NOTES FOR AN ADDRESS BY

THE HONOURABLE DR. REY PAGTAKHAN,

SECRETARY OF STATE (ASIA-PACIFIC),

AT THE WESTERN CHINA MEETS WESTERN CANADA LUNCHEON

EDMONTON, Alberta

October 5, 2001


First of all, I would like to thank the Canada-China Council for Cooperation and Development for inviting me to the Western Canada meets Western China Conference. It is a great pleasure for me and an honour to have the opportunity to speak to you today. Pierre Pettigrew, our Minister for International Trade, has asked me to convey to you his greetings of welcome as well as his regrets for being unable to join you today.


New and emerging realities


What are some of the new and emerging realities, and what do they mean for Canada and China? China is on the verge of entry into the World Trade Organization (WTO). With the addition of a 1.3 billion-person market and the world's seventh largest economy to the rules-based global marketplace, we will see a major step forward in world economic development. China already has one of the world's fastest-growing economies, poised to double in the next decade. Also, China has a huge appetite for foreign capital, technology and know-how. In addition, China is engaged in a broad program to reform its economic and industrial policies. Key to its broad program of reform is the re-engineering of the traditional state-owned enterprise system. Canada encourages China to continue its reforms in foreign exchange controls, taxation, foreign trade and state enterprise restructuring. And we support China's efforts to improve current laws and regulations affecting foreign investment.


In short, Chinese accession to the WTO will bring about increased predictability and transparency of China's trading regime, opening up significant new business opportunities for Canadian exporters while strengthening Canada's substantial trade and investment interests in China. Moreover, accession to the WTO coupled with the push for further participation in the world economy will lead to significant Chinese investment abroad over the next decade.


As official policy, Chinese enterprises have been strongly encouraged to invest strategically in foreign markets, not only as a means of securing sources of raw materials but also as an opportunity to serve as a conduit for technology acquisitions and transfers. It is also a reality that China offers Canadian investors opportunities across a wide spectrum of industries. In recent years, Chinese organizations and private enterprises have been looking for new investment projects in Canada, in such areas as oil, gas and mineral deposits and commercial properties. Numerous Chinese companies have established offices in Canada. These are used as a means of investing in the Canadian market as well as in trading with Canadian companies.


Investment relationship


I would now like to share with you why and to what extent the trade and investment relationship between our two countries is important. Last year, China was Canada's fourth largest trading partner (combined exports and imports), and climbing to third position when figures for both China and Hong Kong were combined. Total Canada-China bilateral trade for 2000 was $15 billion, an increase of 30.4 percent over the $11.5 billion reported in 1999. Over this same period, Canadian exports to China increased by 41 percent and imports increased 26 percent. The Canadian business presence in China is substantial and multi-faceted. Canadian investments cover a full range of key sectors, including agriculture, transportation, telecommunications, financial services, energy, mining, agri-food and biotechnology, machinery, construction and forest products.


According to Chinese figures, Canadian investments were among the top 10 sources of foreign investment in China. Chinese sources indicate there are now over 4500 Canadian-invested projects in China. The Canadian people and Canadian companies have a long-standing history of co-operation with China in areas other than trade and we believe that this spirit of co-operation in other fields will continue to increase in the years to come. One notable example was on the occasion of this past February's Team Canada visit to China, led by the Prime Minister of Canada, Jean Chr├ętien. He took the opportunity to underline that "Canada believes that while circumstances and experiences may vary from nation to nation, we all share a sense of what is just, what is right." As true friends of China, we exchange sentiments about a variety of subjects, including judicial reform. And we understand that China is in the process of establishing a legal system that will allow her to address that challenge.


The Team Canada business delegation I just referred to included more than 600 Canadian company representatives -- by far the largest delegation ever assembled for a Canadian trade mission event. Over $5.7 billion in new deals were signed during the 10-day mission. Later this month, the Prime Minister, Minister Pettigrew and myself, along with a large delegation of Canadian senior executives, will again be a strong Canadian presence in Shanghai during the APEC's [Asia-Pacific Economic Cooperation forum] ministerial meetings and the CEO Summit. Canada is encouraged that China has expressed solidarity with the international community on combatting terrorism, a scourge that could impact international trade. In that regard, the APEC leader's meeting on October 20 and 21 will provide an opportunity to discuss measures to counter terrorism and this, at China's initiative.


Although Canadian investments can be found in all regions of China, so far the greatest share has been in the coastal regions. I believe some of you would like to change that.


As you are aware, Premier Zhu Rongji, at the March 2000 session of the National People's Congress, highlighted China's Western Development Strategy and pledged to invest heavily in 10 regions: the provinces of Shaanxi, Gansu, Qinghai, Sichuan, Yunnan and Guizhou, the ethnic autonomous regions of Ningxia, Xizang (Tibet) and Xinjiang, and the municipality of Chongqing. These regions cover 5.4 million square kilometres -- representing 57 percent of the country's total land area -- and comprise a population of 280 million people or about 23 percent of the national total. It is noteworthy that this region boasts half of the country's proven energy reserves (coal, petroleum and natural gas), and houses important mining, forestry and agricultural resources.


