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On the Chinese Radar

| February 8, 2012
HarperInChina2

Experienced insiders on the Canada-China file have noted that, despite the best efforts of Canadian officials, for most of the past two decades we were engaging China more than ever, yet, economically, lower on the Chinese radar than ever.  Despite the Team Canada missions of the previous Chrétien and Martin governments, the broader economic relationship was faltering. 

The first years of the current government did not bring improvements in economic relations.  In some sectors, Canadian companies themselves built growing momentum.  But it was questionable whether government had taken any steps that fudamentally strengthened commercial ties with China. 

Whereas we once were in the top-10 of China’s trading partners (in the 1980s), by the mid 1990s we had fallen behind not only Australia, but also the Italies of the world.  Sure, the Chinese market mattered to us, with China rounding into our number two trading partner (behind only the US, where we have natural geographical complementarities).

But for the Chinese, we were falling on the radar.  Relative to our competitors.

The more recent exceptions have been, of course, in the energy and natural resource sectors, where they have been coming to us due to their own surging demand for inputs.  But other than in select areas of financial services, the self-driven educational sector, and maybe in transport, the story overall was not onwards and upwards.

For the first four years of the Harper government relations cooled and much of the chatter was over the lack of a Prime Ministerial visit to China.  But PM visits can only do so much.  The hard part is having a sustainable impact after Team Canada leaves Chinese soil.

The Foreign Investment Promotion and Protection Agreement that was just signed in Beijing is momentous and important.  It was 18 years in coming…

By concluding the Agreement yesterday, Canadians have gained the opportunity to lift the relationship with China, and Asia, to a higher level. 

The Agreement will help to create the “stable” investment climate that Chinese Premier Wen Jiabao was calling for, at the start of the PM visit.  

The likely result to follow will be more Chinese investment into Canada in the energy sector, and in other sectors as well.

This brings both challenges and opportunities for Canada. We need to think through what the Agreement could mean for our relations with China and Asia. And also with the U.S. 

We are higher on the radar again. 

Now, we need to make sure that we’re ready.

Photo courtesy Reuters.