Canada Ups Environmental Cooperation With China
Canada’s Environment Minister, the Honourable Peter Kent, serving as the International Executive Vice Chair for the China Council, concluded three days of co-chairing the Annual General Meeting of the China Council for International Cooperation on Environment and Development with China’s Minister of Environmental Protection, Minister Zhou Shengxian.
“Canada is proud of the leadership role it has played in the China Council for over two decades, tackling critical environment and development issues,” said Minister Kent. “The research undertaken by the China Council has influenced important changes in Chinese policies, including the development of China’s environmental impact assessment legislation and adoption of measures to reduce soil, water and air pollution.”
The Council’s 2012 Annual General Meeting resulted in key recommendations to strengthen marine environmental protection, address regional air pollution challenges, and establish a balanced and green regional development strategy across the various regions of China.
The China Council is a high-level international advisory body that provides China’s State Council with research-based policy recommendations on a wide range of environment and development issues. It consists of 32 Chinese and 25 international members from various countries and organisations who have significant expertise in the fields of environment and development.
Canada helped to establish the China Council in 1992, and is the lead international partner of the Council serving as the vice chair at the China Council’s annual general meeting. Since the founding of the China Council, China has experienced continued and rapid economic growth which has brought about increasing pressure on its environment and natural resources. Combined with a number of global environmental challenges such as climate change and loss of biodiversity, the work of the China Council plays an ever important role in facilitating high quality research and providing advice on specific policy measures to Chinese decision-makers.
SOURCE: Environment Canada
Chinese Urbanization to Drive Canadian Lumber Exports to China
This is a no-brainer.
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China’s import of softwood lumber from British Colombia is down this year but demand should begin to accelerate by the end of 2013 as the world’s most populated country continues to build millions of homes to accommodate massive urbanization, an industry analyst said Wednesday.
B.C. exported 5.4 million cubic metres of softwood lumber during the first nine months of 2012, a drop of 1.5 per cent from a year earlier, but less than the five per cent decline in overall Chinese lumber imports.
Mark Kennedy of CIBC World Markets says the performance is positive in light of the recent slowing of the Chinese real estate market and reflects the pullback in U.S. exports and recognition of the quality of Canadian wood.
Canadian lumber is used primarily in China for concrete forms in apartment building construction, furring strips used to attach drywall and flooring, and for trim, door and window frames.
China imported 1.86 million cubic metres of lumber in November, up nearly 15 per cent from the prior month and slightly below volumes shipped a year ago.
Kennedy says the growth of Chinese imports will depend on stimulus programs adopted by the new government and its support for social housing.
Imports could increase up to 20 per cent between 2013 and 2015, supporting strong demand from Canada which supplies more than 80 per cent of North American lumber exports. Increased Chinese demand, coupled with a slow recovery in U.S. home construction should boost lumber prices and eliminate softwood lumber duties as of January.
The leading beneficiaries include West Fraser Timber (TSX:WFT) and Canfor (TSX:CFP), Western-based producers which together paid nearly $100 million in duties last year.
The long-term demand for lumber is huge as an estimated 10.75 million homes are expected to be built annually in the next 15 years, including 40 per cent in the form of social housing targeted at low income earners, Kennedy wrote in a report.
China’s urban population is expected to hit one billion around 2027, prompting five million housing starts annually. Replacements of demolished homes represent another two million homes, plus 3.75 million units to reduce housing shortages.
In addition to lumber, Chinese demand is growing for pulp as the country expands its production of tissue and cardboard packaging.
China imported 1.4 million tonnes of pulp in November, up 2.2 per cent from October, but 7.6 per cent higher than November 2011. In the first 11 months of the year, imports grew 15 per cent to 15.1 million tonnes.
– The Canadian Press
Nexen Approval and New Requirements for Foreign SOE Investment
As expected, the Harper government’s decision to approve CNOOC’s takeover of Nexen garnered mixed reviews from pundits across the spectrum. One National Post columnist hailed the Prime Minister for his able handling of the delicate politics involved while a Sinologist critic warned of sinister Chinese Sunzi-style strategy that could threaten Canada’s sovereignty if “China accumulated a critical mass of economic power”.
On this issue, the Prime Minister was able to carefully balance the need to uphold the greater good of Canada-China trade and investment while appeasing those concerned about Canadian resource security.
The Harper government declared that purchases of Canadian assets by foreign governments though SOEs are different from strictly private transactions and so will be judged on their own merits and approved on an “exceptional basis”. Henceforth, applications by foreign interests, especially SOEs, will be closely scrutinized for the degree of control or influence they could exert on the Canadian company, the industry in which it operates, as well as the extent to which a foreign state could exercise control or influence over the SOE making the acquisition.
