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Asia-Pacific
Trade Opportunities
Remarks
by the Hon. David Kilgour, Member of Parliament for Edmonton Southeast and
Secretary of State (Asia-Pacific)
to the
Chinese Business Community in Coquitlam
November
23, 2003
Coquitlam,
BC
CHECK AGAINST DELIVERY Good
evening: A
few weeks back, Amy Sundberg invited me to come to speak to you about the
opportunities for Canadians in Asia-Pacific.
Most
Canadians just aren’t fully aware of Asia-Pacific’s immense importance and
potential. Part of the reason is
due to the overwhelming focus on the U.S. (more than 87% of our exports), our
“European hangover” and the perception of Asian instability due to
the ‘97 crisis. When looking at
the facts, it becomes clear that Asia-Pacific is home to the world’s most
rapidly growing economies, China being foremost among these. China
as an Economic Powerhouse: Canadian Lessons Learned
China’s economic
ascendancy is astounding. According to Nick Lardy, a Senior Fellow at the
Brookings Institute and recognized China expert, fiscal revenue in China has
grown about 90% even since the 1997
level. In the same period, imports have grown about 70%, largely attributable to
income growth. China’s real trade expanded about 35 times since 1977, while
total world trade grew only fivefold. China’s trade grew faster than any other
country in the last decade. China is expected to attract $USD50 billion in FDI
this year, displacing the United States as the number one recipient of FDI on
the planet. That
China is outpacing every country in Asia is something I’ve heard in almost
every capital I’ve visited. High-tech manufacturing jobs and investment
capital are being moved out of South East Asia into South East China. Japanese
firms are being “hollowed out” as manufacturing facilities are move off
shore to China. This is part of the reality of China’s vibrancy. According
to AT Kearney’s FDI Confidence Index, the key factors driving China’s high
standing among investors include its relatively stable political environment,
robust economic growth, and its recent entry into the WTO. Tariffs have come
down to 15% from 43%; the number of goods facing non-tariff barriers has fallen
from 40% to 4%. The establishment of special economic zones near major cities
like Shanghai and Guangzhou, with their enormous skilled labour force, make them
very attractive to foreign investors. Canadian
companies are no exception when it comes to taking advantage of these
opportunities. In Guangzhou, which I visited September 2002, I saw first hand
how foreign investment has energized the city, fuelled local economies,
stimulated growth and created many local jobs. All over South China, Canadian
firms are establishing
manufacturing bases and investing in R&D. A perfect example in Guangzhou is
Nortel's centre at Zhongshan University, which has grown to almost 200 mostly
young staff within a few years. Challenges
to doing business in China: Canadian Lessons Learned
Some
Canadian companies have enjoyed real success in China. Across all the key
sectors, we are represented by some of our best-known firms. But reported
successes don’t tell the whole story. There remain obstacles to investment in
China which are often overlooked by investors overwhelmed –– some say
blinded –– by China’s opportunities. Three of these, and I’ll touch them
only briefly, are: the misunderstood nature of Chinese accession to the WTO, the
threat of intellectual property theft, and the enduring spectre of corruption. Chinese
WTO accession has reinforced business interest in China, but the impact of
accession is not well understood.
John Curtis, a long-time Asia watcher and the senior economist at Canada’s
Department of Foreign Affairs and International Trade, believes that China’s
accession may not change things as quickly as many observers suggest. Investors
hope that in complying with WTO standards China will automatically create a
better environment in which to do business by eliminating trade distorting
requirements such as technology transfer, foreign exchange balancing, export
performance, and local content requirements. In
short, foreign investors should approach China with their eyes open, recognizing
both the potential for gains and the potential for pitfalls. The opportunities
are large -- perhaps greater than anywhere else in the world, and yes they are
growing. But business needs to be aware that investment in China is a long-term
investment; opportunities in alternative countries should not be overlooked. Canada’s
Hidden Advantage The
EDC’s recent Global Export
Forecast noted : “The world is
back on track...led by Asia.” We
Canadians have a “hidden advantage” including the fact that Asia-Pacific is
the source of half of our new immigrants. There
are over a million Chinese-Canadians and similar numbers who trace their roots
to South Asia. In British Columbia,
the important relationship we have with the region is already felt even more
with about 40% of those in the Lower Mainland originating in Asia. So
consider markets such as Japan, whose economy despite a decade long recession is
still larger than those of all other Asia-Pacific countries combined plus 30%.
Every major Asian economy except Japan’s has grown faster than that of
the United States in the past 10 years. Hence,
it should be of no Thank
you.
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