This column was originally in the Hamilton Spectator: http://www.thespec.com/
Tim Armstrong is a lawyer, who has been Ontario deputy minister of industry and trade and agent general for the Asia-Pacific Region.
Harper’s visit to China essential; Canada needs a strategy to deal with the huge trade imbalance
In February, Prime Minister Harper will revisit China, a nation that The New Yorker’s Henrik Hertzberg has accurately labelled “a fearsome engine of capitalist commerce.” What are the goals, and the prospects for achieving them?
In 1986, as Ontario’s Agent General, I made my first visit to the Ontario-Jiangsu Science and Technology Centre in Nanjing. The building had just been completed by workers from Hong Kong, because the local Nanjing workforce lacked the skills to perform simple construction work. Later that year, in Shanghai, I gazed at the empty mud flats of Pudong across the Huangpu River. A decade later, the site was dominated by a skyline resembling Manhattan. Since then, China’s spectacular growth has continued to outpace all other nations. So Harper’s mission is essential.
The Prime Minister’s Office has announced the agenda will focus on trade and investment, heralding the fact that China is now our second-largest trading partner, with two-way trade tripling over the last decade to a total of about $58 billion. But let’s get the picture straight. As in 2001, about 70 per cent of that figure, more than $44 billion, represents China’s exports to Canada — significant portions of which Canadian workers used to produce.
Our exports, on the other hand, are heavily weighted in the raw and semiprocessed resource sector, involving far less labour-intensive producers. Nor is China our second largest export market. We export far more to the EU and 20 per cent more to the U.K. alone, with its population of 62 million, than we do to China with its 1.3 billion inhabitants. Our trade imbalance with China is by far the largest we have. Oil exports, with or without new pipelines, will likely dominate the agenda. But are there other untapped, non-resource based export opportunities? If so, what are they?
That leaves investment. Several years ago, the Canadian government’s negative signals resulted in China’s state-owned Minimetals withdrawing its effort to acquire controlling interest in Noranda Inc., our largest mining company. Since then, however, the picture has changed and China now has ownership in several of our western oil development corporations. Recently, the state-owned PetroChina acquired sole ownership of the MacKay River project in Alberta. Is it in Canada’s interest to encourage controlling investment in our resource sectors by state-owned or controlled Chinese enterprises? Not in my view.
As for incoming investment, China’s Central State Council has guidelines establishing four categories for approving foreign investment: “encouraged,” “restricted,” “prohibited,” and “permitted.” Does anyone believe that majority Canadian ownership would be permitted in any significant Chinese enterprise? And even if it were, surely we should not be promoting more outward investment, at the cost of Canadian jobs.
China’s remarkable growth has been accomplished by a mixture of extraordinary effort, talent, and well-planned, government-funded industrial policies, emphasizing innovation and training, aimed at overtaking the West.
For the rest of this column, please go to the Hamilton Spectator: http://www.thespec.com/opinion/columns/article/661386–china-mining-canadian-resources