Daniel Schwanen, author of a C. D. Howe Institute study on foreign, notably Chinese, SOE investment in Canada released just prior to the announcement, wrote in the Globe and Mail that the Harper government’s statement made some needed clarifications for foreign investors but may also lead to questions about overall Canadian trade and economic policy.
The revised guidelines now require an evaluation of the market orientation, corporate governance and transparency of the Canadian acquisition. There are also provisions for free market principles and industrial efficiency, indicating a clear preference for private companies. Equally important, the reference to approval on ‘exceptional basis’ is a “de facto declaration of a national strategic interest in the oil sands. This opens the door to state-to-state negotiations whereby Canada leverages access to state owned investors in exchange, for example, for broad market access concessions for Canadian firms”, Mr Schwanen pointed out.
In the wake of the Nexen deal, Canadian eyes are trained on Scotiabank’s $719 million offer to buy a 20% share of the Bank of Guangzhou whose approval by Chinese banking authorities has languished for the past year. But a Scotiabank spokeswoman said the bank does not see the Nexen deal as having an impact on its purchase and its president remained confident the deal will go through.
Meanwhile, the Alberta government has reacted cautiously to the new guidelines, concerned that it could slow the pace of foreign investment into the oil sands. Natural Resources Minister Joe Oliver had himself estimated that Alberta will need some $650 billion over the next decade to develop the sector. Thus, Mr Oliver recognizes that his government has much work to do to reassure SOEs not only from China but also India, Brazil, South Korea, Kuwait, and Abu Dhabi, all of which are considering investment in Canadian oil and gas.
Interviewed by the Globe and Mail, Peter Harder, a former deputy minister of foreign affairs and now president of the Canada-China Business Council, said the Nexen deal is a major advance for Canada-China business relations but both sides will be treading delicately in the offing.
“I think we need a period to politically digest this and we need leaderships across the political spectrum to point out to Canadians why opening ourselves to Asia generally and China in particular is in our economic interest. And I don’t know how we get the capital we need in the oil sands over the long haul without the involvement of SOEs, not just the Chinese but others”.
Writing in the Ottawa Citizen, Wenran Jiang, China scholar at the University of Alberta, suggests Chinese SOEs can react in a number of ways. They may acquiesce to the requirements but take only minority shares of Canadian assets. They could challenge the guidelines as unfair, discriminatory and even hostile causing them to stay away from the oil sands. They could also pack up and leave for better pastures entirely as Chinese SOEs don’t lack suitors for investment.
Mr Jiang concludes: “Which scenario(s) will unfold depends on how Canada will engage with China. We now need a coordinated strategy between the federal government, the provinces, and the private sector in dealing with exactly what Harper has said, that Canada needs to take advantage of the Chinese market while avoiding the risks associated with it”.
China Backed Tech Incubator Launched in Ottawa
This is an interesting development; bodes well for Canadian-Chinese tech co-development.
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Partnership between Invest Ottawa and state-owned ZDG aims to help local tech startups enter Chinese market
Ottawa tech startups interested in entering the Chinese market have $10-million and Canada’s first China-backed tech incubation centre to help their efforts.
Invest Ottawa, the city’s economic development agency, and the state-owned Zhongguancun Development Group (ZDG) have partnered to open the ZDG Ottawa International Incubation Centre, the second such centre to open in North America, following a similar one in Silicon Valley last year. ZDG, created by Beijing’s municipal government and with $11-billion in assets, has committed an initial $10-million in funding.
The centre will be housed in a 1,600-square-foot space at Invest Ottawa’s headquarters and will help startups with funding of China-based research and development, marketing and office expansion, a release said.
– G & M
Comment: US Also Stole Intellectual Property
Intellectual property theft is a bad thing but it is often hypocritical of especially American commentators when they harp on alleged theft of US IP by Chinese companies in a knee-jerk fashion. As China climbs up the technological ladder, its companies are already having to contend with theft of their IP by their counterparts in other emerging countries namely, India and Russia, not to mention Southeast Asian, Latin American, and African countries. Therefore, it is increasingly in Chinese corporate interest to desist from illegal activities and protect IP all around.
Here is a refreshing look back at American behaviour in the 19th Century to acquire British technology that served to revolutionize mass production in the US:
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Why America was the China of the 19th Century
The ship carrying Francis Cabot Lowell and his family home from England in the summer of 1812 was intercepted by a British war squadron, which held the passengers and crew for some days at the British base at Halifax, Canada. Lowell’s baggage was subject to several intensive searches, for his captors had been warned that he may have stolen designs for power textile weaving machinery, a serious crime in England. Lowell, indeed, had done just that – but, aware of the risk, had committed the designs to memory.
