Trudeau’s visit to China fails to shift power imbalance

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It's the digital equivalent of a dedicated aisle in the world's biggest superstore, jammed with products familiar to any Canadian: ice wine, lobster, maple syrup, Arcteryx jackets and Jamieson vitamins.

On Saturday, Chinese e-commerce giant Alibaba opened an online "Canada pavilion" to promote Canadian products as Prime Minister Justin Trudeau looked on and smiled. This, he said, "opened a pipeline for Canadian small and medium-sized businesses to access more than 400 million consumers here in Asia."

But it's an ambition that pales next to what Alibaba wants to do in Canada, as Mr. Trudeau's first trip to China continued a long tradition of Ottawa struggling to win an equal footing with China.

Not long after helping Mr. Trudeau launch the Canada pavilion, Alibaba executives sat down for lunch with the Prime Minister and his entourage, including Finance Minister Bill Morneau. They had their own plans to discuss.

Alibaba wants to bring Alipay to Canada, the service run by affiliate company Ant Financial that handles payments on Alibaba websites and for Chinese shoppers at restaurants, shops and markets. Alipay is a powerful hybrid between PayPal, Interac, Yelp and a bank – and Alibaba sees it as a tool to modernize finance in Canada.

Ant Financial representatives have already spoken to "the major banks. We are talking with them, with good progress," said Chen Long, the chief strategy officer at Ant Financial, in an interview with The Globe and Mail.

On Saturday, Mr. Trudeau was asked about the perception that he gave up more than he gained on his first trip to China as Prime Minister. He did not directly answer.

"This whole trip has been about relaunching a strong, stable relationship with an extremely important country in the world," he said.

But Canada, like other nations, has not always been successful in making its relationship a balanced one. In applying to join the Asian Infrastructure Investment Bank, for example, Canada provided China a valuable vote of confidence and international prestige. In return, it secured a Band-Aid solution to a dispute over canola exports and seven new visa processing centres in China, but made no visible progress on the release of detained missionary Kevin Garratt.

Western leaders have for years demanded China open its markets to their products, in the same way theirs are open to Chinese goods. It hasn't been a fair fight. China's low-cost labour gave it such a powerful advantage that huge trade imbalances resulted. The U.S. imports four times more goods from China than it exports; in Canada, it's only a 3.3-fold difference.

But Mr. Trudeau's visit has highlighted the modern complexion to an old problem, as wealthy Chinese firms now seek foreign access not for the things they make, but their cash – even as their government still bars outside companies from many parts of its economy.

In China, Canadian leaders also raised worries at G20 meetings this weekend that rising protectionism could threaten trade with other countries, including European nations and the United States.

China has said it is lowering barriers to foreign investment, but business groups don't see it. "China seems to be in a holding pattern on opening the markets," said James Zimmerman, chairman of the American Chamber of Commerce in China.

On Saturday, the European Union Chamber of Commerce in China criticized "the ease with which Chinese companies continue to acquire assets in Europe in areas where EU companies do not even dare to consider investing in China."

For Mr. Trudeau, addressing that will require a greater and more sustained effort to negotiate Canadian access, said Perrin Beatty, president of The Canadian Chamber of Commerce.

"The issue is more how we can get the attention of the country that will soon have Earth's largest economy when the rest of the world has been working to develop relationships," he said.

But Canada is so severely outweighed by China that it can't go it alone, warned Geoffrey Hale, a professor of political science at the University of Lethbridge. What Ottawa needs is "to team up" with others, the better to insist on fair rules, and jointly "target domestic interests in the offending country for retaliation" when needed, Prof. Hale said.

Still, change is something Mr. Trudeau clearly wants and his lineage may help, as China's leaders fondly remember Pierre Trudeau. "It's always struck me that those labelled old friends of China do seem to get some slight advantage," said Tom Bernes, a former diplomat who is now a distinguished fellow with the Centre for International Governance Innovation.

Then there's shifting position of China itself. Rising salaries have weakened its manufacturing advantage, even as the government pushes for more advanced technology and a cleaner environment, providing new openings for Canada.

"Those are areas where Canada has a great deal of expertise," said Jeffrey Read, a partner at law firm Borden Ladner Gervais with a specialty in China.

But China's own appetite for overseas assets is growing, and its determination often exceeds what is found in Canada. Chinese people and companies aren't just after Vancouver mansions. They want farms, cultural companies and, for Alibaba, the very fabric of commerce – payments.

For 10 years, the company has built a payment system in China that, for mobile transactions is now "the fastest in the world," and much cheaper for vendors than credit cards, Ant's Mr. Chen says.

"We would like to promote this to the world. Everybody can have it," he said.

Ant's services in China include investments and micro-loans. In Canada, it wants to first provide payments, and services like restaurant reviews, to Chinese already using Alipay.

But it also wants to expand into cross-border money transfers, supply-chain financing and investment products in Canada.

There is "a lot of stuff we can do," Mr. Chen said, casting Alibaba as the company that can help modernize finance in Canada. North Americans still write cheques. "But nobody writes cheques in China. We are past that age already."

So far, though, he acknowledges talks with Canada's banks have been a struggle. "We are hoping to progress much faster," he said.

That's why the Trudeau visit was valuable for Alibaba. It's a question of looking for "mutual" benefits, Mr. Chen said.

To build Alibaba's vision for Canada, "you need all this co-operation," he said. "Let's work together for that. It's good for the Canadian companies, for the Canadian consumer."

Editor's note: An earlier digital version of this story stated that James Zimmerman is the president of the American Chamber of Commerce in China; however, he is the chairman. This version has been updated.