December 6, 2004 Toronto, Ontario Check against delivery It is a great pleasure to have this opportunity to meet with the CCBC -- members of the business community who provide such an important link between Canada and China, and who have been partners with us in setting up several offices in key commercial centres across the world’s most populous nation. This evening, I’d like to speak primarily about the future of our economic relationship with China. But let me emphasize at the outset that our connection with China is far more comprehensive than that. It comprises not just economic pursuits but also the global political agenda, public health, environmental issues, human rights, and culture. It is a relationship that has always been complex, and a relationship that has never been more important. And that is why I’ll be travelling to China in January, to meet with President Hu, Premier Wen and other senior leaders -- to engage them in discussions about our bilateral and multilateral relations, to talk about our partnership as nations and how it can grow and be enriched on all levels. I look forward to seeing many of you there, and meeting more members, when I attend a dinner held by the CCBC in Beijing. Ladies and gentlemen, there clearly are tectonic shifts underway beneath the global economic terrain. As China becomes an increasingly important power, it is crucial that we understand its impact both on us directly and on other countries in the region. This much is certain: In the twenty-first century, power will be distributed very differently than it has been during the past fifty years. Countries such as China and India, which together represent more than a third of world’s people, will play increasingly pivotal roles on the global stage – roles that I certainly could not have imagined when I first visited China in 1972, during the waning years of the Cultural Revolution. No longer can China be considered simply an emerging market; it has established itself as a world power. What does this mean for Canada? In our time, we face two significant demographic challenges, and how we as a government and as a nation prepare for them will, in my mind, go a long way to determining how history will judge us. The first challenge is domestic – an aging population. We have to prepare for this. And that’s what we are doing when we invest in health care, when we reform equalization, when we budget to stay out of deficit, when we pay down debt, and when we as a nation of immigrants continue to welcome people from Asia and around the world – people who will help our country grow and prosper. In so doing, we are acting responsibly both for ourselves and for the next generation. We are preparing ourselves for the future. The second demographic challenge is the global shift that I’ve just described – the rise of new nations as true global powers and what that means for Canada in economic terms and in terms of our role in the world. Again, we have to prepare for this. We have to prepare by asserting ourselves on the international stage, aggressively promoting our values and pushing for a world in which a New Multilateralism translates into enhanced security, greater prosperity and lasting peace. That is what we are doing when we push for reform of the United Nations and when we press for the creation of ongoing meetings not just of the leading industrial economies – the G7 or 8 – but of the leaders of 20 nations, including regional powers like South Africa and Brazil, and of course the new global power, China. I discussed this with President Hu two weeks ago and he is very supportive. I’ll pick up on this when I’m in China in January. We are also preparing ourselves when we address the impact of the changing world on foreign trade, because, more than any other industrial economy, international commerce is crucial to our prosperity. We are a wealthy country, our people are well-educated, we have a high standard of living. But how do we, with a population of only 32 million, navigate to ensure that we maintain our standard of living and continue to prosper in a radically different world of giants? What do our businesses need to do in order to thrive? Thomas Friedman, a columnist for the New York Times, wrote recently about the rise of China. He pointed out that the Chinese used to attract jobs because they were in a race to the bottom – they offered cheap labour. Now, increasingly, they attract jobs because they are in a race to the top – their young people are smart, well-educated and driven. Friedman wrote that when Bill Gates goes to China, people line up for hours and hang from the rafters to hear him speak. In China, he said, Bill Gates is Britney Spears. In North America, Britney Spears is Britney Spears. No one understands the profound change that is coming better than the people in this audience. You have to prepare for it as leaders of business. However, we as a government must also act. We have to focus on making sure our businesses have the capacity and the ability to compete. This means competitive taxes. It also means an education system second to none. That is what we are doing when we invest in early learning, so children enter school ready to excel, and when we invest in our cities and communities, so they are our signatures to the world and attract international talent. With new spending on research chairs, and a commitment to centres of excellence at universities, Canada is signalling that in the 21st century we will continue to foster and nurture the spirit of innovation which is making this a country of world-class technology and creativity. Canada must have an innovation- and research-friendly environment next to none if we are to be ready for the China of