With Prime Minister Stephen Harper’s visit to China this week, all eyes have been on Canada’s deepening ties to the Asian superpower. But what is the current extent of our country’s relationship with China?
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This explainer provides an overview of some of the key areas in Chinese-Canadian foreign affairs, including trade and other major topics Harper and his delegation are addressing this week during meetings with President Hu Jintao and other senior Chinese officials.
Trade and investment
Since the early 2000s, there have been major increases in Canadian trade with China, but economists say the relationship has yet to meet its full potential.
According to a 2009 study by the Fraser Institute, the past decade has seen China surpass Britain and Japan to become Canada’s second-largest trading partner. While the United States continues to hold the number one spot (by a long shot), trade with China has increased by over 350 per cent since 1998. During the same period, Canada’s trade with the rest of the world only grew 33 per cent.
As China has grown to become one of the most powerful economies in the world, Canada has increasingly acknowledged the benefits of strengthening relationships and encouraging more Chinese investment. But research suggests that other countries with a similar resource base—like Australia, for example—have been more successful at exploiting lucrative trade opportunities.
Competition to win economic favour from China is part of the reason for a big push from the Conservative government to make Canada more attractive to businesses and investors abroad. In 2009, Canada opened up six new trade offices in different Chinese cities to serve as “central points of contact” for Canadian firms and Chinese business partners. A survey done that same year by the Asia Pacific Foundation of Canada revealed that Chinese companies see Canada one of the top target countries for business because of our country’s open attitude to Chinese investment.
According to Statistics Canada, Chinese foreign direct investment in Canada has almost tripled since 2008, going from $5.6 billion to over $14 billion in 2010. Out of the total $562 billion invested in Canada by countries around the world, Chinese investment still makes up just 2.5 per cent.
Major developments this week
The Prime Minister’s visit to China this week was a vital step in securing a more stable relationship, and it has already resulted in the signing of multiple agreements regarding investment. The most significant of these—described by Harper as the first “comprehensive economic agreement” between the two countries—is the Foreign Investment Promotion and Protection Agreement (FIPA).
Basically, it means that each country must treat investors from the other country in the same way it treats its own investors (without compromising existing Canadian laws around foreign investment review). The deal also includes a dispute settlement mechanism.
This type of bilateral agreement has been in the works for almost 20 years, and it will become one of just a few similar agreements ratified by the Chinese government. Despite China’s significant trade with the US and the European Union, neither has secured a deal like the one Harper signed on to today.
Canada, on the other hand, has obtained FIPAs with 24 other countries, and there are 10 more on the table.
“This agreement is an historic step forward. When implemented it will provide greater predictability and protection for Canadians seeking to do business in China.”
- Prime Minister Stephen Harper, Beijing announcement (Feb. 8 2012)
Details of the final agreement have yet to be released, as both governments must complete a legal review before it can be put into action. In Canada, that means it will be up for debate in the House of Commons.
In addition to the FIPA, Harper said the government has also signed agreements regarding air transportation, agriculture, science and technology, and energy.
Energy
Energy and natural resources are topics being closely watched by Canadians during the Prime Minister’s time in China. The main issue on peoples’ minds is the government’s agenda to facilitate oil exports from the oil sands to Asia, primarily through the proposed Enbridge Northern Gateway pipeline and resulting tanker routes.
Because of China’s huge (and growing) demand for resources like oil and gas, and because of Canada’s position as a resource-rich country, these industries have been a big focus for Chinese investment.
A recent report from the International Energy Agency shows that state-owned oil companies in China have invested over $7 billion since 2002 to secure stakes in oil sands projects.
Their acquisitions include deals with Northern Lights, MEG Energy, Athabasca Oil Sands, Penn West Energy and Syncrude. With growing development in the oil sands—and Harper’s brand new investment deal with China—acquisitions like these are expected to increase over the coming years.
A Memorandum of Understanding (MOU) on “energy cooperation”, signed Wednesday in Beijing, will help grease the wheels for additional investment and partnerships. It was just one of eight smaller agreements signed in addition to the FIPA, and aims to help China increase energy imports from Canada.
Critics of the oil sands and Northern Gateway project have recently held protests and written letters appealing to the Chinese government—and the Chinese public—to refrain from investing in Canadian resources. The Yinka Dene Alliance wrote an open letter earlier this week in hopes that President Hu Jintao would reconsider agreements regarding oil and pipeline development.
