2014-15 Canada-China Business Forum Magazine - Page 16

TRADE China: A Land of Opportunities & Priority Those of you familiar with Canada’s Global Markets Action Plan (GMAP) know that its purpose is to advance the interests of Canadian businesses in a specific group of key foreign markets. Number one on that list? China. And for good reason. China has the best potential for broad Canadian interests, especially in areas where Canadian expertise has the most potential for success. But not everyone is entirely confident that China will continue the growth we have come to expect. Those detractors might cite the recent regional slowdown as a fixture, a Chinese new normal, if you will. Peter Hall disagrees. As chief economist for EDC, Hall has taken a countervailing view of growth prospects for China. While some economists are predicting a decline in growth next year, Hall expects to see China’s economy grow by as much as 8 per cent. “There are a lot of concerns out there right now, but the country is clearly in the middle of transition,” says Hall. “Certainly demand has gone down, but this is temporary.” “Gone are the days before the recession hit...” - Peter Hall by/par TERRI-SUE BUCHANAN W ith the Government of Canada’s Global Markets Action Plan putting a renewed focus on markets like China, Export Development Canada (EDC) is bullish on the prospects, particularly for smaller companies. Now is the time to act. 15 “Gone are the days before the recession hit, when anything less than 9 per cent real GDP growth was a slow year,” he adds. “Post-crisis, 2010 was the only double-digit year, and that was fed by an extraordinary outpouring of global and China-sized stimulus. Then there’s slower-than-expected growth in the rest of the world. With this, most are settling in to a new vision of China’s expected near and long-term growth path.” CANADA CHINA FORUM BUSINESS 2014-2015 ccbc.com China might still be dependent on OECD nations to lead the charge, but with global trade ramping up right when China is dialing down its public investment, that’s enough to create growth next year, says Hall. “Make no mistake, when trade comes back, so will China’s growth.” GROWING MIDDLE CLASS SPELLS POTENTIAL FOR CANADIAN BUSINESS What kept China going for the past few years? Spending, according to Hall. Driven by the country’s growing middle class, China is adding about 40 million people – more than entire population of Canada – to its middle class every year. The growing middle class means changing consumer markets. Consumers demand higher-quality goods such as cars and food. This in turn is creating entirely new consumer markets and global supply chains. And while much of China is shifting production to goods demanded by these regional consumers, currently, China can’t satisfy its own demands. It is becoming a fastgrowing importer of these higher-quality goods, creating many opportunities for Canadian businesses, says Hall. Take meat products, for instance. With close to 1.4 billion people, China now consumes twice as much meat as the U.S. More meat consumption means more grains to feed livestock, which in turn means higher demand for potash, phosphate and nitrogenous fertilizers, as well as agricultural equipment. Healthcare, life sciences, forestry products, financial services and other associated industries are in demand by the growing middle class. Not to mention the various infrastructure needs and related clean technologies to sustain China’s rapid urbanization. In fact, as GMAP notes, China has a particularly keen interest in clean technology, highlighting in its most recent Five-Year Plan its role in addressing the country’s growing environmental challenges. “For many of these needs, Canada is on their radar,” says Denis L’Heureux, EDC’s Regional Manager for Asia, based in Shanghai. With offices in Beijing and Shanghai, EDC places a big priority on growing Canada’s footprint in China specifically, and in Asia. 16