Harper heads to China in effort to bolster Canadian exports

Ottawa: Canada's prime minister heads to China tomorrow in a bid to pry open more of the Chinese market for Canadian resources after Washington snubbed Canadian oil, in a visit that will also bring pandas to Canada.

But while Beijing eagerly awaits Prime Minister Stephen Harper's arrival, experts downplayed expectations and activists blasted ongoing human rights abuses in China.

"China attaches great importance to this visit," China's ambassador to Ottawa, Zhang Junsai, said after Harper accepted an invitation to China to meet with Chinese President Hu Jintao, Chinese Premier Wen Jiabao and others.

Harper "made very clear that deepening our bilateral economic ties is high on his agenda. This [view] is totally shared by the Chinese side".

It will be Harper's second official visit to China and he will be accompanied by his wife Laureen, several ministers and MPs and 40 business executives hoping to "deepen economic ties", his spokesman Andrew MacDougall told AFP.

"Canada needs to be more engaged in the Asia-Pacific region," he said, adding that the trip's aim — to diversify Canada's markets — is largely "in response to decisions taken in the United States".

MacDougall reminded that most of Canada's exports and virtually all of its energy exports go to the United States, and that Ottawa was disappointed over Washington's rejection last month of a proposed pipeline to carry oil from the Alberta tar sands to the US Gulf Coast.

Activity

The Keystone XL pipeline was viewed as crucial to Canada's economic prosperity, by opening up new avenues to sell oil from its landlocked oil sands to the United States and abroad.

Hearings are now under way in westernmost Canada to consider an alternate crude oil pipeline from Alberta to the Pacific Coast for eventual shipping to Asia.

"If you look at the world economy and where it's growing, the Asia-Pacific region is where the activity is," MacDougall said.

University of Ottawa economy and globalisation professor Errol Mendes noted that Harper was at first "cool on China".

But his vocal criticisms of China's human rights abuses during his first term started in 2006 have "slowly disappeared and economic issues have moved to the forefront". "It is largely because the oil and gas industry needs to find new markets," Mendes said. "Billions of dollars are at stake."

In recent years, Canada has opened new trade offices and sent ministers on 46 trips to China, and sent back two Chinese fugitives, earning it goodwill in Beijing. At home, Ottawa upgraded its Pacific ports of Vancouver and Prince Rupert and highway and rail links to them to increase shipping to Asia.

It also recently signed a border deal with Washington to allow imports from Asia to be screened once at Canadian ports and then moved over land straight to US markets — stealing container traffic from US ports.

A new report by the China Institute of the University of Alberta said there is tremendous opportunity to scale up oil sales to China — currently only 10,000 barrels per day due to "limited infrastructure in place".

However, it warned: "China is not a panacea for all current difficulties and uncertainties facing Canada's energy sector.

"Given the scale of Chinese demand involved, the primacy of the US market, and the tyranny of distance, Canada is not likely to become a decisive source of oil, gas or other energy products for China," the report concluded.

Opportunity

China is Canada's second-largest merchandise trading partner. Bilateral merchandise trade reached C$57.7 billion (Dh213 billion) in 2010, while overall trade between the two countries more than tripled between 2001 and 2010. During this trip, Harper is expected to sign a few small deals such as a foreign investment protection and promotion agreement with China, and secure a loan of giant pandas to Canadian zoos.