In addition to environmental concerns over the oil sands, the First Nations group also used the letter to address human rights offences faced by Aboriginals in Canada. These appeals are not likely to sway Chinese officials—in fact, human rights is one of the more difficult topics Prime Minister Harper was expected to address during his diplomatic visit.
Human Rights
Aside from economics, Canadians have also been expecting Harper to address China’s recent decision to veto a UN Security Council resolution that would have helped put a stop to violence in Syria. Like many other countries, Canada’s position is that Syrian President Bashar al-Assad must step down, and that the country’s armed forces should cease violence that has resulted in the deaths of thousands of citizens.
Officials reported that the topic did in fact come up, during talks with Chinese Premier Wen Jiabao on Wednesday.
“I raised, in very clear and strong terms, Canada's position on this issue…We would hope to see in the future action from the Security Council,” Harper told reporters in Beijing.
The Prime Minister also reportedly raised concerns about a Canadian citizen currently serving a life sentence in China for speaking out on behalf of the Muslim Uyghur minority. Huseyin Celil, accused of terrorism and sentenced in 2007, has been denied access to Canadian officials or a lawyer, and no details have been released about where he’s being held.
Celil’s case is one of many from China that raise alarm bells in the international community. In the past, Canada has taken a harder line on these human rights issues, pushing Chinese officials to provide information or address concerns—particularly involving Canadian citizens.
In 2007, Harper was adamant in pursuing Celil’s case despite warnings from Chinese officials that Canada’s complaints could hurt future trade relations.
"There are those in the Opposition who will say, 'You know, China is an important country, so we shouldn't really protest these things . . . so maybe someday we'll be able to sell more goods there. I think that's irresponsible.
"I think the government of Canada, when a Canadian citizen is ill-treated and when the rights of a Canadian citizen need to be defended, I think it's always the obligation of the government of Canada to vocally and publicly stand up for that Canadian citizen.”
- Prime Minister Harper, CTV News, February 2007
During this week’s trip, the Prime Minister maintained that it was possible to both facilitate trade agreements and address human rights issues without damaging the countries’ seemingly fragile relationship. While he appears to have managed to secure the former and at least make mention of human rights, few details have emerged about any real progress on the topic.
Education and tourism
Recruiting both students and tourists from China is one of Harper’s other priorities during his visit. Since 2009, when the Chinese government gave Canada “Approved Destination Status”, tourism to Canada has increased by almost 25 per cent to over 200,000 visitors per year.
With this approval, Chinese government agencies are now able to market Canada as an official tourist destination. The Canadian government is trying to cash in with a new campaign launched this week at the China Youth Services Travel bureau.
Of course, Harper’s campaign highlighted Canada’s “Wild West” and urged Chinese tourists to come check out the legendary Calgary Stampede (celebrating it’s 100th year in 2012). The Stampede’s mascot, Harry the Horse, made an appearance in Beijing alongside the Prime Minister.
But the Calgary Stampede isn’t the only thing bringing Chinese citizens to Canada—education is another major draw. Since 2005, the number of Chinese students coming to school here has jumped from about 7,400 to over 17,000.
That makes China the number one source for international students in Canada, and those numbers don’t even include people who come for courses lasting less than six weeks.
Despite these increases, a 2007 report by World Education Services showed Canada lagging behind a number of other countries in terms of attracting international students. The United States, Britain and Australia have consistently been the major frontrunners, swallowing up about 45 per cent of all students seeking education abroad.
With international students currently contributing up to $6.5 billion to the Canadian economy each year, increasing enrollment is a constant priority. In 2006, the Department of Foreign Affairs and International Trade (DFAIT) created the "Edu-Canada" unit to promote Canada as a top educational destination.
Now, the federal government has committed $10 million to developing an international education strategy to help attract even more students from overseas. The head of the advisory panel, Western University president Amit Chakma, is the sole delegate on Harper’s China visit representing the education sector.
Canada’s goal is to “internationalize” the post-secondary education system, both increasing enrollment with foreign students and sending more and more students to schools overseas. After further consultation and trips to China and India, Chakma and his panel will submit a report to the government in June, to help solidify the strategy.