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Notes for a Speech by
The Honourable Joe Oliver, P.C., M.P.
Minister of Natural Resources
"Canada and China: Strengthening our economic ties"
Dinner organized by Canadian Chamber of Commerce
November 9, 2011
Check against delivery
Good evening ladies and gentlemen.
Thank you for your very warm welcome.
Since my appointment, I have been looking forward to returning to China and the opportunity to experience once again the vibrancy of China's economic growth.
So it’s a special pleasure to be in Shanghai, one of the world's historic cities — a city increasingly recognized as a great financial centre that helps power the global economy.
I’d like to thank our friends at the Canadian Chamber of Commerce for being our hosts this evening.
I also thank our friends in the Chinese business community for joining us. It is an honour to have you as our guests.
Your presence is an indication of the growing strength and importance of the relationship between our two countries — a relationship founded on mutual respect and the understanding that our friendship offers many benefits to the citizens of both our nations.
I believe we have only begun to realize the benefits. My purpose of visiting China was to attend the China Mining Conference and to meet with senior government and industry officials to discuss new opportunities to build a long-term strategic partnership between China and Canada in the area of natural resources.
Thus far, I’ve had meetings with:
- Vice-Premier Li, who has broad responsibility over the resource sector among other areas;
- Vice-Chair Zhang Xiaoqiang of the National Development and Reform Commission;
- Minister Xu Shaoshi, of the Ministry of Lands and Resources;
- Leaders of Chinese energy companies, including Sinopec, PetroChina and China National Offshore Oil Corporation; and
- Many more government officials and corporate executives.
In all these meetings, I’ve stressed that Canada is open for business and is eager to provide China the resources it needs to fuel its economic expansion. We want to have a vibrant two-way trade based on open, fair and transparent rules for foreign investment in both of our countries.
We have a strong foundation upon which to expand our relationship.
Canada and China established formal diplomatic relations more than 40 years ago, in 1970.
But our economic relationship goes back much farther — Canada established a trade office here in Shanghai more than 100 years ago.
Today, China is Canada's second-largest trading partner — and Canada is China's 11th-biggest trading partner.
Canadian exports to China have increased dramatically — rising 70 percent over the past five years.
The volume of trade increased by 14 percent last year alone. But we can do even better in the future.
From Canada’s perspective, strengthening ties with China — home to one of the world’s most important and fastest growing economies — is an important strategic objective.
And we have a lot to offer China.
We are proud to have one of the world’s most welcoming environments for investment, with a competitive tax structure, political stability and a non-discriminatory regulatory regime.
In fact, Forbes magazine recently named Canada as the best place to do business in its annual rankings of global economies.
The International Monetary Fund predicts that Canada, along with Germany, will have the fastest growing economy among the G7 over the next two years.
In these uncertain times, it is a real advantage for governments to have that kind of fiscal competitiveness and stability.
We are proud that Mark Carney, the Governor of the Bank of Canada, was named as the Chair of the Financial Stability Board. This organization’s mandate is to ensure stability of the international financial system in this period of instability.
And crucially, we have a vast natural resources sector that China needs. Together, forestry, mining and energy account for close to 10 percent of our GDP.
The importance of forestry
One such resource is Canada's forests.
The growth in exports to China of Canada’s wood products is an amazing good-news story for our forestry sector.
China is Canada’s second-largest market for our wood products. Canada’s lumber exports to China have essentially doubled every year over the past five years. Since 2001, there has been a 26-fold increase in exports to China.
Wood construction is hardly new to Shanghai or to China. One need only visit the Forbidden City or the Yuyuan Garden here in Shanghai to gain an appreciation of China’s proud tradition of building beautiful wood structures that can stand the test of time.
China is increasingly looking to wood as the construction material of choice — and it is a good choice. Wood has a low carbon footprint; it is energy-efficient; and it is very effective at withstanding seismic activity.
I had the pleasure to announce China’s first four-storey wood-frame structure in the Tianjin Economic Development Area. This building will showcase the ability of wood to help meet China’s housing market, including its low-rise market.
We are proud of our deep and growing partnership with Shanghai and China in realizing the potential of wood construction as a green building solution to modern challenges and demands.
In 2009 Shanghai implemented China’s most detailed building code for wood-frame structures. We were pleased to be close partners in its development and believe it can serve as a model for the rest of China.
Going forward, we see continued opportunity to grow our trade and investment relationship in forestry.
The importance of mining
As Minister of Natural Resources, I am also eager to talk about how Canada can help China meet its growing demand for minerals and metals.
As one the largest mining nations in the world, Canada may justly be described as a global mining powerhouse.
We have demonstrated expertise in all areas of mining and are at the leading edge of technology and innovation in mine design, extraction, processing, mine closure and rehabilitation.
Canada produces more than 60 minerals and metals and is one of the world’s leading exporters.
For example, Canada is the world’s largest producer of potash; second-largest producer of uranium; and in the world's top five producers of primary aluminium, cobalt, nickel, platinum group metals, salt, titanium concentrate and zinc.
We are discovering even greater potential as we explore our expansive country, particularly in our North, where there is immense mineral and hydrocarbon potential.
Not surprisingly, Canada’s mining sector has global reach. Our mining companies are located in more than 100 countries and involved in more than 10,000 projects, with assets outside of Canada worth more than $109 billion in 2009.
Last year, over half of the world’s equity financing for mineral exploration and mineral development was raised in Canadian stock exchanges.
Canada’s vast resource strength and China’s need for mineral and metal resources is the basis of a strong trading relationship. Indeed, Chinese exports have grown from less than $1 billion in 2001 to almost $4 billion in 2010. However, more can be done, and I look forward to increasing our mining trade with China.