The British rarely accorded outsiders the privilege of touring their cotton plants. But Lowell was a leading Boston merchant who imported a great deal of British cloth and had solid relations with his British counterparts. One can imagine him on one of his tours, feigning languid disinterest even as he diligently filed away details on gearing and loom speeds. By the gentlemanly codes of the day, it seems dishonorable.
Today, it’s China that is the rising power, and the United States that is the hegemon wary of the young upstart. To China, the United States appears much as Great Britain did to Americans two centuries ago. The US Navy is an intrusive presence on its coasts, while US support for Taiwan parallels British sympathies for southern separatists.
Most threatening for Beijing is the appeal of America’s raucous democracy for China’s rising masses. The Chinese today are as determined as 19th-century Americans were to achieve economic parity with their rival, and like early Americans, will steal all the technology they can. The important difference is that modern documentation standards make theft much more rewarding. Any drawings Lowell purloined would have been mostly dimensionless and only approximately accurate. (He was fortunate that Paul Moody, the genius mechanic who designed and built his plants, was also a skilled weaver.) In the mid 19th century, Americans were also desperate to replicate Britain’s famed Sheffield steel, by common consent the world’s finest. But the best Sheffield craftsmen the United States could buy failed to replicate it. (The key, which even the British had not guessed, was the local clay used in the heating vessels.) Today, Chinese espionage is widely assumed to have targeted virtually all big American technology companies. A long list of firms, including Apple, Boeing, Dow Chemical, Dupont, Ford, Motorola, Northrup Grumman, and General Motors, have pursued successful criminal actions against Chinese moles and other agents.
Back in 1812, finished cotton textiles dominated British exports, accounting for about half of all trade revenues, the fruit of a half century of progress in mechanised mass production. Proportionate to GDP, the industry was about three times the size of the entire US automobile sector today. High-speed textile manufacture was a highly advanced technology for its era, and Great Britain was as sensitive about sharing it as the United States is with advanced software and microprocessor breakthroughs. The British parliament legislated severe sanctions for transferring trade secrets, even prohibiting the emigration of skilled textile workers or machinists.
But the Americans had no respect for British intellectual property protections. They had fought for independence to escape the mother country’s suffocating economic restrictions. In their eyes, British technology barriers were a pseudo-colonial ploy to force the United States to serve as a ready source of raw materials and as a captive market for low-end manufactures. While the first US patent act, in 1790, specified that “any person or persons” could file a patent, it was changed in 1793 to make clear that only UScitizens could claim U.S. patent protection.
China’s modern trade and patent regimes are similarly tilted against outsiders. “Use” patents are freely awarded for Chinese versions of Western inventions. High-value chips are denied import licences unless companies allow the “inspection” of their source code. Western partners willingly make Faustian bargains to contribute crown jewel technologies for the sake of immediate contracts. German companies that once supplied mag lev technology to their Chinese high-speed rail partners now find themselves shut out by newly born Chinese competitors. Last summer, GE made a similar deal involving its highly valuable, and militarily sensitive, avionics technology.
If anything, the early Americans were even more brazen about their ambitions. Entrepreneurs advertised openly for skilled British operatives who were willing to risk arrest and imprisonment for sneaking machine designs out of the country. Tench Coxe, Alexander Hamilton’s deputy at Treasury, created a system of bounties to entice sellers of trade secrets, and sent an agent to steal machine drawings, but he was arrested. While skilled operatives were happy to take US bounties, few of them actually knew how to build the machines or how to run a cotton plant.The breakthrough came in the person of Samuel Slater. As a young farm boy, he served as an indentured apprentice to Jedidiah Strutt, one of the early developers of industrial-scale powered cotton spinning. As Strutt came to appreciate Slater’s great talents, he employed him as an assistant in constructing and starting up new plants. (In his signed indenture, Slater promised to “faithfully … serve [Strutt’s] Secrets.”)
Worried about his future in England, Slater made the jump to the United States when he was 21, bringing an unusually deep background in mechanised spinning. Emigrating under an assumed name, he answered an ad from Moses Brown, a leading Providence merchant, who had been badly stung by ersatz British spinning machinery. Brown was sufficiently impressed by Slater to finance a factory partnership, and over the next 15 years, Slater, Brown, their partners, and the many people they trained created a powered thread-making empire that stretched throughout New England and down into the Middle Atlantic states. Former president Andrew Jackson called Slater “The Father of the American Industrial Revolution,” the Brits called him “Slater the Traitor.”
The development implications were profound, for Slater and Lowell together jump-started American mass-production manufacturing, the essential ingredient in its startling 19th-century growth. The United States’ present-day high technology could have much the same implications for China. There is no point appealing to Chinese ethics – in the great game of nations, ethics don’t enter into the conversation.
– Charles R. Morris in Foreign Affairs.