Canada en route to much stronger trade ties with China, envoy says

China’s ambassador to Canada says the Harper government’s about-face regarding his country has strengthened bilateral relations and should foster a major increase in trade and investment.

Ambassador Zhang Junsai says relations between Canada and China are rapidly improving now that Ottawa has recognized the need to diversify its economic and trading focus beyond the United States and Europe. The diplomat also cited Canada’s return of a high-profile Chinese fugitive as a key milestone that will fortify the bond between the two countries.

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Mr. Zhang said he expects trade between Canada and China to continue to increase and predicts more Chinese foreign direct investment in Canadian companies and assets as a result of Prime Minister Stephen Harper’s government’s shift in policy towards the Asian economic superpower.

“After a few years, the [Harper] government has been exposed to international affairs,” Mr. Zhang said in an interview at the Chinese consulate in Vancouver.

“China is playing an increasingly peaceful and constructive role in the world. China has performed very well during the financial crisis and I think all this is seen by the Canadian people that China is making contributions to the world economy,” he said. “More importantly, China has a huge market. There is a great potential for both countries to develop friendly relations.”

Concerns about China’s human-rights record and a pledge not to sell out those values to the “almighty dollar” saw Mr. Harper wait five years from the time he took office before making his first official visit to China in 2009. The Prime Minister was chided during his stay by China’s Premier Wen Jiabao for waiting so long to come to Beijing.

Nonetheless, the trip represented a key change in the relationship that set the stage for recent improvements, according to Mr. Zhang, who was appointed ambassador nine months ago.

“I would say the present state of the relationship is very warm. It is warming up.”

Since winning a majority this spring, the government has ramped up its focus on China, which is now the world’s second-largest economy and Canada’s second-largest trading partner, behind the United States. John Baird travelled to China in July, just weeks after being appointed Foreign Minister, conceding that the world’s largest exporter is “incredibly important” to Canada’s future prosperity.

In the fall, Mr. Harper is expected to travel to China, where he will be under pressure to win an investment-protection agreement that would shield Canadian businesses operating in China from unfair treatment. In return, China hopes Canada will permit Chinese companies to increase the amount of investment in Canadian resource companies producing minerals, lumber, oil and gas and other commodities needed to fuel China’s fast-growing economy.

“Canada’s trade with China is not enough. ... In the first seven months of the year we have seen the amount of lumber exported to China from B.C. increase by 80 per cent. That is terrific,” the ambassador said.

Trade between Canada and China increased 30 per cent last year, Mr. Zhang said, and has risen 31.7 per cent in the first seven months of 2011. Still, Canada’s share of China’s international trade remains tiny and in the past year-and-a-half, China accounted for less than 6 per cent of foreign direct investment in Canada.

According to a recent survey by the Asia Pacific Foundation of Canada, the vast majority of Canadians continue to oppose Chinese state-owned enterprises buying major Canadian companies or resource assets. Mr. Zhang hopes the improved bilateral ties will reduce Canadian’s skepticism about state-owned businesses.

“Canadians should look at these investments objectively. These [Chinese] companies are not here to take over all of your companies. They just want to participate – take some shares to join you,” he said.

The ambassador said China was “very pleased” by a Canadian court’s recent decision to return the notorious fugitive Lai Changxing, who is accused of operating a bribery and smuggling ring in China. Mr. Lai remained in Canada for more than a decade as his lawyers argued that if he were returned to China he would be tortured and face a possible death sentence.

Mr. Zhang said he made sure that Canada’s Foreign Affairs Ministry was made aware of recent changes to potential penalties for accused white-collar criminals in China.

“Earlier this year we had a change in our criminal law for economic crimes. The regulations have removed the death penalty for some economic crimes. All this paved the way, especially the removal of the death penalty for certain economic crimes. As for the torture, I don’t think Mr. Lai and other criminals in the prison will be ill-treated. We have very strict regulations governing our police.”

Asked if the changes will apply to Mr. Lai, the ambassador said, “I think so. But what sentence Mr. Lai receives will come from the court. According to Chinese law he will be given due punishment.”