The price of unpredictability

Posted on: 20 January 2026

There's a sentence that slipped past most commentators last Friday in Beijing. Mark Carney, Canada's Prime Minister, said: "Our relationship with China has progressed in recent months. It is more predictable, and you see results coming from that."

More predictable. Not better. Not more ethical. Not more advantageous. Predictable.

To understand why this is a diplomatic bombshell, you need to know who Mark Carney is. He's not just another politician chasing headlines. He was Governor of the Bank of England from 2013 to 2020. Before that, Governor of the Bank of Canada. The only person in history to lead the central banks of two G7 nations. When he speaks about predictability in international economic relations, he knows exactly what he means.

And he's saying that China, the country Canada labelled its "greatest national security threat" less than a year ago, has become a more predictable partner than the United States.

Let that sink in.

Canada and the US share the world's longest undefended border. They've been allies since World War II. They built NORAD together. Their economies are so intertwined that 75% of Canadian exports go south. Until two years ago, Canada followed Washington almost automatically on China policy: 100% tariffs on Chinese EVs mirroring Biden's, Huawei banned from 5G networks, Chinese retaliation on canola exports absorbed without complaint.

Last Friday, Carney signed a deal cutting those tariffs from 100% to 6.1% on a quota of 49,000 vehicles annually, in exchange for China reducing canola tariffs from 84% to 15%. He announced expectations of "considerable Chinese investment in Canada's auto sector" within three years. He spoke of a "new strategic partnership."

The American response was immediate. Trade Representative Jamieson Greer called the decision "problematic" and said Canada would "surely regret it." Transport Secretary Sean Duffy piled on: "They'll look back at this decision and surely regret it."

Carney didn't flinch. Instead, he added that the multilateral system governing global trade since the war is "being eroded" and the future will be bilateral deals and sectoral coalitions. "The question is: what gets built in its place?"

Now here's what matters for Britain.

Carney isn't just Canada's PM. He spent seven years running the Bank of England. He speaks the City's language. He has the credentials, the contacts, the worldview of the Anglo-Saxon financial establishment. When he makes this move, he's not speaking only for Ottawa. He's signalling something that London understands perfectly.

And what is London doing?

Keir Starmer has pencilled in an official visit to China for late January, the first by a British PM since Theresa May in 2018. He's declared he wants to "reset" relations with Beijing. He's talked about a "pro-business" approach. His government is considering approval for China's controversial mega-embassy in London, despite security service objections. He's refused to classify China as a top-tier threat under the Foreign Influence Registration Scheme, putting it a notch below Russia and Iran.

Two Commonwealth nations. Both with new governments. Both historically aligned with Washington. Both moving toward Beijing at the same moment. Coincidence?

Perhaps. But consider this: Canada and the UK aren't simply "Western allies." They share a monarch. They share legal systems, institutional traditions, intelligence networks. For decades they've operated as the two Anglophone pillars of the Atlantic alliance, complementary to the United States but distinct. When they move together in a direction, it's not noise. It's signal.

And the signal appears to be: the era of automatic alignment with Washington is over.

Not because America has become an enemy. Because it has become unpredictable. And in the cold calculus of governing complex economies, planning industrial transitions, managing global supply chains, unpredictability is a luxury no one can afford.

There's a fundamental difference between a hostile partner and an unpredictable one. A hostile partner you can manage. You know what they want, where the red lines are, you can negotiate, you can plan. An unpredictable partner you cannot. You cannot build a ten-year industrial strategy if you don't know what tariffs will be in force in six months. You cannot invest billions in a supply chain if the rules can change with a tweet. You cannot make energy policy if agreements get torn up and rewritten on a continuous cycle.

Hostility is a fixed cost. Unpredictability is a variable cost that grows exponentially with your planning horizon.

For a central banker like Carney, this distinction isn't philosophical. It's the core of the job. Central banks exist precisely to provide predictability to the economic system. Their main weapon isn't the interest rate, it's forward guidance: the ability to communicate in advance what they'll do so economic actors can plan. When Carney says China is "more predictable," he's using the language of his trade to say something very precise: with Beijing I can make long-term plans, with Washington I cannot.

There's a bitter irony here. The Trump administration explicitly uses unpredictability as strategy. The theory is that keeping adversaries guessing about your next move gives you negotiating leverage. It's textbook game theory: in certain games, a mixed strategy where you randomise your moves is optimal.

But there's a problem. It works against adversaries. Against allies it produces the opposite effect. Allies aren't in a zero-sum game with you. They're in a cooperative game where value is created through coordination. And coordination requires predictability.

When you treat allies as if they were adversaries, you don't subdue them. You push them to seek alternatives. And in today's multipolar world, alternatives exist.

China has understood this perfectly. All of Beijing's rhetoric in recent years has been built around one word: stability. "Reliable partner," "predictable international order," "respect for agreements." It's not that China has become more trustworthy in absolute terms. It's positioning itself as the predictable alternative in a world where Washington is no longer predictable.

It's a brilliant strategy because it doesn't require China to be good. It only requires China to be consistent. And for those planning twenty-year investments, consistency is worth more than benevolence.

So what does this mean for Britain?

Starmer faces concrete decisions in the coming weeks. The Chinese mega-embassy. The threat classification. Trade negotiations. Whether to follow Canada's lead or hang back. Every choice will signal something about where Britain sees its future.

The temptation is to read Carney's move as betrayal, or as capitulation to Chinese pressure, or as a mistake Canada will regret. But this reading assumes Canada had better alternatives. Did it?

It can continue aligning with Washington and suffer 25% auto tariffs, threats of annexation as "the 51st state," and the daily humiliation of a president who treats the friendliest border in the world as a front line. Or it can start building options, knowing that diversification takes time and the moment to begin is before the crisis becomes acute.

The same logic applies to Britain. It can keep hoping the "special relationship" still means something, or it can recognise that in a world where America puts tariffs on allies and threatens to buy Greenland, the special relationship is a memory, not an insurance policy.

This isn't about loyalty or betrayal. It's about institutional survival. Governments that don't adapt to structural changes in the international system don't last. Those that adapt first acquire advantages that latecomers cannot recover.

Carney, with his dual experience in Ottawa and London, probably sees this more clearly than anyone. He knows the global financial system rests on predictability. He knows that when predictability disappears, actors seek new anchor points. And he knows that whoever offers those anchor points acquires power far beyond the face value of signed agreements.

China isn't buying Canada with an EV deal. It's buying something far more valuable: the chance to be the alternative. And in a world where the alternative didn't exist, that changes everything.

For those of us doing business with multi-year horizons, the question isn't whether this matters. It's whether we're paying attention.