today, let alone prepare for the China of tomorrow. We are preparing. Our agenda as a government is broad, we are active in many areas, but in everything we do we are guided by one imperative: ensuring that Canadians and their values prosper now and in the future. That is what connects our actions, our priorities, our pursuits: Building prosperity today, enhancing it for tomorrow. And how we react to the emergence of China as a global force will go a long way to determining whether we succeed. Today, on the other side of the Pacific, growing investment and bold change among China, a number of countries in South-East Asia and the Indian sub-continent are beginning to transform not just trade and investment flows, but also the way people live and the possibilities they see for themselves. China’s share of world trade and GDP is rising dramatically and companies from all over the world are investing there with an eye to both the domestic marketplace and international markets. As these changes occur, the very nature of international commerce is evolving. Concepts and catchphrases like supply chain management, on-time delivery, and point-of-sale inventory adjustment, which not long ago were novel ideas even to logistics specialists, are now poised to evolve dramatically in meaning and practice. What does this mean for Canada and for our economy? The answer, potentially, is everything. Consider one simple yet critical fact: The share of the value of a product represented by the cost of making it is decreasing. The Chinese may manufacture a sweater, but a lot of other people in a lot of other places will have high-quality jobs managing the process. The race is on to develop a system that allows the preference of consumers in Winnipeg for red sweaters over blue to be reflected not just on the factory floor in South China, but also dockside in Hong Kong and in the freight yards of Vancouver. Maximizing our share of those jobs requires a new strategy that goes far beyond our traditional understanding of international trade and recognizes that globalization, and the specialization it often calls for, will create new opportunities for advanced economies such as our own. We must prepare. When I travel to China to meet with the President and the Premier, the Minister of International Trade, Jim Peterson, will be there as well, heading a delegation from Canadian business. These are important trips at an important time. Minister Peterson and business leaders like you are putting in place the modern strategy that will deliver the services that businesses require in the 21st century economy. This must succeed if Canada is to maximize its share of the jobs in the new world. The creative arts, technology-driven manufacturing and many areas of traditional Canadian expertise, ranging from transportation and communications to educational services and agriculture, all stand to benefit from the changes I’ve described, and for one very simple reason: Economic growth in China and the rest of Asia means increased demand for our products and services. China’s entry into the WTO is making it a more open, more transparent and, over time, a more market-driven economy. The opportunities for Canadian exporters have never been better. And let us not forget: We have a not-so-secret weapon, a real asset, in this contest for the pocketbooks and wallets of booming Asia – our multi-ethnic population. Canadians of Chinese origin number more than one million. They are successful in all walks of life, from medicine to engineering to the arts and to public life. Those who choose careers in commerce provide companies in Canada with a tremendous advantage in selling their products in China and in managing joint ventures. And the magnitude of the advantage is just beginning to be felt. Between 1984 and the end of the century, 350,000 residents of Hong Kong moved to Canada. That’s equivalent to 5 per cent of Hong Kong’s population. As first or second generation Canadians, many are now engaged in the promotion of trade, technology transfer or investment flows between Canada and China. They are to be found not just in Hong Kong and Canada, but in cities like Shanghai, Guangzhou and, of course, Beijing. And new immigrants from the mainland are making their mark also, many in areas of advanced technology and finance. They, and indeed all Canadians, are eager to see us vigorously promote in our dealings with China core Canadian values in areas such as the environment and human rights. We have done so, and we will continue to do so. We will do so because we understand that our advocacy does not stand in contradiction to our trade and economic agenda. On the contrary, it supports it, for it is our belief that the growth of a strong and enduring country depends not only on economic prosperity but on environmental sustainability, rule of law and respect for persons. As China becomes increasingly influential in economic terms, as it emerges as a global player, it will find many new opportunities but also new obligations. International attention will intensify as China expands its interests and as the 2008 Summer Games approach. With power and influence comes responsibility. This is why we regularly engage the Chinese government at all levels, through dialogue and practical cooperation, on human rights issues. And I will be continuing that engagement at the highest levels during my visit to China. A second asset we have is the quality of Canadian education, which is prompting large numbers of Chinese either to study in Canada or to attend Canadian curriculum schools in China. This openness to Canada as an attractive choice for quality learning, language development and cultural interaction makes "brand recognition" of