There's a regular ritual for Canadian Finance ministers: after delivering a budget in Ottawa, they head to New York and London to sell it to movers in the markets. This year, Finance Minister Bill Morneau will break ground with two more stops: in Shanghai and Hong Kong.
It is a symbol of China's growing might in economic matters and in financial markets. But in reality, it's a trade initiative. China wants to be seen as a rising centre of the financial world, so Mr. Morneau is putting its financial hubs on an itinerary of global financial capitals as a nod to Chinese influence intended to build relationships.
The Liberal government has made halting efforts to launch free-trade talks with Beijing, but this is part of a broader strategy to try to deepen economic ties in ways that don't rely on a formal trade deal.
A free-trade deal with China is not only politically divisive in Canada, it has hit hiccups in Beijing over Canada's idea of selling it as a "progressive trade" initiative. When talks do get going, they will take years. Prime Minister Justin Trudeau has set a government-wide mission to deepen the countries' relationship in other ways. Agriculture Minister Lawrence MacAulay has expanded trade missions started by the Conservatives; Trade Minister François-Philippe Champagne led a forestry-sector mission last year; Mr. Morneau co-chaired a Canada-China "strategic dialogue" on finance last April.
Mr. Morneau's visits to Shanghai and Hong Kong aren't likely be controversial, but a lot of Canadians don't like this kind of symbolism, either: many are irked by the idea of their government flattering this big authoritarian power just to do more business.
Still, Mr. Morneau's trip could also serve as a reminder of why Mr. Trudeau's government feels it needs to have this kind of strategy: the Finance Minister doesn't really need to worry much about how traders in Shanghai or Hong Kong can shake Canada's finances, but, one day, his successor will.
Finance ministers' postbudget tours have usually taken them to New York, and often London, because that's where they find the major investors and traders who deal in Canadian government debt.
Canadian Finance ministers do a road show for the same reasons the chief financial officer of a major corporation does a road show when they issue bonds, said Scotiabank chief economist Jean-Francois Perrault, a former assistant deputy minister in the Finance Department. If there's more demand from investors for Canadian bonds, borrowing costs will go down. It makes sense to go to Asia because there are major investors with a lot of capital available, he said.
British Columbia's provincial government has twice issued so-called "panda bonds," denominated in Chinese renminbi. Guy Saint-Jacques, a former Canadian ambassador to Beijing, noted that the National Bank of Canada has issued billions of dollars worth of panda bonds that can serve as both a new source of debt financing and a currency hedge.
But China's not that big a market for Canadian bonds right now and Mr. Morneau knows it. This is about financial diplomacy. The Liberal government wants to promote business with China, and the financial-sector business in particular. This is a piece of flattery to open doors.
China wants to see more international trading in renminbi and has been frustrated by its limited place in international financial institutions such as the World Bank and the International Monetary Fund. "China wants to occupy the place that it believes it should be in on the international scene," Mr. Saint-Jacques said.
That can raise legitimate questions. Given short shrift at major international financial institutions, China launched its own Asian Infrastructure Investment Bank and pushed other countries to sign up and contribute. Critics complained that overlapped with the existing Bretton Woods Institutions and was merely a Chinese play for influence. Stephen Harper's Conservative government chose not to join, but Mr. Trudeau's government did. And now Chinese state-owned companies are testing the waters for major investment deals in Canada again.
There are concerns about Chinese espionage, about Chinese influence and about Chinese pressure to play ball. Even Mr. Morneau's trip could underline those anxieties: One day, China probably really will have influence over Canada's finance. Beijing already holds unspoken financial influence over the United States: they hold a lot of its debt.
Mr. Saint-Jacques argues Canada has to set "red lines" with the Chinese on concerns such as espionage, but it will suffer economically if it doesn't engage with China economically. Chinese power is not going away. It's growing. Mr. Morneau is choosing to sell his budget in Shanghai this year. His successors might have little choice.