Beijing, 11 p.m.
The first full day of the trade mission is wrapping up with a 500-person gala banquet at the Kerry Center Hotel’s glittering ballroom, under massive, sparkling chandeliers shaped like inverted pyramids. At the head table: the four premiers of Ontario, Manitoba, New Brunswick and Prince Edward Island, as well as Quebec delegation leader Marc-Pierre Johnson; four vice-governors of Chinese provinces; honorary chairman Andre Desmarais of Power Corp., and Wan Jifei the head of the China Council for the Promotion of International Trade. The gushing speeches are over, for now. The networking, however, never stops completely.
All day the speeches, as expected, were replete with messages of friendship, mutual opportunity and cooperation, and how the global financial crisis makes clear the extent to which economies are now interconnected, and how bilateral trade is more important than ever. And Ontario Premier Dalton McGuinty, who took over as leader of the trade mission after Quebec Premier Jean Charest pulled out to likely call a snap election, also earned points from the Chinese by reiterating that the Canadian delegation was laying the foundation for Prime Minister Stephen Harper to visit China. While Chinese media were on hand to snap photos and videotape, this event seemed to hold more significance for Canadians than the Chinese.
Nevertheless, it was all very warm and congenial. The Chinese are unfailingly polite and gracious, and are appreciative of respectful efforts at cooperation.
The necessary photo ops were upnext, with a series of underwhelming memorandums of understanding signed simultaneouslyeverything from mineral exploration deals to batteries for electric cars, and from flight training to education curriculum sharingfollowed by the Canadian and Chinese partners of each paraded on stage for a picture with the politicians. The estimated values of these agreements always sound good, but the deals are quite preliminary and largely little more than a show of cooperation.
No less congenial was the panel that followed, moderated by Asia Pacific Foundation President Yuen Pau Woo, and featuring professor Fan Gang, director of the National Economic Research Institute, and Jay Myers, president of the Canadian Manufacturers & Exporters. But these two economists did offer something other than just glad tidings: economic predictions. Myers, for instance, forecast that exports would fall 15% next year, leading to a 1-2% decline in GDPand thats if credit markets stabilizeand that he worries about contagion from the U.S. housing market collapse.
As for, Fan, he laughed at the suggestion he could forecast anything more than one year out, and then predicted global growth of just 1% next year, and that this year, China would grow more than 9%, but slip to 8% growth next year. (Mind you, the commonly accepted GDP growth threshold necessary to keep its population employed and supportive of the government is right around that mark.)
Most interestingly, however, was Fans analysis of Chinas economy. He points out that while a stock market did burst, it hasnt had a big impact on domestic consumer confidence in China because 70% of the population is still low-income, and because the bubble was so short livedonly a couple of yearsthe wealthy never translated it into over-spending behaviors.
Fan also laid out one of Chinas economic structural challenges. Saving rates are 50% of GDP, with consumption accounting for 35% of GDP and the final 15% coming from government spending. While the global economy falters, so do Chinas exports, which is what it relies on for growth. Despite being home to 1.3 billion people, however, consumption is lownot because people save, but because 70% of the people spend 90% of their income just getting by day-to-day. In that scenario, encouraging people to spend more has little effect. So the problem China faces is restructuring the economy so more of the wealth residing in companies can find its way into the pockets of its citizens.
A good chunk of the rest of the morning was taken up by the vice-governors presenting promotions of their provinces (Hebei, Henan, Shandong and Hunan), which together have a population of 315 million people, about the same as all of North America.
The afternoon was reserved for breakout sessions, two of which focused on just the environmental protection and aerospace sectors, followed by moderated matchmaking between companies from common industries.
And this, of course, is the real point of the trade mission: for Canadian businesses to meet potential Chinese business partners. Certainly there were plenty of Chinese attendees rushing up and thrusting their business cards into the hands of Canadian counterparts. One Canadian attendee likened it to speed dating, where business cards are quickly exchanged, followed by a halting attempt at conversation in English: Is there a match? No. Then move on. More promising are the arranged one-on-one meetings that take place in quiet rooms away from the hubub. Even then, though, it is more a case of good luck than strategy when meetings bear fruit.
Tomorrow afternoon, following a conference on energy and the environment, the trade mission flies to Chongqing, the worlds biggest metropolitan area, located at the confluence of the Jialing and Yangzi rivers in the Western mountainous province of Sichuan.