April 16, 2009
Hong Kong, China
Address by the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, to the Canadian Chamber of Commerce in Hong Kong
Based on a Transcript
I’m so excited to be here. This is the first time that I’m visiting China and certainly first time in Hong Kong and I’m just frankly overwhelmed. The people that I’ve been able to meet just around my table and in the reception underline the perspective that I’ve always had about Hong Kong: that—if I can steal the name from the Canadian nuclear industry—it is a CANDU place. It’s a place where people just say, let’s just do it, let’s just get it done.
And it’s amazing to be surrounded by that kind of energy. To be in a place where we have, at the same table, somebody who’s become famous for bringing organic foods into China. And over at the other table, somebody who’s claim to fame is actually what his wife is doing, and he’s quick to talk about the fact.
I’m talking about John Crawford of course, that his wife is going to be one of the first women in the private sector going into outer space. Don’t even start with all of that: I know what things are going through your mind, but that’s tremendously exciting.
When I was in school, I actually thought I was going to be an astronaut. John, you may be interested in knowing that. My father continued to reference the fact that I was taking up space in school, and I thought that was going to be my destiny, but obviously it hasn’t been.
This opportunity that I’ve had over the 9-day trade mission that I’ve been on, starting in Japan, being on the mainland then for six or seven days; to be here in Hong Kong for a couple more days—and planning already to be back to this part of the world because it is amazing what is going on here.
I’d like to just give you a bit of a snapshot about what Canada is up to, especially in this time of global downturn—and I’m beginning to realize that, even, is a relative term, if you’re talking to people in China. I’ve heard people commiserating over the last week that their growth rate for their particular area geographically is down to, you know, 8 percent this year and down to 7 percent.
I realize there is an impact that goes with that, but it requires a bit of a mental shift to hear those kinds of numbers relative to other areas of the world which are spiralling down or have been, at least, in far more serious numbers.
If I can just give you a quick snapshot of where we are as far as Canada goes, a little bit about what I’ve been doing the last seven or eight days and then, by then, you’ll be ready for coffee around 3:00. It’s an amazing time that we are in right now. And despite the global downturn, you may have heard—and I do quiz people on this—what the international banking evaluators say about Canada: that we have the most stable banking system in the world right now. And we are pleased to hear that. We believe that was true.
Our banking regulations, the regulatory regime, everything that applies to financial institutions for years because of our requirements of a certain amount of capital assets relative to lending and certain things which we didn’t allow financial institutions to do which maybe they were allowed or able to do in other jurisdictions, like the United States. For many years, our banking system was regarded as boring and now it’s the most stable in the world. So I’m here to announce today that boring is the new exciting. And people do seem to be pleased with that, as far as our banking sector goes.
We have put in place certain limitations that have proved to be wise now, and prudent. We are not bailing out banks in Canada, or financial institutions. We do not have a subprime mortgage problem. We have our financial institutions on a fairly sound setting.
Having said that, like most financial institutions, credit has been in a period of contracting, and so part of our strategy has been to make credit available again, in fiscally responsible ways, through our various credit agencies and credit facilities like the Canadian Commercial Corporation, like EDC [Export Development Canada], different financial institutions, agencies that are arm’s-length from government but for which we use the power of the treasury to somewhat enhance their lending capabilities. And that’s been a strategic move that we’ve taken.
Along with that, we were recognized again by international evaluators. It’s great when, as a government, you don’t have to produce your own propaganda—and of course, our government doesn’t have propaganda; some others do, but ours does not. But it is encouraging when it’s other people evaluating your system. And so, in January, the Economist Intelligence Unit came out with a report on the G8 countries and pointed to Canada, saying that we will be and are the place to do business, certainly over the next five-year rollout.
Now, you’re probably saying, “Well, hold on, I thought you were talking about Hong Kong business. It sounds like you’re trying to get people to invest back in Canada.” And we’re always trying to do that, but I’m showing the linkages that are available, especially if you’re using Canada as a platform, as a basis of your business: the stability and the perception that the rest of the world has, in terms of stability and in terms of opportunity, of Canada.
We are on track to be, by 2011, the lowest-taxed, on the business regime, country of all the OECD [Organisation for Economic Co-operation and Development] nations; we are well on the way to being number one in that position. Our sense is that we’ve got to, as a government, as far as possible, clear the clutter: don’t create, as a government, obstacles and burdens that are unnecessary for business, because people being entrepreneurial and people being innovative will respond when there’s less of a load on their shoulders.
Now, we can’t talk in absolute terms, obviously: taxes are necessary, to a degree. Regulatory regimes are required, to a degree; and they must work and they must be transparent and they must be seen to work. And we can certainly reflect on what got us into this present global crisis by recognizing the importance of some regulation. But as far as possible, our perspective on business is to get out of the way, to provide certain channels and mechanisms, but don’t clutter up the scenery: open the doors, let the breezes blow through and let people and organizations do what they do best with proper facilitation, or appropriate facilitation, from government.
One of the scariest phrases that I ever encountered, when I was in small business, before moving into government, was that phrase, “Hello, I’m from the government and I’m here to help you.” That can and should strike fear in the hearts of many people, but there is an appropriate role to play and we try to strike that particular balance.
With our recent comprehensive economic package—we used to call those budgets but now we call them comprehensive economic action plans—and along with what I’ve already said in terms of taxation, we’ve also accelerated our infrastructure program. Infrastructure projects that we had looked at coming out over the next seven years we’ve compressed into a two-year time frame, significantly loaded the front end for the obvious economic impact that will have. We’ve also taken a very strong position that there is a place and a role to play for government when it comes to encouraging certain relationships which will expand economic opportunity.
