In early 2026, Canadian Prime Minister and former Bank of Canada governor Mark Carney launched one of the most significant diplomatic initiatives of his recent work: a roughly two-week Indo-Pacific tour, visiting India, Australia, and Japan, following an earlier visit to China. This trip is seen as a key strategic move for Canada to diversify trade and strengthen “middle-power cooperation” amid intensifying global power competition. However, former Canadian diplomat Michael Kovrig recently warned in the National Post that Canada must exercise caution in expanding economic and trade ties with China, or it could face long-term economic and strategic costs.
Indo-Pacific tour highlights ‘middle-power cooperation’
According to the Canadian government website and multiple media reports, Carney’s Indo-Pacific tour ran from Feb. 26 to March 7, covering India, Australia, and Japan. The focus was on trade, energy, technology, artificial intelligence, and defense cooperation.
In India, Carney met with Prime Minister Narendra Modi to discuss expanding trade, energy, and technology collaboration, while promoting talent mobility and investment opportunities.
Media noted that the visit comes as Canada seeks to reduce reliance on the U.S. market and develop new trade partners, making India an important potential market.
Next, Carney went to Australia to meet Prime Minister Anthony Albanese and delivered a speech to the Australian Parliament. He proposed that Canada and Australia become “strategic cousins,” working together to address global geopolitical and economic challenges.
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The two countries also signed a key minerals cooperation agreement, deepening collaboration in lithium, uranium, and rare earth resources, and promoting a supply chain alliance to reduce reliance on China.
Carney’s final stop was Japan, where he met with Prime Minister Sanae Takaichi. They agreed to establish a new “economic security dialogue,” strengthen cybersecurity, trade, and defense cooperation, and jointly advance a “free and open Indo-Pacific” strategy.
Analysts say the series of visits shows Canada is trying to build a closer network with like-minded democratic nations to address changes in global supply chains, energy, and security landscapes.
Visit to China sparks policy debate
Notably, before the Indo-Pacific tour, Carney visited China in January and met with Xi Jinping. The visit was seen as an important engagement after years of strained Canada-China relations.
Carney said China still presents “huge opportunities,” and Canadian businesses could benefit from trade with China in energy, agriculture, and resource sectors.
However, this stance has drawn debate domestically. In his commentary, Michael Kovrig noted that many countries try to “stabilize relations” with China, but this can evolve into a “normalized acceptance” of Beijing’s policies, potentially overlooking risks.
Kovrig: Dependence on China could carry triple costs
Kovrig argued that Canada, as well as other middle powers like India, Australia, and Japan, have all faced pressure or conflict in their relations with China. For example, Canada experienced the “Meng Wanzhou–Two Michaels” incident, Australia faced years of trade restrictions, and India has had military clashes with China along its border.
He identified three key costs of expanding economic cooperation with China:
- Unfair competition that impacts domestic businesses and employment
- Higher national security, defense, and supply chain protection costs
- Trade and investment that may indirectly strengthen China’s geopolitical and military influence
Kovrig specifically warned that if Canada tries to offset U.S. market losses by exporting more energy and agricultural products to China, it could deepen dependence on the Chinese market and weaken domestic manufacturing.
He also noted potential “hidden costs” of Chinese investment. For instance, even if a Chinese electric vehicle company sets up a plant in Canada, it might be mostly automated assembly, contributing little to employment while locking supply chains and technical standards into China’s system.
Experts: Balancing cooperation and risk
Despite controversies, many observers see Carney’s Indo-Pacific strategy as pragmatic: expanding cooperation with democratic nations like India, Japan, and Australia while maintaining economic engagement with China.
In his Australian Parliament speech, Carney emphasized that middle powers need closer collaboration to “set the agenda” in global competition.
Some scholars suggest this approach reflects changes in the international order—amid rising U.S.-China competition, mid-sized economies are seeking new cooperation models to safeguard their interests and strategic autonomy.
Kovrig, however, cautions that without clear strategic boundaries in China relations, over-dependence could leave Canada vulnerable in critical technologies and industries.
Significance of the new diplomatic layout
Overall, Carney’s Indo-Pacific tour is more than a traditional diplomatic visit; it represents an important step in repositioning Canada on the global stage.
By deepening ties with India, Australia, and Japan, Canada aims to build new partnerships in supply chains, critical minerals, and security cooperation. How it manages its complex relationship with Beijing will be a key factor in the strategy’s success.
As Kovrig noted, in dealing with a “complex partner” like China, Canada must strike a balance between cooperation and caution—capitalizing on market opportunities without ignoring long-term strategic risks.
By Yin Hua
