The financial crisis in Asian markets may have scared investors, but a spokesperson from Canada’s embassy in Beijing, China, says the region is still a good place to do business.
Guy Saint-Jacques, one of 25 diplomats to tour Canada in March, said China was not hit as hard by the crisis as other countries.
“Last year they had a trade surplus of over $40 billion U.S.,” he said. “Their current account is positive. They sit on a very large foreign reserve of $140 billion. Their foreign debt is manageable, especially the short-term debt is not very high.”
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The country enjoyed 8.7 percent economic growth last year, and is forecasting eight percent this year.
Saint-Jacques said China will be affected by the crisis because its trade with other southeast Asian countries will be reduced.
But the country is responding by tackling some political and economic reforms that will make international commerce easier.
“China is taking the right attitude and learning the lessons from the financial crisis,” Saint-Jacques said.
Bureaucracy trimmed
The bureaucracy could be cut by half, the banking system is being reformed and the country has announced a three-year, $1 trillion infrastructure renewal program.
That’s where opportunities for Canadian companies come in.
Saint-Jacques said many Canadian businesses have expertise in the areas of road construction, telecommunications and other infrastructure sectors.
“The message to companies is it’s less and less difficult to do business with China,” he said of the diplomats’ domestic Team Canada mission. “They are putting in place regulations and the laws that will reassure our investors and our companies. It will become more and more predictable and transparent.”
In terms of trade, negotiations to include China in the World Trade Organization will continue April 8 in Geneva, Switzerland, where Saint-Jacques said Canada hopes China will offer to revise its tariffs.
“There’s not much that separates us but there are important sectors for Saskatchewan and Alberta, for instance canola oil, where we want the tariffs to go down,” he said. “There are a few other areas in the agricultural sector where we hope to get better tariffs and help out companies in Western Canada.”
Canada’s overall trade to China dropped 25 percent last year to $2.22 billion. Saskatchewan has traditionally been the largest exporter to China among the provinces, although last year it was $17 million behind Ontario. In 1997, exports totaled $447 million, down from $712 million the previous year.
“The main reason for the drop is cereals,” Saint-Jacques said, because China has had two good harvests. “The export of cereals went down 66.7 percent to $358 million.”
However, even if bulk wheat exports decline the potential in the food sector is great, he added, because the standard of living in China is rising. As people change their diets there are more opportunities for Canadians to provide food products.
Saint-Jacques said smaller companies that can’t devote the resources they need to develop a business relationship in China can follow larger companies, or use Hong Kong as a springboard.
“Small companies have to have a niche and a long-term commitment,” he said.
