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Zhao Minghao: Canada drawing closer to China out of its own economic interests

2016-09-23

By Zhao Minghao    Source: Global Times    Published: 2016-9-22

 

Chinese Premier Li Keqiang embarked on an official visit to Ottawa less than one month after his Canadian counterpart Justin Trudeau concluded his formal tour to Beijing. This is the first official trip by a Chinese premier in 13 years. Both countries agreed to establish an annual dialogue mechanism between the Chinese premier and Canadian prime minister at the end of August, and Ottawa announced its decision to join the China-initiated Asian Infrastructure Investment Bank earlier. The Beijing-Ottawa relationship is apparently warming up.


Under the efforts of Trudeau`s father, then Canadian prime minister Pierre Trudeau, Canada was one of the first Western countries to establish diplomatic ties with China in 1970. Canada started to export wheat to China as early as the beginning of the 1960s in defiance of a US embargo. China is now the second-largest trading partner, second-largest source of imports and second-largest export market to Canada.


Liberal Trudeau defeated Conservative Stephen Harper to be the prime minister of Canada in October 2015. Trudeau aims to expand Canada`s exports and attract more foreign investment. The global economic slowdown has stricken a heavy blow to the energy-supported Canadian economy, and Trudeau said explicitly that Canada needs to strengthen ties with emerging states such as China and India, and seize the trade opportunities with the expanding middle class there.


Many criticize the former Canadian government for being too indifferent to China. From China`s perspective, Canada`s status in international affairs is declining, but Harper was arrogant and self-satisfied. Beijing no longer wants hackneyed criticism on human rights from Ottawa, and ordinary Chinese feel angry about corrupt officials parking themselves in Canada.


Chinese enterprises are believed to have been unfairly treated in Canada in the past few years. The Harper government banned state-owned foreign enterprises from taking over domestic oil sands companies in December 2012. This is regarded as targeting China. The Canadian government blocked China`s Lenovo from purchasing Blackberry in 2013, and discouraged China`s Huawei from joining governmental telecommunication projects. China`s investment in Canada has seen a declining trend, and reached only $1.5 billion in 2015, the lowest since 2009.


As a neighbor, Canada follows the US in most cases, including the controls on China`s investments. However, the Trudeau government intends to change the status quo. Ottawa should strengthen ties with Beijing to expand its exports and to make its economy more resilient. The trade volume between China and Canada reached $65 billion in 2015, compared with $500 billion between the US and Canada.


China and Canada are now exploring the likelihood of a free trade agreement (FTA), and this is also at the top of Li`s agenda. Polls by the Asia Pacific Foundation suggest that 46 percent of Canadian respondents support a China-Canada FTA. The figure was 36 percent last year. Canada wants the Beijing-Ottawa FTA to be more preferential than the one between Beijing and Canberra. Under the Beijing-Canberra FTA, 85 percent of Australian exports to China are granted zero-tariff treatment.


Trudeau has asked many people for advice on the China-Canada FTA. Former Australian prime minister Kevin Rudd, the Montreal-based Desmarais family, the global managing partner of McKinsey Dominic Barton and other business tycoons have expressed their support for the China-Canada FTA. In the eyes of former Canadian prime minister Paul Martin, the Beijing-Ottawa FTA is of particular significance to the global economy.


However, some Canadians are prejudiced against China, and do not want to strengthen ties with China via the FTA. Beijing and Ottawa should join hands to address tricky trading problems, such as disputes over the canola exports. Canada exports 4 million tons of canola seeds valued at $1.8 billion to China every year, but standards in China are quite strict.


To address these issues, top meetings between the two countries are of vital importance. Although Canada is a Pacific country, it has not attached much significance to its ties with the Asia-Pacific countries, especially China. Beijing expects Trudeau`s government to adopt a wise and coherent China policy.


The author is a  visiting fellow at the Chongyang Institute for Financial Studies at Renmin University of China.

Key Words: China   Canada   economy  

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