IN THIS EDITION: Oil and gas in China-Iran 25-year deal, potential barley opportunity, experts share opinions on how return of Chinese tourists and students will unfold


Oil and gas under China-Iran 25-year deal

China and Iran signed a strategic cooperation deal, which includes a section on oil and gas. Iran recently increased its oil production to 3.9 – 4 million barrels per day, up from a few hundred thousand under U.S. sanctions. It is estimated that China will receive a record 27 million barrels of oil this month from Iran. David Messler with OilPrice.Com takes a closer look at what the “fast growing force” of Iran-China means for the oil market. 

China’s Foreign Minister Wang Yi recently made a trip to the Middle East. As part of the wrap up of his tour, Minister Yi promised Saudi Arabia, Turkey, Iran, the UAE, Bahrain and Oman China’s support against U.S. pressure. 

Potential barley opportunity

With the Chinese government’s move to food security, animal feed has seen some changes which benefit Canada. A recently released China Swine Industry Journal article cited a government document (Chinese version here) which makes the case for the switch from soy and corn-based feed to include alternatives like wheat and barley.  

Jerry Klassen, who manages the Canadian office of Swiss-based grain trader GAP SA Grains and is also founder of Resilient Capital, gives his predictions for the year in Grainews. Klassen says that while Ukraine is subject to export restrictions, French and Canadian farmers have both increased barley production compared to the previous year; “China can easily absorb the year-over-year increase in barley production from Canada and France.” 

However, there could be additional competition on the barley front. The Argentinian government recently floated, and discarded, the idea of wheat export taxes. Some wheat farmers are looking to barley as they are concerned that the government will bring in other regulations for wheat and China’s demand for barley is promising. As the crops grow at the same time, farmers need to decide which one to plant this year. 

The extent of ban on canola

Leftfield Commodity Research, in a report for the Canola Council of Canada, determined the impacts of the China canola ban between March 6, 2019 and July 31, 2020. 

  • If no ban in place, the report estimates an additional 2.15 million tonnes would have been exported. 
  • Total cost to farmers estimated to be between $681 million and $1.3 billion. 
  • Net loss in canola export sales estimated to be between $859 million and $1.051 billion. 
  • Aggregate loss estimated to range from $681 million to $1.304 billion. 

Federal opposition leader Erin O’Toole said that Canada needs to diversify from China to reduce the risk of similar economic actions in the future. The comments were made at an event for the Winnipeg Chamber of Commerce. 

Sanctions on Canadians

Canadian and U.S. officials were recently subject to Chinese sanctions. The move follows Canada’s participation in multilateral sanctions against Chinese officials with ties to the Xinjiang region over genocide concerns result in Chinese. Chinese sanctions were enacted for MP Michael Chong and the Subcommittee on International Human Rights of the Standing Committee on Foreign Affairs and International Development of the House of Commons of Canada. U.S. officials Gayle Manchin, Chair of the United States Commission on International Religious Freedom (USCIRF), and Tony Perkins, Vice Chair of the USCIRF were also sanctioned. China also called out historical actions against minority groups in Canada and the United States in response to the multilateral action. 

Shipping container crisis to last longer

Mai Boliang, Chief Executive at China International Marine Containers, estimates the shortage will push into September now. The Suez Canal blockage is partially responsible as containers are delayed, compounding earlier problems. The price of steel continues to increase in China, which makes the containers costly to produce. China currently makes about 98 per cent of shipping containers.  

G7 and industrial subsidies

G7 trade ministers issued a statement at the end of the inaugural Trade Track. Part of the statement said “Trade ministers will discuss the impact market-distorting practices, such as harmful industrial subsidies, including those causing excess capacity in some sectors, are having on our economies and chart a way to address these collectively.” Politico has more on what the statement means in terms of China, which often subsidizes its industries. 

Liz Truss, UK trade secretary and representative at the meeting for the UK, which holds the G7 presidency, said that the WTO needs to “get tough on China” and reform rules. Chinese Foreign Ministry spokesperson Hua Chunying said that “these countries are calling for tailor-made new rules for China […] to ensure they always win” and called for “true reform.”  

