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The report by the Montreal Institute for Global Security examines how the Chinese Communist Party operates across Canada and other G7 countries through networks tied to business, academia, media and politics.

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The report concludes Chinese influence efforts can operate in legal grey zones, relying less on overt coercion than on economic incentives, institutional dependence and long-term relationships. Universities, municipalities and media outlets can all become vulnerable to these forms of influence, it says.

Democracies must avoid paranoia and indiscriminate suspicion toward diaspora communities, Matthews said in an interview with Canadian Affairs. But they must also be alert to the fact that Beijing’s threats are real and systemic.

“We should stop pretending that it’s harmful or hateful to call out a government when it’s interfering in our democracy,” he said.

The report comes amid heightened scrutiny of foreign interference in Canada following repeated warnings from Canada’s security establishment that China poses a national security challenge.

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The Montreal institute’s report describes Canada as a particularly “permissive environment” for foreign interference among G7 countries.

Canada’s history of multiculturalism, decentralized political system, and large Chinese diaspora population have created conditions that can be exploited by foreign actors, the report says. Canada’s Chinese population reached roughly 1.7 million people in 2021, with nearly half born in China.

Successive governments have been slow to respond partly out of fear that criticism of Beijing would be interpreted as hostility toward Chinese Canadians, says Matthews.

“Was it multiculturalism? Was it a fear of politicians that [countering interference] would be framed as being racist towards Chinese people rather than calling out the Chinese government?” he said in the interview. “That could be it.”

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But many of the strongest advocates for tougher action are from diaspora communities targeted by transnational repression campaigns, Matthews notes.

The report also highlights concerns surrounding universities and research partnerships.

According to the report, Canada’s strengths in artificial intelligence, quantum computing, and biotechnology have made Canadian institutions attractive targets for efforts to acquire sensitive research, intellectual property and advanced technologies.

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The report argues that no single democracy can effectively counter foreign interference alone. It calls for a coordinated, G7-wide strategy that focuses on intelligence sharing, research security, cyber capabilities, and strong transparency rules.

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Matthews says Canada should resist the temptation to see China as a simple alternative to an unreliable southern neighbour.

“Yes, we’re trying to set ourselves as a country dealing with a more transactional United States under President Trump, but China is not necessarily the answer,” he said.

“There are a whole set of risks” when dealing with China, said Matthews. “And I would say the risks are far larger than the rewards.”