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Column: Canada needs to kick-start China courtship now

This much is clear: we need China. China needs us. We can figure out why; we have some difficulty with the how. The economic benefits of a bond are clear, as are the perils of ignoring it. Let’s stagger for a moment in statistics.
Kirk LaPointe
Kirk LaPointe is the editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.

This much is clear: we need China. China needs us. We can figure out why; we have some difficulty with the how.

The economic benefits of a bond are clear, as are the perils of ignoring it. Let’s stagger for a moment in statistics.

By 2030, Asia will account for half of the world’s population, more than half of the world’s GDP and about two-thirds of the world’s middle class.

China is the continent’s big kahuna, of course, and within little more than a decade it will be the world’s biggest exporter, both the largest emitter of greenhouse gases and producer of clean energy, the most profound source of international students and tourists and a huge technology leader with serious military prowess and ambitions to dabble in the Arctic.

Its share of the global economy has quintupled to 15% this century and will surpass America’s in a decade or so, reflective of a country responsible for one-third of the world’s economic growth.

Little old us, what are we to do?

Canada’s effort to improve the relationship has – weak pun intended – taken the slow boat to you-know-where. We could be doing so much more, and an authoritative new deep dive into the Canada-China connection offers some sound recommendations on the paths to pursue, particularly relevant for us in B.C.

Before we get hopeful, let’s be reminded of how we recently sustained the trade equivalent of libel chill – the threat that keeps a journalist from taking a reporting risk, for fear of hostile litigation. The trade example: the United States fired a shot across the bow of Canada and Mexico, clause 32.10 of the U.S.-Mexico-Canada Agreement, to permit a country to abrogate the agreement if either of the other two dare effect a free-trade deal with a “non-market economy.” No question, the bull’s-eye here is China, with which the current U.S. administration is not feeling the love. A full-meal deal with China is treason to America.

The new report from the independent Public Policy Forum think tank canvassed business and labour leaders, academics, former prime ministers and other interested parties for 18 months. It seems to have arrived at a solution to 32.10: sector-by-sector trade pacts, starting with agri-food and natural resources.

It’s a splendid, learn-as-you-go approach, enabling momentum in the space without approaching the World Trade Organization definition of a deal that comprises “substantially all trade” between the countries.

The forum’s Diversification Not Dependence report has a dual aim of mobilizing Canada to lean into China without jeopardizing its four-star access to America, which it nonetheless describes as not “the reliable partner it was.” The report co-chair, Kevin Lynch, vice-chair of BMO Financial Group and a former clerk of the Privy Council, told me last week that Canada has lagged in securing a larger stake in China, in part because of the geographic and cultural ease of dealing with south of the border. (Our full discussion can be found online on our BIV daily podcast.)

But the time for a China catch-up has come, before it is gone. Its exploding middle class is a market that wants more of what Canada offers: a safe food supply, well-made consumer goods, access to great education, and experience in market protection and smart regulation where it matters, among them.

To that end, the report recommends we get into gear without getting reckless, so sectoral agreements need clear ways to resolve disputes, foreign investor provisions need more rigorous enforcement and our sovereignty needs a more unambiguous declaration.

All told, the report’s dozen ideas gleaned from the consultations are low-risk, but neither low-effort nor low-key. They require a game-changing ownership of the file, and with an election a year away, it is uncertain if our prime minister will accord the bandwidth to something without the quickest possible dividend.

That being said, if there were ever serious, substantial plans to court China, this report is it. Let’s see what happens next.