Wednesday, January 17, 2007

Ottawa aims to rebuild frayed ties with China


BEIJING, OTTAWA -- After nearly a year of friction and neglect in Canada-China relations, the Harper government is launching a big push to rebuild ties with Beijing, including plans to target China as one of 10 markets that will be the focus of Canada's trade efforts.

It's an apparent sharp reversal from just two months ago when Prime Minister Stephen Harper traded barbs with the Chinese and vowed never to sacrifice human-rights concerns on the altar of the "almighty dollar" -- even if it cost business.

This week, a new tone was evident, with International Trade Minister David Emerson and Finance Minister Jim Flaherty making high-profile visits to China to try to restore good relations.

"I would characterize it as re-energizing a relationship that has been very deep and very strong for a long time," Mr. Emerson said yesterday at a news conference in Beijing.

Business groups, which were concerned the diplomatic tiff was hurting trade, applauded the renewed emphasis on commercial relations with China. But they noted that the visit by the two ministers was a far cry from the so-called Team Canada trips that Liberal prime ministers used to lead.

Private-sector players say they believe the Prime Minister's Office is pursuing what it has called a "two-track approach to China," in which Mr. Harper reserves the right to criticize Beijing's human-rights record while leaving his economic ministers to keep trade and business relations humming.

"Prime Minister Harper is not going to stump for Canadian companies the way prime minister Chr├ętien did," one senior Toronto business official said. "He is not the Team Canada cheerleader-in-chief . . . but believes that's the purview of the minister of trade."

In a speech last night, Mr. Emerson said the Tories are developing a "China strategy" that will be financed with new money in the forthcoming federal budget, along with additional money from reallocations within the Trade Department.

China will be one of about 10 "strategic markets" that will become the focus of Ottawa's trade efforts, based on an internal government study of the countries with the best prospects for trade with Canada, Mr. Emerson said.

He did not identify all 10 countries, but said they would include China, India, Brazil, Vietnam and perhaps other Southeast Asian countries. "China is way up on that list," he said.

The Tories are under pressure from the business community to improve Canada-China relations, which fell into disarray last year. Mr. Harper snubbed the government by declining an invitation to visit Beijing and refusing to send any cabinet ministers to China until late in the year. He also criticized China's human-rights record, provoking a frosty response. Canadian business leaders were increasingly worried that tensions would damage prospects in China, as were some government departments, officials said.

Mr. Emerson acknowledged that Canada has suffered "a little period of remission" in its relationship with Beijing, but said this setback could lead to a "more strategic, more aggressive, more constructive engagement" that could strengthen relations in the long term.

He maintained that his government can improve economic relations with China while retaining the right to criticize its human-rights record.

"As Canadians, we do carry our values and perspectives beyond Canada to the rest of the world," he said. "We talk candidly about democratic governance, about the importance of the rule of law. . . . Open discussion and engagement in these broader issues should not conflict with commercial interests."

But China watchers warn that Ottawa cannot continue to publicly hector Beijing on human rights and assume that trade won't be affected.

Wenran Jiang, director of the University of Alberta's China Institute, said the notion that two nations can have "cold" political relations but "hot" economic relations will not fly in Beijing.

"That is not going to work with Canada and China," he said. "We have cold politics and lukewarm economics." He said the Chinese can take criticism but not "grandstanding statements" such as the ones Mr. Harper made last year.

In an interview, Mr. Emerson acknowledged that the new trade strategy has some similarities to the previous Liberal government's policy of expanding the number of trade offices in China. The Liberals announced in 2005 that a network of trade offices would be created in 25 Chinese cities, but the plan was scuttled after the Liberals lost the federal election last year.

In his speech, Mr. Emerson said Canada is losing ground to its rivals in the Chinese market. Canadian exports to China grew only 2.3 per cent in 2005, while the United States recorded a 9.14-per-cent increase and Australia reaped a 40-per-cent jump. "For Canada, I suspect 2006 was even worse," he said.

Business leaders said the government's new push is long overdue. "We just don't have the troops on the ground that we need," said Nancy Hughes Anthony, president of the Canadian Chamber of Commerce, who is traveling in China this week.

But the visit to Beijing by the two cabinet ministers is not enough to resolve the tensions in the relationship, she said. "There should be concrete plans for visits by the Prime Minister and the Foreign Minister. So far, they've been missing in action."

Howard Balloch, a former Canadian ambassador to China who is now the head of a consulting firm in Beijing, applauded the visit by Mr. Emerson and Mr. Flaherty. "I'm sure they feel it's time to get back on track," he said.