Canada Seeks To Expand Trade and Economic Ties With China

Canada Is China’s New Approved Tourist Destination

First Published: ADawnJournal.com December 22, 2009

On December 3rd, Prime Minister Harper of Canada made his first trip to China since taking office. This is the first time that the two countries leaders have met in five years, making this visit significant to both countries. Prime Minister Harper is known for limiting his foreign travel for political purposes, but has recently become more active, visiting both China and India in order to increase diplomatic ties.

China and Canada have had some opposition in the past, stemming  from the Canadian act of giving the Dalai Lama citizenship in 2007, but those disputes have been put away as China has recently granted Canada an official travel destination. China has a very limited list of countries that are officially approved as travel destinations, with most of those being approved lying outside the North American continent. Canada’s unique status is the result of several decades of Chinese-Canadian cooperation. With a celebration of 40 years of diplomatic ties, both countries are happy to heal the rift. China and Canada both benefit from the ties, with economic and cultural exchanges between the two countries growing tremendously.

China has become a major partner in trade with Canada, and officials say that trade is likely to increase due to the strengthening of ties between the two leaders. Chinese tourists visit Canada regularly, and spend more in the country than in any other travel destination in the world. Chinese tourists also stay for longer periods of time in Canada than any other travel destination, making the diplomatic ties important to Canadian tourism. Canada expects to see greater economic returns from tourism, especially since China has now allowed tourism advertisements to be run in the country, persuading more Chinese tourists to visit Canada.

Cultural exchanges are also on the agenda for Chinese and Canadian leaders. China has expressed interest in a youth student exchange program that would allow young students to visit Canada to increase cultural awareness and build friendships between the countries. Currently, there are over 42,000 students who reside in Canada, attending university or studying. There are also well over 1 million Chinese-Canadian citizens in Canada, as well. The cultural exchanges between the two countries are just as important for building strong ties as the economic benefits, but there are also other common ties that have allowed China and Canada to work together.

China and Canada worked together to sign several different agreements, ranging from climate change to educational issues that will affect both countries. Canada has plan for opening up to six trade offices in China, a move that will further strengthen ties between the two. In addition to these agreements, China has purchased a majority stake in the Canadian oil fields, a project that has cost China over one billion US dollars. China’s increasing economic power has been seen worldwide, and Canada is among the top recipients of their buying power. China is Canada’s second largest trade partner economically, and with plans to increase cooperation and cultural exchange, Canada is sure to benefit in the future.

India And China Economies Continue To Grow

The Robust Economies of China and India

First Published: ADawnjournal.com January 3, 2010

With the global recession in full swing, though showing some signs of recovery, the economies of India and China continue to grow.  Some argue that, in fact, India and China, with their more robust economies, are floating the worldwide economy, boosting the global recovery almost single-handedly.  Other economists predict that China will surpass the United States as an economic superpower within the decade, and still others predict that same achievement for India.  Both China and India are, to be certain, becoming global economic ‘big players,’ albeit in very different ways, and under differing governmental structures.

Right now, most economists agree that in global economic standing, the United States is above Japan and China, respectively.  India is placing in the top twenty, at position twelve.  China, despite its growth, still has a long way to go before it may surpass the United States; 2008 GDP (gross domestic product – a figure that measures all the economic outlays of a particular organization, government, and so forth) for the United States stood at the top of the heap at 14 trillion.  How do other countries stack up, particularly China and India?

World Top Economies by GDP 2008

1.   United States $14 trillion

2.   Japan  $5 trillion

3.   China  $4.4 trillion

4.   Germany $3.6 trillion

5.   France $2.8 trillion

6.   United Kingdom $2.6 trillion

7.   Italy  $2.3 trillion

8.   Russia $1.7 trillion

9.   Spain $1.7 trillion

10.   Brazil  $1.6 trillion

11.   Canada $1.5 trillion

12.   India  $1.2 trillion

NB – Figures are rounded. Source: CIA World factbook.

