{"id":9914,"date":"2009-02-14T01:18:53","date_gmt":"2009-02-14T06:18:53","guid":{"rendered":"http:\/\/blog.jackjia.com\/?p=9914"},"modified":"2009-04-14T01:05:10","modified_gmt":"2009-04-14T06:05:10","slug":"20090214%e6%80%bb%e7%90%86%e5%93%88%e7%8f%80%e6%89%a7%e6%94%bf%e4%b8%89%e5%b9%b4%e4%b8%ba%e4%bd%95%e4%b8%8d%e8%ae%bf%e5%8d%8e%ef%bc%9f","status":"publish","type":"post","link":"https:\/\/blog.jackjia.com\/?p=9914","title":{"rendered":"20090214\/\u603b\u7406\u54c8\u73c0\u6267\u653f\u4e09\u5e74\u4e3a\u4f55\u4e0d\u8bbf\u534e\uff1f"},"content":{"rendered":"

Canada and China: Why is this man frowning?<\/strong><\/p>\n

Three years into his leadership and Prime Minister Stephen Harper still hasn’t made a single trip to China. It’s a known fact that bilateral relations have been frosty, but just where exactly is Canada’s trade policy with China heading? Is change on the horizon?<\/p>\n

By Rachel Pulfer <\/p>\n

From Canadian Business magazine, January 26, 2009<\/p>\n

It\u2019s 7:30 p.m., the Grand Ballroom at New York\u2019s Plaza Hotel. A glittering crowd has gathered for the annual gala dinner of the National Committee on United States\u2013China Relations. A not-for-profit body, it sponsored one of the first moments of d\u00e9tente between Communist China and the United States: the visit of China\u2019s Ping-Pong team to America in 1972. What a difference 40 years makes. Today, the Committee\u2019s guest is Treasury secretary Henry Paulson. He has interrupted one of the busiest schedules on Capitol Hill to speak to an audience that includes China\u2019s ambassador to the United States and the president of a newly minted U.S. division of a Chinese bank. <\/p>\n

Why is Paulson here? He can\u2019t afford not to be. <\/p>\n

At a time when consumption is slowing worldwide, China represents one of the few growth spots left in the global economy. In November, responding to news that suggests China\u2019s growth slowed to 9% in the third quarter, the Chinese government announced a US$586-billion stimulus package. The goal is to boost domestic demand\u2014making the Chinese market potentially even more attractive for exporters. Meanwhile, Chinese investors continue to invest in U.S. assets and Treasury bills, keeping the greenback strong and the economy liquid. <\/p>\n

By the first week of December\u2014six weeks after the Manhattan event\u2014Paulson was over in Beijing, hashing out issues with China\u2019s minister of commerce, Chen Deming. That trip was part of a biannual visit known as the Strategic Economic Dialogue, a special forum set up by presidents George W. Bush and Hu Jintao in September 2006 to keep lines of communication on trade issues open. The Chinese currency has been depreciating of late, making Chinese exports cheaper while rendering U.S. exports more expensive\u2014a major flashpoint at the talks. Yet both officials also stressed their commitment to work together through tough economic times. <\/p>\n

Now turn to this humble dominion. With economists revising Canada\u2019s growth prospects steadily downward, you might think engaging China should be high on the to-do list. In a world where few are buying, China represents the market of last resort. But on China\u2014as on everything else of late\u2014Canadian politicians are stubbornly charting their own path. <\/p>\n

Three years into his leadership, Prime Minister Stephen Harper has yet to visit Beijing. What\u2019s more, judging from Harper\u2019s comments and actions on the matter at home, the relationship is anything but a priority. That\u2019s why, in an exclusive interview in late November, Canadian Business asked Harper\u2019s new minister of international trade, Stockwell Day, just what, exactly, Canada\u2019s trade policy toward China is. <\/p>\n

In reply, Day stressed that trade with all nations is a priority for the Conservatives. \u201cMy mandate is to keep as many doors open to trade with Canadians as possible,\u201d Day said. \u201cNow is not a time to be closing off opportunities.\u201d <\/p>\n

When pressed for details, Day\u2019s comments on trade with China are most striking for their negative space. Though he says the prime minister \u201cplans\u201d to visit China, echoing comments Harper has also made, it\u2019s unlikely to happen anytime soon. Of course, Harper has his hands full managing the current political crisis. Yet according to Day, who spoke to CB before the constitutional ruckus in Ottawa, neither the PM nor he had scheduled plans to visit China at that time, either. <\/p>\n