our country an advantage that we need to nurture. Our third asset is our natural resources. As recently as a decade ago, it was popular to say that the age of commodity-driven growth was a phenomenon of the past. Just as building wooden ships for the Royal Navy could no longer sustain our shipyards after the mid-nineteenth century, the popular wisdom thought that the Canadian resource sectors would be marginalized in the 21st century economy. Well, think again. Clearly, commodities are back and in demand. While prices will fluctuate, the remarkable consumer and industrial growth throughout Asia and the Indian sub-continent means that Canada will continue to benefit from our natural resource wealth. That being said, we cannot as a nation make the mistake of thinking we can leave it at that. Yes, we will benefit from exporting resources. And yes, as we have seen, our resource firms will become attractive to companies in Asia. In fact, given its accumulated hard currency reserves, China is likely to be an increasing source of capital as it seeks to secure the resources the Chinese people will need. In determining whether acquisitions of this nature will be welcomed in Canada, we will be guided by the imperative of ensuring that they are of significant benefit to Canada both domestically and in terms of our international economic reach. All of this being said, the real opportunity is the potential to market abroad Canadian know-how – our brain power and expertise, for this could ultimately prove our greatest and most enduring export. Today, Canadians are active in both the South China Sea and in the north-east of China in the energy sector because of the expertise that our country has developed in petroleum recovery. That same level of expertise exists among those in our mining sector. Simply put, we benefit as a nation when we are able to sell not only the resources themselves but our resource sector management and our technical ability. But we cannot stop at that, either. We must commit ourselves to competing globally in high-level manufacturing and services such as environmental technology and medical innovation. There is such opportunity here, and Canada is well-placed to seize it. We would do well to emulate Japan, whose economic resurgence owes much to the successful role played by its advanced economic sectors within the context of China’s growth. Ladies and gentleman, we seek a mutually beneficial relationship with China and the other economies of Asia – a growing partnership that recognizes the changes that are occurring in how economic activity is undertaken today and seizes the new opportunities that are emerging. This relationship will have challenges and we will be working with the Chinese on such issues as investment protection, full implementation of WTO commitments, the development of a more transparent legal system and the full application of the rule of law in commercial disputes. The creation of an open playing field for economic activity does not happen overnight, but we expect ongoing progress. Good governance and the rule of law in commerce also have a ripple effect across society and we will encourage this as well. Make no mistake: A comprehensive relationship with China requires a “whole of government” approach from Canada. Foreign policy, more than any other dimension of government activity, needs to be consistent across a wide variety of government departments. This requires a solid framework and active co-ordination. In terms of our relationship with China, this means that we will engage across a wide range of issues and endeavour to be seen as a useful partner along the full spectrum of activity. When in China, I will pursue with President Hu and Premier Wen discussions on a range of issues, including UN reform, international public health, the environment, and the fight against terrorism. China is playing a growing role in world affairs. Its influence is destined to expand further. With its permanent seat on the UN Security Council, China in many ways speaks for a region with more than half the world’s population. It has much to gain from the success of a New Multilateralism. There is one last observation I would make in conclusion tonight. Increasingly, as one reads American and European business periodicals, one sees the rise of China referred to as equal parts prospect and hazard. We have a different view in Canada. Given our population, given the small size of our domestic market, given our history as an exporting nation, when we look out at the shifting global landscape, all we should see is opportunity. So long as we continue to be among the world’s best-educated populations, so long as we strive to improve productivity and capitalize on our ingenuity, there is remarkable potential for us as new markets open up, as new nations rise, as new people acquire the means by which to participate more fully in the global economy. We all need to understand and engage with this new reality – a new China linked in new ways to an evolving world. You, as members of the business community, are at the forefront of this effort. Canadian businesses, large and small should be doing as you have done – developing and implementing strategies for China. We in government are committed to doing our part - but to be effective, the engagement must reach broadly and deeply. Only in this way can we build a partnership that embraces the complexity and the growing influence of 21st century China. Only by acting now, and with vigour and determination, can we help to ensure that future generations of Canadians will benefit from the opportunities presented by a rapidly changing world, by a rapidly growing China. Thank you. - 30 - PMO Press Office: (613) 957-555