The point in the prediction of the growing might of the economies of China and India is not their current standing as much as that the global GDP has slowed in recent years (thus the term, worldwide recession) whereas the economies of China and India have grown, despite the realities of the worldwide economy. 

One indicator that most of us can understand is automobile sales.  Long a “canary in the coalmine” type of economic barometer; when consumers perceive the economy as ‘strong,’ they purchase big ticket items, such as cars (which, outside of a home, are usually the largest single expense that an individual undergoes).  As one of the richest nations on earth, the United States has long led this economic indicator, but next year it is predicted that China will surpass the United States by being the car-buying powerhouse of the world.  With its growth rate at an average of between 7 and 8% (depending on the report that you read), compared to the United States’ predicted growth rate of just over 1%, it should come as no surprise that China may exceed the United States within our lifetimes.

India, as well, shows a high growth rate for the upcoming years.  Currently far below China, and even further below the United States, but with one of the highest populations in the world, India’s GDP is still impressive considering the abject poverty and low (in comparison) wages.  Primarily a service based economy (almost 60% of India’s economy is service-based), India’s economy shows great potential for growth with its massive population, and extremely high knowledge base.  Most economists predict that by 2020, India will be among the top economies of the world. 

China and India are certainly worth watching as the economic world continues to diversify and becomes more complex. 

Chinese Market Set To Rebound

China’s Economy Is Rebounding

First Published: September 17, 2009 ADawnJournal.com

While much of the rest of the world has been dealing with a financial crisis that has seen economies contracting, China’s experience of the global downturn has been a different kettle of fish. They have not been immune to the overriding pessimism that has gripped most nations, but their economy has continued to grow – just a lot slower than before. Chinese Prime Minister, Wen Jinbao, has stated openly that he wishes to drive a recovery from this slow expansion by continuing a level of government spending which has been described as “unprecedented”. Speaking to the World Economic Forum meeting in the north-eastern Chinese city of Dalian, Wen said that he would not change his government’s financial policy when the conditions did not justify such action.

Though paying heed to the undeniable fact that China’s economy is rebounding, like many of the major global markets, Wen admitted that the rebound was currently “unstable, unbalanced and not yet solid”, and continued a global commitment to maintain government action to ensure a steady and long-term recovery from the deepest global recession since the Second World War. While the level of government loans is expected to taper off in order to ensure that any growth is “genuine” – a good analogy here would be the effort to ensure that a patient with a broken leg can eventually walk without crutches – investment will not fall away completely, rather it will remain at enough of a level to give the patient breathing space to recover properly.

Key economists such as Wang Qing, chief Asia economist for the Morgan Stanley bank in Hong Kong, feel that although the worst of the recession has undoubtedly passed, a hang-up in Chinese exports may muddy the waters when it comes to driving an overall recovery. Over the past nine months the country’s exports have fallen as struggling economies showed a reluctance to look overseas when they had problems of their own to correct. This has had the knock-on effect in China of creating an overcapacity in their marketing sector and resultant unemployment – meaning that the record government stimulus package of 4 trillion yuan (More than US$586 billion) has not had as pronounced an effect as might have been hoped.

One of the key indicators of Chinese market performance, the Shanghai Composite Index, has shown a recent slide of 20%, reflecting wider concerns that continued government lending could in fact have a negative effect on Chinese economic growth. The initial results from the government’s stimulus lending have been positive, arresting that slide and creating growth. Wen has judged from this that the government’s liberal and proactive economic steps are the way forward for the moment, but that the time had come when some stimulus measures had to be left to do their work, some having almost completed that process and others likely to take some time to become fully effective. With the global economic sector awaiting the publication of August’s figures, a look at China’s results in the next few days will make for instructive reading.

Where Are We In Terms Of The Global Financial Situation?

Happy Birthday, Global Financial Crisis

First Published: ADawnJournal.com September 24, 2009

There has been so much said over the past couple of years about the dangers of recession, and much still to be said, but one event seen by many as the moment that the global financial crisis became a fact was the collapse of the American investment bank Lehman Brothers. It was one year ago this week that the bank went bust, and the realities of the crisis became clear to everyone at that point. If the Global Financial Crisis has a birthday, that date is the 16th of September. One year on, where are we in terms of the global financial situation?

