actually do," said Ong, who is also a non-resident senior fellow at the Asia Society Policy Institute.

"China could go on and say that it hasn't done anything formally, in terms of trade coercion, to Canada. But behind the scenes, I think people know what is going on."

Shortly after Prime Minister Justin Trudeau took office in 2015, he attempted to forge closer ties with China, visiting the country in 2016 before signing an agreement aimed at boosting collaboration on trade, infrastructure and even military exercises.

The Liberals put a focus on those ties as part of a push to diversify away from the U.S. as then-President Donald Trump took office in 2017, and pledged to rework the North American Free Trade Agreement.

Work toward a Canada-China trade deal stalled by 2018, when Beijing rebuffed Ottawa's insistence on enshrining labour, gender and environmental standards into such an agreement. Months later, Beijing arrested the men who became known around the world as "the two Michaels."

In late 2019, the Liberals announced a China "framework" was in the works, which by early 2022 shifted to an "Indo-Pacific strategy," released at the end of that year. The shift represented an increase Canadian focus on the region as a whole, with Ottawa looking to other countries as a counterbalance to China.

The strategy warns Canadian companies of the "arbitrary application of Chinese laws" and calls China "an increasingly disruptive global power." Cong rejected that characterization.

But Laliberté viewed it this way: "They realized that we have just too many problems in our bilateral relations, and they ended up concluding that it would be much smarter to diversify."

Deputy Prime Minister Chrystia Freeland articulated as much in an April speech. "My own country faced economic punishment for displeasing Beijing," she said in Washington.

In September, Trudeau visited Southeast Asia as part of his attempt to pivot away from China, and he told Bloomberg that China "is not a country that anyone can simply ignore" economically, but he said Ottawa is not in a position to try a rapprochement.

"Certainly not at this particular moment," he said at an event in Singapore. "China has made decisions over the past years that have made it more difficult — not just for Canada but for other countries — to engage."

It's a drastic shift from the Liberal party's past enthusiasm for China. Former prime minister Jean Chrétien led two "Team Canada" trade missions to China starting in the 1990s. He still argues Ottawa should collaborate more with Beijing, given the long-term prospect of economic growth.

"There are a lot of exaggerations in the (media) stories, and we need dialogue," Chrétien told China's state broadcaster, in an interview that aired Nov. 1.

He said both countries will always have points of disagreement, but he said each government sets the tone. "In any country, the leader makes a difference. Sometimes the individuals have a different perspective," he said.

"It is in the best interest of the West and the people of the East to work together."

The Canada China Business Council, a non-partisan group that promotes trade across industries, says Ottawa can look to Australia, which has rebounded in its relations with China after severe restrictions on market access.

"When countries are actively engaged with each other, there are fewer issues that arise," said Sarah Kutulakos, the council's executive director.

Australia's call for a global probe into the origins of the COVID-19 pandemic was followed by Beijing implementing hefty tariffs on everything from wine to barley. The state-run Global Times warned Australia, which has China as its largest trading partner, that aligning too closely with the U.S. against China would mean the economy "will inevitably suffer a fatal blow."

In April 2021, Australia cancelled a state's participation in a Chinese infrastructure scheme, calling it "inconsistent with Australia's foreign policy or adverse to our foreign relations." Beijing has also pushed back on the country's attempts to limit foreign interference.

And yet the two countries have booming trade, with frequent ministerial visits that have culminated in Australian Prime Minister Anthony Albanese visiting Beijing last weekend to meet with Chinese President Xi Jinping.

Kutulakos said the U.S. is managing a similar balance despite heated rhetoric in Washington — and is seeing exports like pet food soar.

"(China's) base of people wanting to buy our products is growing. But if we're not exporting and our competitors are, that means we're losing ground."

Kutulakos said Cong's talk of setting aside differences doesn't mean ignoring foreign interference, but being more tactical in discussing the issue.

"Bringing up issues like foreign interference is something we definitely should do. But if you don't have regular dialogues in which to do it, then it then it doesn't get raised at all. Raising it in the Western press isn't going to solve anything," she said.

"There will always be things we disagree on, but refusing to talk because you disagree isn't going to get you anywhere."

This report by The Canadian Press was first published Nov. 11, 2023.