While the most important political election in the world took place yesterday, some would argue that the event that will most likely and most significantly affect Canada’s future is the selection of the new Chinese President and Prime Minister. This Thursday, the 18th National Congress of the Chinese Communist Party will begin its selection of a new leader behind closed doors.
It is anticipated that Xi Jinping will take the leadership role to the party’s new Central Committee; the Committee will then approve a list of members of China’s supreme ruling body, the Politburo Standing Committee. If “elected”, Mr. Xi will lead the group of Politburo members as the Party’s new general secretary, and in March, take over China’s Presidency from the current leader Hu Jintao.
In Monday’s Globe and Mail article, “Never mind Washington, its Beijing’s leadership choice Canadians should watch this week”, Jia Wang, the Assistant Director of the China Institute at the University of Alberta, notes that whoever is selected into power “is going to essentially set the direction for China for the next five to ten years. If there is any shift or change in the policy direction it is going to have a major impact on the people of China and the rest of the world, particularly the global economy.”
More specifically, greater liberal political and economic policies would likely increase trade, investment, and closer relations with the Western world. But if policy “turns inward under the advice of Party hardliners, the free flow of capital to and from China as well as its diplomatic standing are both likely to suffer.”
The global community is increasingly shaped by China, the world’s second largest economy. China’s economy has enjoyed an annual growth rate of 10% for more than 30 years. Martin Jacques, author of When China Rules the World, considers it to be “the most remarkable economic transformation…since the modern era began with Britain’s industrial revolution in the late 18th Century.” It is estimated that in about six years, the Chinese economy will overtake the US economy in size; by the year 2020, it is expected to become the world’s largest economy.
This matters for Canada. China has been a significant driver of Canada’s resource-heavy economy: direct foreign investment between Canada and China totaled C$15.4 billion in 2011 – a fivefold increase from 2005 levels. Chinese firms have a significant interest in investing in Canadian industries, particularly in mining, oil, and gas extraction; at the same time, Canadian investment in China has also grown, reaching C$4.5 billion at the end of 2011.
The Foreign Investment Promotion and Protection Agreement (FIPA) is a key piece in Canada’s bid to diversify trade and investment towards Asian economies. Canadian and Chinese officials negotiated and signed FIPA earlier this year. With this agreement, Canada has solidified its commitment to furthering investment flows by proving a more stable and secure environment for investors on both sides of the Pacific.
FIPA clearly illustrates Canada’s growing ties with China. It has real meaning to Canadians, and we can look no further than the $15.1 billion USD bid from China National Offshore Oil Corporation (CNOOC), the Chinese state-owned oil giant, to take over Calgary’s Nexen Inc., a Calgary-based energy producer.
So, as the aftermath of yesterday’s U.S. election unfolds, don’t forget to look east, as the transition of power to China’s new President will greatly shape our future here in Canada.
Carolyn Kim is a 2014 Master of Public Policy candidate at the School of Public Policy and Governance. She also received a Bachelor of Urban and Regional Planning from Ryerson University. She previously worked in the fields of land use development and transportation planning.