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doug saunders

Justin Trudeau's efforts in Beijing this week to build closer economic ties had a number of things in common with Pierre Trudeau's historic early-1970s move to do the same. Both followed years of pressure from Canadian companies for more access to Chinese markets. Both occurred at moments when the Communist Party leadership was moving in a more authoritarian, centralizing direction. And therefore both visits were awkward, politically risky encounters.

But this is not his father's China. Today, "business with China" no longer means what it did a generation ago – or what it meant when Jean Chrétien (eagerly) or Stephen Harper (reluctantly) tried to negotiate more of it. Cozying up to Beijing is no longer a matter of choice and opportunism: China is now coming to us, from a thousand directions. We will become more entangled with China, with or without a trade deal.

In both 1973 and in 2016, Canada and China met each other as starkly different economic actors. On one side, a rural-bound economy dominated by farms and mines, and on the other a more sophisticated, highly-developed urban and industrial economy.

The big difference is that in 1973 the more sophisticated, developed economic actor was Canada. A peasant-majority China was badly in need of trade with Canada, and willing to do a lot to win it.

Today, those roles have reversed.

Canada today sells about $20-billion in goods to China every year. The largest share, more than a quarter, is wood and other forest products; the next, at 15 per cent, is canola seeds used to make cooking oil. Almost all the rest is made up of minerals, petroleum, grains, fish and other raw materials pulled from the earth and sea.

As Trade Minister Chrystia Freeland was reminded this week when she made little headway in her attempts to get China to ease its hindrances on canola imports, the Chinese can take or leave Canada's raw-material exports: We're a good seller, but they have others.

On the other hand, Canadians import more than three times as much, $65-billion in goods, from China every year – a list almost entirely consisting of electronics (a quarter), appliances (a fifth), furniture, toys, clothing and equipment. About 70 per cent of it is made in China by non-Chinese foreign companies such as Apple and Samsung and IKEA. We're not going to stop buying that stuff.

That imbalance alone makes negotiations tempting: They're here, but we're not there, except as a purveyor of staples. But the economic relationship is no longer just, or mainly, about buying and selling goods and commodities from a monolithic Chinese state.

This year, for the first time, China's investments in other countries will exceed the world's investment in China, exceeding $100-billion (U.S.) annually. For the past decade, most of that investment was a matter of state-owned enterprises building infrastructure projects in poor countries in Africa and elsewhere.

But now more than half of that investment (up from a quarter two years ago) is made by China's private sector, and the money is flowing into wealthy countries like Canada.

Chinese private companies, and individuals, have strong reasons to put their money abroad. Beijing's effort to shift from manufacturing exports to a middle-class consumer economy while increasing centralized controls have caused market turmoil and a devaluation of the Chinese currency; shares in Chinese companies aren't as lucrative, or trustworthy, as before, and a sinking currency means foreign investments are more appealing.

Many middle-class Chinese no longer trust their country's banks, stock markets or real estate markets, so are moving their investments and savings offshore – as Vancouver's real estate market has discovered. So "business with China" no longer means a Beijing-driven push into the world; it means thousands of points of spontaneous contact. China is in our economy, like it or not. But we have little access to theirs.

As the Beijing-based economic analyst Arthur Kroeber concluded in a research paper on these flows for his firm Gavekal last week, "The key question now is how long advanced economies will put up with large inflows of private Chinese capital while their own firms continue to be shut out of the fastest-growing parts of China's economy."

In other words, Mr. Trudeau was in Beijing because Beijing is already here.

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