In other news

  • China may lead the global economy but Canada dominated the house this week as Team Canada beat Team China 6-5 at the 2021 World Men’s Curling Championship. The US edged out China 5-4 in China’s first round robin game of the match. Canada currently sits at second while China is currently last in the tournament ranks. 
  • In a recent S&P report, Michael Thomsen, a rare earth minerals expert, says the government might have to put some money into efforts to compete with China on the mineral front.  
  • In testimony to the House of Commons committee on natural resources, representatives from the Canadian Mining Association and mining companies made the case for Canada to assert control over domestic strategic metals. Simon Moores, managing director of Benchmark Mineral Intelligence, testified that in terms of capacity to build lithium-ion batteries, China alone will hold about 67 per cent global capacity while North America will have about 12 per cent by 2030.  
  • Federal Minister of Innovation, Science and Industry François-Philippe Champagne said that the Five Eyes Nations should coordinate and collaborate on those areas that are sensitive, such as minerals and technology. 
  • Xiaomi, which makes phones in China, announced it is investing $10 billion yuan to manufacture electric cars. Lei Jun, co-founder, will take the lead on the initiative. 
  • H&M faced retaliation from Chinese consumers over the move away from Xinjiang cotton, but confirmed that it would continue to do business in China despite the backlash.  
  • Canada has not taken steps to prevent the sale of Xinjiang cotton products in Canada, according to a recent Globe and Mail article, despite officials saying they would prevent forced labour goods from entering Canada.
  • Canadian warship HMCS Calgary passed through the South China Sea with a Chinese warship shadowing the vessel.
  • Will Canada join the United States, India, Japan and Australia and become a member of the Quadrilateral Security Dialogue, the Quad? A Globe and Mail article explores the likelihood. 

Spotlight Feature

The Question  

As vaccines roll out and international borders slowly reopen for travels, how do you see the return of Chinese tourists or students unfolding over the coming months or year in western Canada? 

The Insights 

The views expressed in this section are opinions and do not necessarily reflect the views or positions of the Canada West Foundation or the China Brief authors.


 Robert J. Hanlon, Ph.D., Associate Professor, Department of Philosophy, History and Politics and Director, Canada and the Asia Pacific Policy Project, Thompson Rivers University 

As the global vaccine effort ramps up and borders begin to open, China will once again serve as a top source of overseas travellers and students to Canada. Yet Canadians should prepare for an extended period of uncertainty as the global health crisis will most likely have a long-term negative impact on tourism and international education well into 2022.    

While vaccine passports will play a role in restoring confidence for international travel, Canada will be competing with other advanced economies such as Australia, the European Union, and the United States.  A vital question for the both the tourism and education sectors is to ask what can Canada give back to these visitors?    

It’s important that these sectors do not only think of China’s tourists and students as dollar signs. Rather, they represent a strategic pillar in Canada’s post-Covid social and economic recovery. What’s more, these sectors are vital for improving Canada-China relations which are at historic lows on account of the global health crisis and a protracted diplomatic crisis.    

China’s recent Fifth Plenum communique highlighted a new approach to international cooperation that rethinks the global community as a multipolar economic order.  Canada’s education and tourism sectors will play an important part in building bridges in this nascent system through cultural, academic, and social exchange.  

Provincial planners should be thinking of pragmatic strategies to welcome China’s tourists and students back to Canada while also being prepared to address social challenges that will likely appear such as racism, inequality, and a general sense of anxiety towards international travellers.    

Educational administrators should be thinking about innovative programs that appeal to international students such as micro-credentials. What’s more, bolstering intake of students in key fields of interest for students from China such as science and technology, humanities and social sciences, as well as international law and business administration.    

Finally, business owners should be prepared to welcome the waves of tourists that will return as was witnessed post-SARS. At the same time, not forget or lose sight of new customers and stakeholders that kept them afloat throughout a catastrophic year.


Erin Williams, Senior Program Manager, Asia Pacific Foundation of Canada 

The worst-case scenario of a big drop in international students, including from China, does not seem to be materializing for the 2021-22 academic year. Many post-secondary campuses are expecting to resume in-person classes in September, which will be important to returning to something like the pre-pandemic normal. Of course, there are a couple of wild cards in this scenario. One is our sluggish vaccination rates. The other is the alarming rise in anti-Asian racism and anti-China rhetoric. It remains to be seen whether students and their families will factor either of these into their education plans. But the number of Chinese students in Canada has leveled off in recent years, and we shouldn’t expect any major growth, especially as the size of China’s youth population also levels off. Moreover, as Chinese universities climb the international rankings they even might be able to persuade more of these students to stick closer to home. 

 


Cover photo by Louis Paulin on Unsplash