Business leaders call for sharper focus on China

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As he addressed a room of Chinese developers sipping Canadian wines last week, selling the virtues of Canadian wood products, Natural Resources Minister Joe Oliver's voice sounded a little hoarse.

For two full days he had been giving variations on the same speech – to a mining conference, to Chinese leaders and entrepreneurs, to a gathering of executives from Canada's liquefied natural gas industry hoping to sell to China: Canada has what China needs.

"My message has been pretty direct," Mr. Oliver said in an interview afterward. "We in Canada have the resources that China needs. We are open for business and we are willing to provide their minerals, energy, forestry and mining needs."

His visit – he was the fourth of five federal ministers to visit China in the past month, along with two provincial delegations from British Columbia and Newfoundland, and a visit by the Senate speaker – was part of Canada's efforts to ramp up its economic courting of Asia. Tourism Minister Maxime Bernier, Trade Minister Ed Fast, Fisheries and Oceans Minister Keith Ashfield and most recently Finance Minister Jim Flaherty have all been in Beijing since mid-October.

But even as federal and provincial governments spooked by gloomy trade winds increase their focus on opportunities in China, there are new warnings that this piecemeal approach – a minister here, a minister there, without a co-ordinated national mission and without an appearance by Prime Minister Stephen Harper – is still allowing Canada to fall behind other nations.

"We are in danger of losing out to countries who have in place more comprehensive strategies," said Peter Harder, president of the Canada-China Business Council. "It's a complex question because overall trade and investment numbers are increasing. At the same time our share of trade and investment is declining."

The Canada-China trade relationship took a hit in Mr. Harper's first years in the prime minister's chair, with an increased focus on China's dark human-rights record. But industry lobbying, combined with a global plunge into an economic crisis eventually eroded that approach, and Mr. Harper paid his first visit to China in late 2009.

Since that time there has been what many Canadians doing business in China call a "sea change" in the government's approach. And in return, state-backed Chinese companies have stepped up their acquisitions in Canada, including Sinopec's $2.2-billion takeover of Daylight Energy, and an undisclosed amount paid by CNOOC Ltd. for Northern Cross (Yukon).

China is Canada's second-largest merchandise trading partner and third-largest export market. Chinese foreign direct investment in Canada is now 14 times higher in 2005, reaching $14.1-billion last year.

But while the volume of trade has increased, critics argue Canada's share of China's foreign trade is actually decreasing, from a high of near 2 per cent to just above 1 per cent now.

Earlier this year the Mr. Harder's business council issued invitations far and wide for official visits that would coincide with the group's annual general meeting this month. The hope was for a return to the sort of Team Canada-style mission used during the Liberal leadership eras of Jean Chretien and Paul Martin.

So far, that hasn't happened, and many business leaders joke that the name Team Canada was buried with the demise of the Liberal government. There is hope that more co-ordinated missions might resume as early as next year.

But it may not come soon enough for Canada's provincial leaders. The premiers plan to visit China as a united front before the end of 2012 and have invited Mr. Harper to join them, though he hasn't yet responded.

Previously expected to visit China after the APEC summit in Hawaii, Mr. Harper is now thought to be considering a trip early next year.

"With the world in economic turmoil there are two spots in the globe where you can see real growth, and that is Asia, which I define widely, and Western Canada," B.C. premier Christy Clark said in an interview during a stop in Beijing last week. Her trade delegation was of unprecedented size – 320 political, business and community leaders – with a heavy focus on LNG, wood products, tourism and agricultural products.

Plans for natural-gas marine terminals in Kitimat, B.C., that could ship fuel to China, opening a new and potentially very lucrative market, received heavy promotion during the mission, though the pipeline that would carry LNG has not yet received approval.

"We know [China is]looking for a safe haven for investment and British Columbia, with a Triple-A credit rating, is that safe harbour," Ms. Clark said.

Though these provincial efforts help promote Canada in China, there are drawbacks: Chinese provinces enjoy neither the autonomy nor the power of their Canadian counterparts, complicating protocol during official visits. Canadian embassy staff are said to frequently find themselves trying to explain their visitors to the Chinese government officials they hope to meet.

"Canada, as a G8 country, has no developed, consistent dialogue with China at any level, federal or provincial," said Wenran Jiang, a research chair in the University of Alberta's China Institute and Asia-Pacific Foundation fellow who specializes in Asian energy investments in Canada.

Though he said he sees a lot of "momentum" in a positive direction, Mr. Jiang warns good intentions are not enough.

"We are not pro-active enough," he said. "I think that's where we are, although I think there are good intentions now. I think most of the ministers in Harper's government are committed now … And yet somebody has to do something to get better organized."

Special to The Globe and Mail