The core elements of the strategy include a pledge to direct at least 60 percent of the China Development Bank's lending to the interior regions, and to encourage investments by foreign governments and international financial institutions. Many of the priority capital projects already identified involve roads, railways, airports, energy infrastructure (such as pipelines), water conservancy and environmental protection. Resource development and infrastructure projects will play an important part in the development of Western China. These are areas of Canadian strength. Canadian businesses have experience and technology to share. Canadian firms bring experience in infrastructure, agriculture, and policy and social development that is rooted in our own efforts to address a widely dispersed population and challenging geography.


There is an important role for Canadian business associations, such as the Canada-China Council for Cooperation and Development, to play in strengthening and creating Sino-Canadian links that are crucial to expanding our business dialogue. Fostering this dialogue will provide increased access to Chinese markets for Canadian exporters of goods and services.

Both the federal and provincial governments have a long-standing tradition of promoting Canadian business interests in China. Our three consulates on the mainland as well as our embassy in Beijing, which includes an Alberta government office, work in concert to provide the business communities of both countries with the necessary help and advice to further our commercial relations.


Canada has long acknowledged the importance of developing its western regions. We therefore not only have developed significant expertise that is relevant to Western China, but also have a deep understanding of China's development goals. Canada recognizes the distinct nature of China's regional economies and we make every effort to adapt our approach as a consequence. Canada's consulate in Chongqing was among the first to be established in that municipality, and remains among the few foreign government representatives outside the developed coastal regions.


One recent event I would like to mention was the one-day high technology event organized by our consulate in Chongqing. Info-Com West, in June of this year, was a highly successful collaboration with the local governments. It attracted more than 20 Canadian technology companies as well as over 150 local participants. This effort, led by our Consul, Craig Wilson who is here today, provided a forum to showcase Canadian companies active in China and opportunities for local Chinese firms to make valuable business contacts. During the Team Canada Trade Mission the Prime Minister visited the ancient Chinese capital of X'ian. Although this was a short visit, the Canadian government wanted to acknowledge the importance of Western China to Canada as a whole and our interest in working with the people of Western China to bring a bright and prosperous future to their region.


One sector I have a special interest in is education. Canadians place a premium on education and demand first-rate schools. Canada spends more per capita on its education system than any other country in the G8 and is among the top three countries in the Organization for Economic Co-operation and Development. A degree from a Canadian university is recognized world-wide and as a result, international students who graduate from Canadian universities enjoy successful and prosperous careers.


Canada is an international leader in computer and information technologies. High points in Canada's telecommunications industry include Teleglobe's CANTAT 3 cable, the first of its kind in the world, which supports high-speed and high-capacity delivery of transoceanic, multimedia transmissions. The Stentor Alliance of telephone companies is investing $8 billion to provide the latest in broadband technology to 80 percent of Canadian households by 2005. Industry Canada's SchoolNet program has successfully made Canada the first nation in the world to connect its schools and libraries to the information highway. It is now being copied around the world. SchoolNet has been working with the province of Hainan under a Memorandum of Understanding signed two years ago to develop certain aspects of the e-education system. Canada has much to offer foreign partners by building a global community of interest concerning the issue of knowledge-based learning networks. Canada has faced many of the challenges of other countries: delivering programs in multiple languages, financing issues, curriculum challenges and delivering to remote locations. We have the experience and can transfer our knowledge to international models.


Another example of Canada working closely with China in the education field is a project recently announced by the Canadian International Development Agency, which involves both the province of Alberta and Western China. My colleague, Maria Minna, Minister for International Co-operation, has awarded $11.8 million to Agriteam Canada Consulting Ltd. of Calgary, in association with Alberta Learning, Athabasca University, the University of Alberta, and the University of Calgary. This money will go toward funding a five-year project to improve basic education in Western China.


Recently, many Canadian educational institutions have recognized the value of complementing their student recruitment activities in China with the delivery of joint programs and the establishment of joint-venture schools. Increasingly, Canadian universities and colleges are delivering Canadian curriculum in China with Canadian or Canadian-trained teachers. Canadians are playing a constructive role in enabling Chinese students, lacking the means to afford an overseas education, to access a high- quality Canadian education in China.


The challenge is, of course, how to build further on this strong foundation. In an era of globalization, of information economy and technology transformation, we must examine international relationships and plan for change and renewal. As you can see, Canada and China and more specifically, Western Canada and Western China, have a strong foundation for further future collaboration.


I would like to thank the Canada-China Council for Cooperation and Development for inviting me to speak here today, and all those who have contributed to making the event a success, particularly the many sponsors. Finally, I note the important role that your organizations are playing in furthering Canada's bilateral relationship with China. Organizations like yours, through your extensive experience and personal contacts, constitute one of the most important catalysts for Canada's Asia-Pacific trade.


Not only do you promote Canadian exports and thus create jobs in Canada, but you also achieve similar objectives for our partner -- China. Our relations in trade and investment also provide a strong bridge for people-to-people linkages that help spread and sustain universal human values and promote a better quality of life for all -- a genuine and legitimate universal human aspiration, and therefore, a very laudable economic objective.

I salute you all as you continue your deliberations.


Thank you.