Federal cabinet heads to China for high-stakes trade mission

OTTAWA—Prime Minister Stephen Harper is bound for a country at a crossroads to meet a Chinese political leadership that faces significant political risk as it tries to move its massive economy forward.

That blunt assessment, uncharacteristic of a government bent on deepening economic relations with China, is contained in a briefing note prepared for International Trade Minister Ed Fast in advance of his April 2013 visit to that country.

Fast is one of many Conservative cabinet ministers who in recent years have paved the way for the prime minister’s third official visit to China, which starts this week.

Harper’s office is emphasizing the economic and trade component of the trip, but it isn’t shying away from the obvious human rights and democracy issues in China.

A briefing book prepared for Fast’s trip last spring, released recently under the Access to Information Act, is part of several government documents that show the Harper government has been busily assessing the lay of the land in China for the last year.

That includes weighing the political ramifications of China’s rapid and uneven economic growth, and its relatively recent change in communist leadership.

“Today, China is at a crossroads. While the government has largely delivered on economic outcomes, with unprecedented growth over the past 30 years, the development of China’s social welfare and governance systems has not kept pace,” says the briefing note, dated March 2013.

“Rebranding the drivers of the Chinese economy from the export-driven model and towards domestic consumption will create significant political risk for the Chinese leadership as citizens are becoming increasingly vocal about issues including corruption, environmental mismanagement, food safety and social injustice.”

Moreover, the memo says China’s growing economy has made it a glaring example in another area: The negative effect of economic disparity.

“Rising income levels have benefited almost all of China but the income gap between rich and poor is unrivalled anywhere in the world,” it states.

Fast’s trip took him to Shanghai and the lesser known, thriving industrial centre of Hangzhou—Harper’s first stop later this week before he meets Chinese leaders in Beijing.

That’s where Harper will have the opportunity to see the new Chinese leadership, led by President Xi Jinping, who took office in late 2012.

Harper is expected to announce a deal that will see Canada designated as a trading hub for China’s yuan currency.

A government source, speaking on condition of anonymity, told The Canadian Press the two countries have agreed to the plan, but a few details still need to be worked out.

“The hope is that there will be an announcement on the trip,” said the source, who was not authorized to discuss the matter.

Ontario Premier Kathleen Wynne said this week she hopes the new trading hub, which would help Canadian business by possibly increasing exports to China, is located in Toronto because it is a “financial services” centre in Canada.

A separate briefing note prepared for Canadian deputy ministers emphasized the need for the Harper government to engage the new Chinese leadership “at all levels.”

“Important for Canadian interests that the Chinese transition was smooth, but unclear what policy implications of new team will be,” said the partially censored document, dated March 20, 2013.

“No reason to expect accommodating stance on foreign policy issue.”

The memo also recommended the government undertake a vigorous engagement with the new Chinese leadership.

“With China now an important partner in many policy areas, Canadian leaders need to build relationships with the new Chinese leadership,” it said.

“As ministers visit China in support of priorities within their portfolio, should work to ensure their program takes advantage of broader network-building opportunities to further bilateral relationship as a whole.”

Harper will be accompanied this week by several top cabinet members, including Fast, Foreign Affairs Minister John Baird, Industry Minister James Moore, Agriculture Minister Gerry Ritz, and Alice Wong, the minister of state for seniors.

A statement from Harper’s office indicated the prime minister would “engage in an open and frank dialogue on issues that are paramount to Canada: human rights, good governance and transparency, security and the rule of law.”