Canadians are missing the point in their debate over increased trade with China, according to one Canadian foreign policy expert.
"The debate that Canadians need to have, and the debate we’re really not having," according to Kim Nossal, director of Queen’s University’s Centre for International and Defence Policy, is on where we will fit as relations between the U.S. and China change.
The proposed $15.1-billion U.S. bid by state-owned China National Offshore Oil Corp. (CNOOC) for Calgary-based Nexen and Enbridge’s bid to build a pipeline to carry Alberta oilsands crude to the west coast has led to much discussion about the bilateral relationship.
But what we should be talking about, Nossal says, are "the implications for us, as a small country that has relations with both the United States and with the People’s Republic of China, as the relations between those two great powers begin to shift and change in the next decade or so."
Nossal has a unique perspective, having being born in Australia and spent time in Beijing and Hong Kong beginning in the 1960s.
He continues to do research on Australia’s foreign and defence policy. And he’s watched the surge in China’s trade with Australia –an economy very similar to Canada’s in terms of its weighting in commodity exports — especially in the last decade.
China-Australia trade worth $85 billion.
The two-way merchandise trade between China and Australia has soared from $113 million Australian in 1973, just after the two opened diplomatic relations, to $78.2 billion in 2009, making China Australia's largest trading partner.
Add in services, and the total trade in 2009 was worth $85.1 billion, up 15.1% over the year earlier.
In 2010, Canada’s bilateral merchandise trade with China totaled $57.7 billion.
Martin Jacques, in his book When China Rules the World, describes China’s growing economic power over the last decade as exercising a "mesmerizing" effect on Australia.
Quoting London’s Financial Times, Jacques says "increasingly, Australian financial markets follow signals from China rather than the U.S., while the correlation between the value of equities in Shanghai and Sydney has strengthened every year since 2004."
Notwithstanding that Canada and the U.S. have the most integrated economies in the world, it seems likely that Canada will follow in Australia’s footsteps, Nossal says, including in the area of long-term Chinese investment in the energy and resource sectors.
From November 2007 to May 2010, the Australian government has approved more than 160 proposals for Chinese investment in Australian business, with a total value of $60 billion.
Former federal cabinet minister Jim Prentice, now an executive vice president of CIBC, agrees ties will grow.
"Asia is where the growth of today is, and where the growth of tomorrow will be," Prentice said in a speech to the Canadian American Business Council Monday.
"So that's where we need to be."
And, at the same time, Prentice warned that growing trade with Asia would have implications for our relationship with the U.S.
"We would be naïve" to think otherwise, he said.
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