Perhaps the largest potential for growth in Canadian–Chinese trade is energy.
It is no exaggeration to say that Canada is an energy superpower.
We are the second-biggest producer of uranium in the world.
We are the world's third-largest producer of hydroelectricity and the third-largest producer of natural gas.
But, of all our energy assets, probably none is more important than our vast oil and gas reserves.
Our proven oil reserves total 174 billion barrels. Only Saudi Arabia and Venezuela have more.
The oil sands in western Canada are the largest industrial development project in the world, with approximately $137 billion of investment to date.
And we’ve only begun to tap into this potential.
170 billion barrels of our proven reserves, or just over 97%, are found in the oil sands. As technology evolves, those reserves could grow to as much as 315 billion barrels.
This resource will add about half a million Canadian jobs and generate over $2.3 trillion in economic activity for Canada. It is also critical to global energy security.
That’s because, even though the world is reducing its dependence on oil and other fossil fuels, it is going to be a long transition.
The International Energy Agency predicts oil will remain the dominant source of energy for at least the next 25 years, with demand growing by a third.
Currently, virtually all of Canada's energy exports go to the United States.
This is only natural. The U.S. is Canada's next-door neighbour, a good friend and a huge marketplace.
However, there are other opportunities, so we intend to diversify our markets across all resource sectors, especially in the Asia–Pacific region.
Canada’s investment in its Asia–Pacific Gateway is part of our effort to expand commercial ties with China and other countries in the region.
In the years to come, our Asia–Pacific Gateway will be the fastest way to ship goods between North America and China — including energy.
For example, investors have come forward with projects that would connect Alberta’s oil sands to the coast of British Columbia, where tankers can transport oil to Asian customers and others. Sinopec, China’s largest refiner, is among the announced investors in the Northern Gateway Pipeline project, which would deliver 525,000 barrels of oil a day to export markets.
This proposed pipeline is undergoing a joint environmental assessment and regulatory review. A decision whether the project proceeds will be made after this review is completed. But let me be clear, it’s a key strategic objective for Canada to diversify our exports.
Natural gas also offers the potential to provide substantial economic and strategic benefits to Canada and to China.
We are moving quickly to develop our capacity to export liquefied natural gas (LNG). Again, the expanding economies of Asia are obvious markets for Canada’s natural gas through ports on our west coast.
Canadian natural gas is important to global markets and would build our status as a safe, responsible and reliable supplier of energy.
A key advantage for Canadian LNG projects is significantly lower transportation costs.
Transporting LNG from B.C. to China by ship takes only 11 days.
That same tanker would take more than twice as long to make the trip from the Gulf of Mexico, and from the Middle East would also be longer by 50 percent.
A key part of my mission to China is to raise awareness of the strength of Canada's natural resource sector — as both a plentiful source of much needed products and an attractive destination for investment.
There is no doubt Canada's energy sector, especially oil sands and natural gas, is becoming an increasingly popular destination for investment by global energy companies.
Over the last decade, the value of foreign direct investment from Asian companies in oil and gas extraction has grown from $2 billion to $19 billion.
Three major Chinese energy companies are investors in Canada’s oil sands: Sinopec, Chinese National Offshore Oil Company, and PetroChina Company Ltd.
In my meetings with these companies in Beijing, officials told me that Canada is an attractive place to invest with the lowest corporate taxes in the G7, sound regulation and clear rules that do not disadvantage foreign companies.
At the same time, Canada is looking to invest in Chinese natural resource projects. Unfortunately, Canadian investment has declined because some Canadian companies have been disadvantaged by unclear regulation and issues at the sub-national level. We want to build a strong, two-way trade relationship and hope that these issues will be addressed by the Chinese authorities.
Nevertheless, with China’s growing middle class, rapidly developing infrastructure needs and its burgeoning science and technology sector, it is no surprise that 57 percent of Canadian businesses are looking to expand into China over the next five years.
Building the relationship
Such projections add to my confidence in saying that the relationship between Canada and China will continue to grow significantly — and both our countries have made it clear that we share this goal.
Last year, President Hu and Prime Minister Stephen Harper signed an agreement to boost bilateral trade to $60 billion by 2015 — clearly, we have come a long way since that Canadian trade office opened in Shanghai a century ago.
We are currently negotiating a Foreign Investment Promotion and Protection Agreement. This will help solidify our two-way trade and investment.
Such an agreement will create new opportunities for both Canadian and Chinese workers, businesses and their families.
It seems a natural next step for two countries that are growing closer to one another in other ways.
Chinese languages, as a group, are Canada's third most common mother tongue. Every large Canadian city has a vibrant Chinese community.
More and more, students from China are taking advantage of the opportunity to attend Canada's excellent universities — over 60,000 last year.
In conclusion, I would like to add my voice to the growing chorus of those who recognize that what is happening in China today is truly remarkable.
In 2010, as most of the world struggled to pull itself out of recession, China’s economy grew by an astonishing 8.7 percent.
And underpinning all this economic activity is China’s growing need for resources — mineral, energy and forestry resources.
Canada has much to offer this dynamic market.
With our vast natural resources, we can help to build new successes in China, generating jobs and prosperity in both our countries.
Even as we negotiate new transactions and sign new agreements, we recognize that success is found not on paper but in the people who put these agreements into practice.
That is why I must congratulate the Canadian Chamber of Commerce and the Canada–China Business Council.
While we work at the official level, you are the people who will ensure that the great potential we all see in the relationship between Canada and China is fully realized for both our great nations.
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