Harper\u2019s government has announced six new consular bureaus in regional centres in China, and cabinet ministers head over to Beijing with some regularity. But according to China hands, what the prime minister himself says and does carries the most clout in Chinese eyes. And by all accounts, he\u2019s been MIA. Meanwhile, Day says that initiatives to engage the relationship on a higher political level, along the lines of the Strategic Economic Dialogue, are not in the works. \u201cWe don\u2019t have a plan to start up a bilateral discussion forum right now. We\u2019re building up the relationship piece by piece,\u201d says Day. There are no plans to run trade missions, either: \u201cWe believe in small government.\u201d This contrasts strongly with the Liberal approach, in which the PM led delegations from business and the provinces to meet with Chinese counterparts and, ideally, sign contracts. <\/p>\n

Day doesn\u2019t rule out trade missions down the road. \u201cThere\u2019s a place for flag-waving,\u201d he goes on. \u201cBut we believe in putting resources where they will be most effective: keeping tax levels reasonable, reducing the GST.\u201d <\/p>\n

Fair enough. But what reducing the GST has to do with engaging China on trade is anyone\u2019s guess. <\/p>\n

Canadians have never been blind to the opportunity China represents. Back in 1961, Prime Minister John Diefenbaker negotiated sales of wheat to China before the rest of the West even acknowledged the Communist country existed. But times have changed. In November, the Canada China Business Council led a delegation of businesses and premiers to Beijing, Shanghai and Chongqing. Notably absent was Stephen Harper. <\/p>\n

On China, the signals from Ottawa have been mixed. Even as it\u2019s been refusing to engage China politically, the federal government has led the build-out of the Asia Pacific Gateway and Corridor Initiative, pledging more than $900 million toward infrastructure designed to facilitate the flow of shipping containers entering North America from the Asia-Pacific. The Gateway includes a new port in Prince Rupert and enhanced rail links from B.C. to Chicago. The goal, says Day, is to send China the message that Canada is open for business. It\u2019s the \u201cif you build it, they will come\u201d approach to trade policy. <\/p>\n

Paul Evans, one of Canada\u2019s pre-eminent China experts and a professor at the Liu Institute for Global Issues at the University of British Columbia in Vancouver, describes the Harper government\u2019s strategy on China to date as one of \u201ccool politics, warm economics. But by all accounts,\u201d says Evans, \u201cit has reached a dead end.\u201d <\/p>\n

So what is the prime minister doing on China? Instead of attending the opening ceremony of the Olympics in Beijing, Harper made statements that suggested he would not sell bitumen-based crude oil to countries with poor environmental records. (That\u2019s politician-speak for China, says Evans.) Harper\u2019s decision to meet with the Dalai Lama in Canada in late 2007 prompted an angry reaction from Lu Shumin, Beijing\u2019s former chief ambassador to Canada. All this, says Evans, has put Canada into a situation where \u201cwe are far behind the number of competitive nations that are trying to work with the Chinese. The synapses are just not firing.\u201d <\/p>\n

John Gruetzner begs to differ. Now a consultant based in Beijing, Gruetzner has worked in China for more than 25 years. He insists Harper\u2019s hands-off foreign policy is in keeping with the man\u2019s conservative philosophy. Rather than focusing on the politics, says Gruetzner, it\u2019s more important to look at the relationship statistically. He points to September numbers that show a jump of 21% in our exports to China in the past year. Foreign direct investment from Canada into China is also up 14%. \u201cIt\u2019s time for businesses to get beyond the mission stage and engage on the ground,\u201d Gruetzner says. <\/p>\n

Government statistics bear Gruetzer\u2019s view out. In 2007, our exports to China were worth $9.3 billion, a 20%-plus increase over 2006. Imports from China were $38.3 billion, an 11% increase. Day is at pains to emphasize the importance of this growth. \u201cWithin two years of us being in power, we have seen a 150% increase in Canadian merchandise exports,\u201d he says. \u201cChina is our third-largest market.\u201d <\/p>\n

Maybe. But according to Statistics Canada, that roaring trade through 2007 was dominated by sales of commodities\u2014metals, potash and chemicals. Between July and November 2008, prices for those goods dropped by as much as 40%. It\u2019s unlikely robust trade growth will continue in 2009. <\/p>\n

Furthermore, Evans and Sarah Kutulakos, executive director of the Canada China Business Council, say that Canada has been losing ground to other nations. Back in 2006, Canada was last in a list of Top 10 trading partners put out monthly by China\u2019s ministry of commerce; by 2008, Canada had dropped off the list completely. According to Bob Kwauk, a Canadian tax expert and founding partner of the Beijing branch of Blakes law firm, Harper\u2019s \u201ccool politics, warm economics\u201d strategy is at least partly related. \u201cIn the lead-up to the Olympics, former Australian prime minister John Howard came to sell Olympic-related infrastructure, French President Nicolas Sarkozy was here selling Airbuses and nuclear power plant technology\u2014and President Bush has been here several times,\u201d explains Kwauk. \u201cBy not having our prime minister here when every other head of government has been\u2014well, it puts us at a disadvantage.\u201d <\/p>\n

