In this issue: China to ease Shanghai restrictions, Canadian business community in Asia responds to CWF trade infrastructure report, Belt and Road and Five-Year Plan Monitor
China to ease Shanghai restrictions
Shanghai, home to the largest seaport in the world and a lynchpin in global supply and production chains, has been in lockdown for over six weeks. Al Jazeera has reported that restrictions will gradually be lifted with normal life resuming on June 1. The announcement comes after weeks of restrictions under China’s COVID zero policy which saw tensions boil over in the city.
The lockdowns are contributing to global supply chain congestion. An RBC study found 20 per cent of the global container ship fleet is stuck at ports around the world. This month Shanghai reported a backlog of 344 ships— a 34 per cent increase from last month. Chinese shipments to the United States are delayed up to 70 days. On the other hand, Bloomberg reports that North American ports are seeing record high imports and preparing for summertime surges in shipments as consumption remains high and retailers replenish. Either way, demand and pressure on supply chains, availability of shipping containers, etc., will likely not diminish anytime soon. There is hope that easing restrictions will help global supply chain challenges, but Canada is also facing its own home-grown infrastructure challenges, which also impact Asian trade.
CWF trade infrastructure report draws response from Asian business associations
While Canada’s ability to realize opportunities in foreign markets with growing demand is often taken for granted at home, its ability to deliver product is a major worry of foreign buyers as Canada’s global ranking for trade infrastructure has dropped from top ten to 32nd. A new CWF report, From Shovel Ready to Shovel Worthy, highlights the country’s trade infrastructure declines and suggests Canada draw lessons from its competitors and build a long-term, national plan of shovel worthy projects. The report is receiving support from the business community in Asia, including the Canada China Business Council and the Canadian Chamber of Commerce in Japan. Read the report and comments on the report’s findings by these organizations as well as remarks by others including former EDC chief economist Peter Hall.
Canada and the U.S. look to ASEAN
A CBC article notes U.S. Trade Rep. Katherine Tai visited Canada’s International Trade Minister Mary Ng to discuss, among other topics, the establishment of a common trade agenda with autocratic nations in the face of a new global order. Shortly after Tai’s visit to Canada, Biden hosted the U.S.- ASEAN summit and announced a $150 million investment in Indo-Pacific infrastructure and development, Reuters reports. Analysts and some ASEAN leaders expressed cynicism over Biden’s move and described it as a way to push “ASEAN to the front in provoking China to serve its Indo-Pacific strategy.” As Canada develops its Indo-Pacific strategy amid a changing world and negotiates an ASEAN trade agreement to give ASEAN North American market access these developments will be worth monitoring.
Chinese market for future foods
As traditional protein trade weakens and production prices soar, the Chinese government looks to future foods and seafood. With the Five-Year Agriculture Plan’s prioritization of food security, Chinese domestic investments in lab-grown meats and plant-based proteins are up, South Morning China Post reports. Canadian processers will want to keep an eye on China’s plans to build this domestic market because China is a potential competitor in the growing global plant protein and ingredient market.
CWF’s Belt and Road Monitor and Five-Year Plan Monitor
China’s multi-billion dollar Belt and Road Initiative (BRI), the state-backed global infrastructure development strategy, has the potential to enormously shift global trade through new levels of infrastructure and supply chain integration in the Asia-Pacific region as well as globally. These shifts have the potential to alter global markets for western Canadian-produced commodities. As part of the Canada West Foundation’s efforts to track the Belt and Road Initiative and what it means for Western Canada, the China Brief will now include a section with relevant BRI developments. We welcome feedback as we continue to develop this new feature.
Belt and Road frustration in the Indo-Pacific
India’s Ministry of External Affairs launched the Trilateral Development Corporation (TDC) India’s Economic Times reports, which would see “big-ticket investment” in the region and elsewhere to counter the BRI through joint private and state funds. From the same report, India and the U.K. have announced a Global Innovation Partnership which would use funds from the TDC as India’s contribution for trilateral partnerships with the U.K. and other partners, such as the EU, for investment in Africa, Asia and the Indo-Pacific.
China’s first ever five-year bioeconomy plan
China’s National Development and Reform Commission released the country’s five-year plan for the bioeconomy, China Daily reports. The plan, according to the report, will “[focus] on protecting and using biological resources and deeply integrating medicine, healthcare, agriculture, forestry, energy, environmental protection, materials, and other sectors.” Caixin Global adds that the plan aims to raise the sector’s value to 22 trillion yuan and revenues above 10 million yuan.
BRI growth in Latin America continues
As Argentina and Nicaragua have signed BRI agreements over the past few months, recent developments in Columbia (FTA with Canada) and Brazil (target for FTA negotiations and major exporter of much of what Western Canada exports) could pave the way for similar agreements.
The Chinese National Offshore Oil Corporation (CNOOC) began development on Brazil’s subsalt ultra-deepwater oil field. The Global Times describes this project as “an important achievement for in-depth cooperation between China and Brazil.”
The U.S. announced a proposal to improve Latin American economies and strengthen ties between the two regions and counter China’s continued role in the region. The proposal would look to address supply chains and create economic stability to attract private investments to the area and comes ahead of a U.S.-led summit in the region.
- Coal production continues to play a big role in China’s domestic energy plans. The People’s Bank of China recently increased the re-lending quota for the industry by 100 billion yuan (USD$147 million) to support “clean and efficient use of coal.” According to the China Coal Transportation and Distribution Association, China’s coal output will be seven per cent higher in 2022 than in 2021.
- According to Quartz, a business-focused, international news organization, the Chinese central government is looking to raise the official retirement age. Since 1951, the official retirement age for men has been 60, and 55 or 50 for women depending on the type of work. By raising the retirement age, increased job competition in China could ultimately lead to young Chinese workers looking internationally for jobs.
- Nikkei Asia, has announced that a state-owned company, Shanghai Electric Group, recently reported more than $650 million in losses during the building of a solar power station in Dubai. The company was championed by President Xi Jinping and was a part of the Belt and Road Initiative. The losses were due to cost overruns, unpaid bills and corrupt management.
- Canada wants to expand wheat export opportunities. The Government of Canada is giving Cereals Canada Inc., the Canada Grains Council and the Prairie Oat Growers Association $4.4 million to identify new opportunities for Canadian grains. Chinese online news outlet, China.org.cn, also reported on the announcement.
- A South China Morning Post article highlights the world’s highest weather station on Mount Everest, installed by a 12-member team of Chinese researchers. The ‘Summit Mission’ project is a high-precision radar used to measure weather conditions on the peak of the world’s highest mountain.
– Stephany Laverty, Taylor Blaisdell, policy analysts, and Connor Watrych, policy intern
The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.