The collapse of Lehman Brothers marked the point where governments around the world decided that intervention was the way to go. From that point on, many banks have been effectively nationalised – an act which in itself was massively controversial, seeing diverse reactions in different countries. In America, for example, Barack Obama’s determination to bolster the banking sector and revive the world’s largest economy led to accusations of totalitarianism, communism and Nazism. It may sound amusing, but this reaction was, seemingly, entirely serious. In other nations, a sense of skepticism over bank bailouts also persisted, but the bailouts are ratified now and the recovery is in place.

Would the world’s economy have bounced back in such a way and so soon without the government interventions that took place in most of the larger economies? It seems unlikely. Certainly, the banks which have received bailout cash have posted mixed results, with Goldman Sachs posting record numbers very shortly after receiving their lifeline, while others have suffered record losses. But many independent sources feel that the recession is in its last blasts and that this is due in no small part to government intervention. No government has given any indication that further bailout cash will be released, however, so it is now very much a matter of waiting for the situation to stabilise.

While we wait for that, it is believed that the recession has yet to do the last of its work in the sphere of employment. A recent report from the OECD claims that as many as 15million people worldwide have lost their jobs as a result of the financial crisis, and that there could yet be another 10million people made unemployed. Although economic results are improving, the effects of the recession will still be felt for a while to come.

While it would be fair to say that the financial sector has always had its critics, the overwhelming thread running through public reaction to the situation has been one of severe distrust of banks and bankers, and of injustice at the bailouts given to banks while many other industries have been left to fend for themselves. There is still a reluctance on the part of the banks to lend to customers – much to the chagrin of the governments which released the cash to save them – and it might be a while before the stability being claimed for the global economy is seen in the bank accounts and employment prospects of the “man on the street”. This story has some time to run as it blows out the solitary candle on its birthday cake.

China and India In The Next 20 Years

China or India – Or China AND India?

There is an economic miracle of sorts taking place in today’s global economy, and it is coming as no shock to the people who have been watching the global picture develop these last ten years. However unsurprising it is in general, there will be people who, although they knew it was coming, may not have expected to see it happen in their lifetime. The economic miracle is taking place in Asia. That may not be terribly specific, given the size of the continent itself (the world’s largest continent), so to specify: Where the miracle is really happening is in two particular countries: China and India.

There was always the potential for this to happen, given the raw data that is available to anyone. China and India are two of the world’s largest countries by size, and easily the two largest by population with almost 40% of the world’s people living between them. This mix of landmass and population combined with the resultant ability to call on raw materials gives both China and India the opportunity to maximize any opportunity and become global powerhouses. But this dimensional magnitude has in both cases been both a blessing and a curse. The spread of both countries, allied to China’s historic insularity and India’s numerous dividing factors, has held both back from becoming quite as successful as they might have hoped.

As the 21st century really gets going, with its first decade almost inked into the history books, both China and India look ready to make their big impact on the world’s economy. Both countries are expected to have a big century, and by the middle of this one will, on any reading of the situation, have economies which outstrip the current largest in the world, that of America. China will get there first – by 2030 on a conservative estimate, followed by India within the next 20 years. Will America and others be able to catch up in the mean time and overturn the predictions? It’s hard to say, but the economy does sometimes throw up unexpected situations.

Another question which might arise is that of whether competition between India and China will be a stalling factor in either country’s growth. This is not expected to be the case, as the economic strengths of both countries complement each other quite well, and may in fact enable mutual growth in countries which are showing greater expansion in their economies than any other major nation.

China is endlessly improving on a mass-manufacturing front, and expanding its range of industrial plants in order to cement its role as a world leader in that respect. India is marking its territory as a master of precision manufacturing and software innovation. The two working together will be able to supply the world with much of what it wants without stepping on each other’s toes. It is impressive to see how quickly both have developed, and interesting to wait and see what is next from these two future superpowers.