IN THIS EDITION: Re-engagement strategies for China, China to increase imports, Agri-Food trade and politics, Australia’s pain – Canada’s coking coal gain

Re-engagement strategies for China on agricultural issues

How does Canada move forward on trade with China in the agriculture sector? CWF’s Carlo Dade, Director of the Trade and Investment Centre, and Sharon Sun, Trade Policy Economist, explore strategies to prepare now for re-engagement when the time is right in a new report, available here. The report makes the case that not preparing to re-engage with China does nothing to advance Canadian interests; it only helps our competitors who continue to engage and make progress despite setbacks in some areas. The report also dives into the harms done to China and Canada by the U.S. Phase One trade agreement. 

The Western Producer and Manitoba Co-operator both interviewed Carlo on the report. Read the Producer piece here and the Co-operator piece hereCarlo and Sharon also participated in a recent episode of the Between the Rows podcast, which you can listen to here. 

China to increase imports over next ten years

CWF’s report on agricultural re-engagement is timely given the recent positive news out of China on imports. In recent comments at the China International Import Expo, President Xi said he expects that over the next ten years the accumulated total of Chinese imports will reach $22 trillion.  

In terms of agriculture, recent Chinese import figures show noteworthy increases for crops globally and for Canada. In comparisons of September 2020 to September 2019 imports, China had a 585 per cent increase in wheat imports, 675 per cent increase in corn imports, and 57 per cent increase in barley imports.  

Canadian specific figures show that between June and September 2020, China received 53 per cent of Canada’s total barley exports, 23 per cent of Canada’s total canola exports, and 34 per cent of Canada’s total pork exports. The question now becomes will these gains continue over the coming years, especially with China’s expected increase to imports. 

Agri-Food trade and politics

Our friends at Agri-Food Economics Systems have a new deep dive into how Canada can negotiate trade within tense political situations, primarily with the U.S. and China. The report suggests that distinct trade policy approaches for each country may help overcome the trap of the U.S.-China dichotomy. Among the recommendations in the report is that Canada export more processed agri-food products to China, rather than raw materials, as brand loyalty or product loyalty makes it more difficult to restrict. The report uses the example of Apple as the brand is very popular with Chinese consumers and the Chinese government would face difficulty in restricting Apple specifically due to this popularity. Read the full policy note here.  

Australia’s pain – Canada’s coking coal gain

Canadian company Teck, which is the world’s second largest miner of seaborne coking coal, reports increased Chinese demand over and above projections. China recently placed trade restrictions on Australia, where the world’s largest miner of seaborne coking coal is based. Indonesia has also had decreased thermal coal shipments to China. For more on China’s impacts on global coal trade read this Financial Post article. 

While China previously placed trade restrictions on beef and barley, the Chinese government told importers to curb sugar, barley, red wine, timber, coal, lobster and copper imports from Australia. The move comes as Australia has announced an inquiry into the COVID-19 pandemic’s origins and early stages. China may also add wheat to the list of restricted imports, which could benefit Canada.  

Canada behind China on energy transition minerals

As global demand for minerals key to the energy transition increases, Canada could be a source for those minerals, particularly copper, aluminum and nickel. However, global prices will have to increase for these products before Canada can attract the investment capital to build the requisite infrastructure. China has already taken significant steps to secure access to these key metals despite the low prices and when Canada is ready to enter the market, will face Chinese competition. 

China’s Operation Fox Hunt leads to CSIS warning

The Canadian Security Intelligence Service (CSIS) has warned Chinese Canadians that China may pressure them against criticizing the Chinese government and threaten retribution against family still in China. 

The House of Commons Special Committee on Canada-China Relations recently heard that the federal government must do more to curb Chinese Communist Party propaganda within the Chinese-Canadian community. One recommendation is to require that all lobbyists must disclose whether their work is on behalf of a foreign government. Federal Conservative Party leader Erin O’Toole pushed for Canada to take a tougher stance on China and take measures to protect the Chinese-Canadian community from propaganda and influence. Federal Minister of Foreign Affairs Francois-Philippe Champagne said that Canada will not tolerate these actions and criminal charges could be pursued. At some point it would be helpful if all parties moved from sound bites to in-depth strategy papers on major challenges like China. 

Regional Comprehensive Economic Partnership

Fifteen countries, the ASEAN bloc and its top trade partners, formally signed onto the Regional Comprehensive Economic Partnership (RCEP) on Sunday; the partnership now constitutes the world’s largest regional trade bloc. There are now two massive multi-party trade agreements – RCEP, which includes China, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), from which the U.S. walked away. While reports have characterized RCEP as China-led, this was an ASEAN pact led by Indonesia and ASEAN nations analogous to how the original Trans-Pacific Partnership agreement was led by Chile, New Zealand and Singapore. While the RCEP is a less ambitious agreement than CPTPP it is still a comprehensive agreement with significant improvements to the terms of trade in the region. The agreement, however, has different tariff schedules for members on different products. Australia and New Zealand will see benefits in terms of access to Asian markets and another forum to engage China. As Canada does not have a trade agreement with the ASEAN bloc, the federal government could not participate in negotiations. The RCEP is yet another sign that Canada’s allies who have strained relations with China are not walking away from the country – just the opposite.  

Hong Kong immigration

Canada will open new paths to immigration for residents of Hong Kong and will not bar those who have violated Hong Kong’s national security law from entry. The first path applies to students and will extend the time they are permitted to stay in Canada on work permits; the federal government will waive fees for students already in Canada to reapply. The second path applies to recent graduates in Hong Kong and will provide new work permits for which they can apply; those already in the country on work permits will have an easier path to residency. The move comes as the federal government has said it will increase immigration to 1.2 million over the next three years. The Alberta government also announced transition plans for its provincial immigration streams to focus on tech startup development and entrepreneurship, as well as to draw in graduates from the U.S. as the American government has restricted H-1B visas. For more on those changes and the need for tech development in Western Canada, see this edition of CWF’s Future of Work and Learning Brief. 

Everything else

• In a recent op-ed, CWF board member Jack Mintz argues that regardless of who is the president, Canada must continue to work closely with the United States when it comes to China. Canada should engage in trade with China as long as China follows international rules. 

• Following up the previous China Brief, Ant Group’s record-breaking IPO did not go forward as the Chinese government announced restrictions on micro-lending. The company is expected to lose $150 billion from its valuation following the move.

• The Commission of Inquiry into Money Laundering in B.C. continued, hearing a former BCLC investigator describe how BCLC managers and executives attributed Chinese VIPs losing large sums of cash at casinos to cultural preferences for cash rather than purposeful money laundering. 

• Bob Rae, Canada’s Ambassador to the United Nations, pushed for the UN to investigate claims of genocide in Xinjiang, China. China fired back and said that Canada better fits the definition of genocide than China due to the population growth rates in Xinjiang. 

• The Canada Border Services Agency temporarily stopped a Chinese ship from delivering steel pilings to the Port of Kitimat for the $40 billion LNG Canada project but offloading continued later in the day. The International Longshore and Warehouse Union filed a complaint that the ship crew had no work permits, security clearance, Labour Market Impact Assessment required for foreign workers, nor port safety training which are all required. The project previously drew scrutiny for the import of steel from China rather than sourced from Canadian companies. 

– Stephany Laverty, policy analyst

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.