China-Canada Discuss Strengthening of Trade at APEC 2012
The Asia-Pacific Economic Cooperation Summit taking place in Vladivostok, Russia, this week will be attended by diplomats and representatives of key global businesses, providing a host of opportunities for discussions on trade between countries participating in the APEC summit. Canadian Prime Minister Stephen Harper and Chinese President Hu Jintao reportedly inked an agreement at the summit which will offer a measure of protection to Canadian businesses interested in investing in China. President Hu stated that China sees the relationship between Canada and China as being of ‘great importance’, noting that the two countries have a lot to offer each other.
With China pumping up to $158 billion into infrastructure projects over the next three years, Beijing has made known its willingness to consider bids from Canadian firms on these projects which include subways, power stations, airports, waterway and highways. There was also some discussion on the possibility of Canada and China entering into a free trade agreement in the future. The discussions at the APEC summit continue to build on a relationship strengthened by Prime Minister Harper’s visits to China in 2009 and 2012, and Presiden Hu’s visit to Canada in 2010.
Analysts, however, warn that the Canada-China trade relationship is currently skewed in favor of China. The bid by China National Overseas Oil Corporation (CNOOC) to take over Canadian oil company Nexen is a case in point. If approved by Canada, which appears to be a distinct possibility, the transaction would be valued at 15.1 billion Canadian dollars – making it China’s single largest foreign energy investment. As is the case for all substantial foreign investments in Canada, the proposed Nexen deal will be reviewed by authorities under the terms of the Canada Investment Act. It is anticipated that the international investment community will be keenly interested in the outcome of Canadian authorities weighing the pros and cons for approving or rejecting the proposal, bearing in mind that a positive decision is likely to be seen by China as a signal to pursue further acquisitions in Canada. Alternatively, a rejection of the proposal may damage future bilateral investment opportunities.
While it is never realistic to expect a perfect balance of trade between countries, it has been pointed out that Canadian statistics reportedly reveal exports from China to Canada, and from Canada to China, to be at a 3-1 ratio in China’s favor. It remains to be seen if Canadian firms will be able to reduce this ratio by being given the opportunity to invest in China’s infrastructure projects over the next few years.