Heads of government don\u2019t usually come to Canada to promote business, acknowledges Kwauk, but the Chinese system is different: \u201cIn China, most of the major purchases are in the infrastructure area. The companies making these purchases are heavily influenced by the state.\u201d <\/p>\n

Kwauk says he would not want to see a return to the Team Canada approach taken by Chr\u00e9tien. \u201cThat guy was here way too much. He\u2019d claim he\u2019d signed all these contracts worth billions, but then he\u2019d leave, and nothing would be forthcoming,\u201d says Kwauk. \u201cIt ended up tarnishing our credibility.\u201d But in tough times, the Harper government\u2019s alternative\u2014of non-engagement coupled with pot shots from afar on China\u2019s human rights and environmental record\u2014isn\u2019t helping, either. <\/p>\n

According to Evans, Harper\u2019s policy toward China isn\u2019t irrational. Instead, he argues, it\u2019s based on domestic political calculations. Opinion polls published by the Asia Pacific Foundation of Canada in April show Canadians harbour negative feelings toward China on human rights, product safety and growing military power. Evans believes that in such a climate, it would be difficult for a Canadian government to get elected while embracing a Team Canada approach to China. In that light, Harper\u2019s reluctance to engage directly with China merely reflects Canadians\u2019 own ambivalence towards the complicated economic giant. Unfortunately, that reluctance could pose problems for our export-driven economy. <\/p>\n

Complicating the situation is Harper\u2019s selection of Day for the post of International Trade. Day carries strategically unfortunate baggage from an earlier era. While in Opposition,he became known for his fiery speeches and op-eds decrying the human rights situation in China. He\u2019s acclaimed a hero on blogs linked to the outlawed Chinese group Falun Gong. However, a record of grandstanding on human rights won\u2019t help him at the negotiation table. \u201cDay has said a lot of negative things about China in the past,\u201d says Evans. \u201cIt is important that he visit China quickly, to get a sense of its dynamism and complexity.\u201d <\/p>\n

Investment banker Bill Majcher, of Hong Kong\u2013based Baron Group, goes further in his criticism of the human-rights-versus-trade school of western thinking on China. \u201cWhen I see politicians make big bold statements about big bad China, I get angry,\u201d he explains. \u201cI think: You are not speaking for me, and you are also not speaking with authority. You have bought into the views of a number of special interest groups. There\u2019s this fear in the West that China will dominate,\u201d Majcher goes on. \u201cBut 120 years ago China and India were the world\u2019s largest economies. This isn\u2019t new. So rather than fear it, try to understand it.\u201d <\/p>\n

Even members of Harper\u2019s inner circle are getting impatient. John Reynolds was co-chair of the national Conservative party campaign in 2006 and is now a member of the Queen\u2019s Privy Council. As he points out, \u201cWe traded with the United States right throughout the 1950s, before the civil rights movement. At the time, the United States was not a place where human rights were prevalent, either.\u201d <\/p>\n

Day insists his views on China have been misrepresented. \u201cAt that time, I also commented on the benefits of trade with China, but that hasn\u2019t gotten as much coverage,\u201d he says. As proof he\u2019s up to the job, he points to an 80-minute meeting he had with his Chinese counterpart, Chen Deming, at the recent APEC summit in Lima. \u201cWe had good talks,\u201d he says. The week before, Chen and Day signed a memorandum of understanding, ensuring Canadian businesses have free access to financial information while operating in China. Day says: \u201cAnd we are now in the advanced stages of signing an agreement that enhances protections for Canadian investments within China.\u201d <\/p>\n

But a formal mechanism for discussion isn\u2019t on the cards. That\u2019s too bad, in CCBC executive director Kutulakos\u2019s view. \u201cBehind closed doors, the Chinese prefer engagement,\u201d she says. \u201cThey can get in a room with their U.S. counterpart and beat each other up with baseball bats\u2014and agree to disagree\u2014but at least they talk and things get resolved.\u201d <\/p>\n

All is not lost, however. Evans says putting the Beijing ambassadorial posting on equal footing with the Washington, D.C., mission\u2014and installing someone like former trade minister David Emerson, who, unlike Day, has extensive experience in China\u2014would help repair the relationship. What\u2019s more, there is some evidence that the home audience might still be open to an enhanced economic relationship, if properly sold: APFC opinion polls show Canadians are not equating negative feelings about China with a closed attitude toward trade. <\/p>\n

At least, not yet. <\/p>\n

http:\/\/www.canadianbusiness.com\/managing\/strategy\/article.jsp?content=20090126_10025_10025<\/p>\n","protected":false},"excerpt":{"rendered":"

Canada and China: Why is this man frowning? Three years into his leadership and Prime Minister Stephen Harper still hasn’t made a single trip to…
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