And so science and technology agreements that can be encouraged to take place between academic institutions, research institutions and the private sector from one country to another can be positive and can be a launching pad for future endeavours. We were able to announce six of those while I was in China on the mainland: six science and technology projects—some very interesting ones, which are going to lead to commercialization in some cases and which will lead to medical breakthroughs in other cases—where we have institutions like McGill and McMaster [universities] working now on these projects with [institutions like] the [Chinese] Academy of Science in Beijing.
Just to give you an example of the diversity of some of these: Water treatment processes that are state-of-the-art—clearly in demand in an area where growth is so significant—China, of course. Some breakthrough research on the human immunodeficiency virus. A project that will analyse the effect of climate change on grasslands, doing a comparison between grasslands in the Prairies in Canada and in similar areas in Tibet. And other business-oriented projects that are spinning off from that.
When I was on the mainland, travelling with Canadian companies in the construction sector, contracts were signed. Deals had been worked on and contracts were signed, because, as you know—those of you who’ve lived in Canada, as most of you have, or spent time there—the whether extremes in Canada are very significant. We go from extreme high temperatures to extreme low temperatures, and that’s just Vancouver. You take the rest of the country, it gets interesting also. But development of construction materials and capabilities on the residential and commercial side, along with energy-saving technologies, has found a huge audience and a great need in China. And so deals are being signed from that perspective.
It’s been an exciting several days explaining what is happening in Canada, talking about the advantage there, and then using the actual programs that we have in place to continue to advance those particular opportunities.
In China, I met with many of the senior ministers, my counterparts, and also with key people in business. In Japan, it was the same thing. That’s basically the approach we’re taking. And whether it’s a high-level meeting of the key decision makers in government in China, or a meeting such as I just attended about an hour or so ago, of people in the field of medical devices, I’m on a learning curve here. I think government should always be having ears open to hear what are the best things that government can be doing to allow business and enterprise to move ahead—ultimately of course, raising prosperity levels, raising the standard of living and raising the basic state of the human condition. And that’s been the process in which we’ve been involved.
I have to say that I was not prepared for the extent of the growth demand that I’ve seen since being in China. Certainly we receive expert briefings from our officials, we meet with various people in the business community, you read the reports—but, when you fly into a city like Shenyang, where just at a brief count, and driving from the airport to downtown, you count over two dozen cranes which are building massive structures, when you walk into what is the largest airport hangar you have ever seen in your life, when you see the deals that are being made between aerospace companies in China and similar counterparts in Canada, you just start to get a sense of what is going on and the demand, the growth that is being created and therefore, the opportunities with it.
We want to see Canadian business being well placed to capitalize literally on those opportunities. We want to see the linkages formed that can help move these along. We want to see the vibrant relationship between Canada and Asia-Pacific continue to grow.
And there has been growth: in the area of tourism and visitors from China, for instance. In the year 2007, trips to Canada by Chinese tourists’ increased 5.3 percent over the previous year. Last year, the increase was even higher: 6.5 percent. In 2008, despite the downturn, our merchandise exports to China increased over 9 percent and imports from China went up over 11 percent. And when we look at foreign direct investment: the stock of foreign direct investment in Canada from China increased by more than 31 percent, and Canadian direct investment in Chna went up more than 37 percent.
So things have been happening. We also realize that the rest of the world is very much alive to the fact that China is on the move, Hong Kong is on the move, the opportunities are here, the growth opportunities are great. And we want to continue to capitalize on that. We have this great natural base in Canada of a population, 1.2 million of which are people of Chinese descent. Chinese languages are the third most-spoken in households in Canada. We’ve got that great natural base. We’ve got a built-in entrepreneurial and innovative spirit in Canada which has made us the nation that we are today. We are as prosperous as we are because we are an exporting nation: we export and always have—products and services and technology. And that clearly has to continue.
That’s why it was encouraging for me, in meeting with my counterparts in government, to hear very clearly from them that they also want to be part of this move against the danger of protectionism, especially in a time of economic crunch. There’s an amazing transformation that takes place where you can be talking with the most entrepreneurial people in the world in one particular era very clearly saying government should not get in the way of business. And then, in a time of economic crunch, in many cases, it could be those same businesses that run to government saying, “Protect me from my competitor over here and start building up the trade walls and the protectionist barriers.”
And we know from experience, going back as far as 1929, what happens if you’re in a recessionary mode and you start to build protectionist walls: economies will come down. And it’s been encouraging to work specifically on strategies with officials in the Chinese government, looking at things like the WTO, the Doha Round—which we want to continue—bilateral trade relationships, but the message being very clear that protectionism is not the way we want to go. If you want to protect an industry, of course, you open the doors of opportunity. If you want to create opportunities for workers, then you open the channels by which products and services can move more freely, and that will create the necessary employment base to fuel that particular demand.
This is the direction that we want to go. It’s the direction that we are going to continue to follow and we need your advice, your ongoing input on how best to do that. You need to be telling us whether there are ways in which we’re cluttering up the landscape, ways in which we can clear the landscape so that you can continue to do what you do best: raising the prosperity level for our citizens in all of our jurisdictions and raising the state of the human condition in general.
I will close my remarks by reflecting that yesterday I had the honour of speaking at Sun Yat-sen University. The students there first surprised me because I spoke for 40 minutes and not one of them fell asleep—so that’s a credit to the new caffeine drinks that are available. And the questions that I was getting—it was a mix of business and people in political studies—showed me that these students have a sense that, yes, it’s important to gain knowledge, but—as Dr. Sun Yat-sen said—not just for the sake of gaining power or just for the sake of gaining wealth but, in fact, for raising the level of prosperity of the soul and prosperity of the human individuals and prosperity of the human condition itself.
And that is the course that we are following. We want to see that prosperity at all levels continue. I’m happy to be a part of that and I am delighted that you are very willing players in that direction.
Thank you so much for your attention today.
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