Vancouver Sun

De Jong de­cries pro­tec­tion­ism in U.S.

‘It be­hooves us to look out­ward ... and we have the tools to do it’: De Jong

- CHUCK CHI­ANG chchi­ang@post­media.com

B.C. Fi­nance Min­is­ter Mike de Jong fired a shot across the bow of Amer­i­can politi­cians and pres­i­den­tial can­di­dates on Wed­nes­day, say­ing that Canada will look else­where for trade if the “seep” of pro­tec­tion­ism in the United States con­tin­ues.

De Jong, speak­ing in Van­cou­ver at the an­nual Pacific Fi­nance and Trade Sum­mit (which pro­motes North Amer­i­can bank­ing and other busi­ness in­ter­ac­tions with Asian part­ners such as China and In­dia), lev­elled thinly veiled crit­i­cism at the cur­rent U.S. pres­i­den­tial can­di­dates.

“I re­mem­ber when U.S. pres­i­dents talked about tear­ing down walls, not build­ing them,” de Jong said, re­fer­ring to Repub­li­can hope­ful Don­ald Trump’s prom­ise to build a bar­rier along the Mex­i­can bor­der. “I re­mem­ber when Amer­ica was great when it was the coun­try help­ing other coun­tries tear down walls. That does not seem to be the pre­vail­ing sen­ti­ment be­ing ex­pressed by po­lit­i­cal lead­ers, or those who want to be po­lit­i­cal lead­ers in the U.S. right now.

“If the U.S. de­cides to look in- ward, it be­hooves us to look out­ward ... and we have the tools to do it. It will be a ben­e­fit for gen­er­a­tions if we take ad­van­tage of the new op­por­tu­nity.”

All three re­main­ing hope­fuls in the U.S. pres­i­den­tial race (Hil­lary Clin­ton and Bernie San­ders for the Democrats, and Trump on the Repub­li­can side) have spo­ken out against free-trade deals such as the 12-na­tion Trans-Pacific Part­ner­ship.

The trade sum­mit is fo­cused on Canada’s ren­minbi (RMB) trad­ing hub, which was launched last spring. De Jong said the cur­rency hub and B.C.’s sta­tus as one of the first ju­ris­dic­tions to is­sue Panda Bonds (bonds in ren­minbi is­sued in the Chi­nese mar­ket) has helped the prov­ince se­cure eco­nomic sta­bil­ity through di­ver­si­fi­ca­tion.

At­ten­dees at the sum­mit, how­ever, cau­tioned against be­ing too en­thu­si­as­tic about the po­ten­tial for the RMB hub and other Chi­nese in­vest­ment.

“I think that while there are cer­tainly op­por­tu­ni­ties in­volved in both of these things, some per­spec­tive is in or­der,” said Pa­trick Cho­vanec, chief strate­gist and New York-based Sil­ver­crest As­set Man­age­ment.

Cho­vanec noted that China’s for­eign in­vest­ment strat­egy is sim­i­lar to Great Bri­tain’s dur­ing the 19th cen­tury — run­ning trade sur­pluses, then us­ing the pro­ceeds to in­vest in for­eign eco­nomic projects that promised big re­turns.

“The dif­fer­ence is in the world’s econ­omy, to­day, the world is awash with sav­ings, look­ing for places to go,” he said. “The danger is that you get cap­i­tal flow­ing out of China, and it bids up as­set prices — hint, the Van­cou­ver real es­tate mar­ket — but it doesn’t drive the un­der­ly­ing de­mand that gen­er­ates re­turns on those as­sets. So what you get is high val­u­a­tions, which is great for peo­ple who al­ready own those as­sets, but you get low re­turns on those as­sets, which is very bad for in­vest­ment.”

Cho­vanec added that is ul­ti­mately why many Amer­i­can com­pa­nies such as Ap­ple are sit­ting on cash re­serves: They are re­luc­tant to in­vest where the re­turns are ques­tion­able. What Bei­jing should con­sider is for China to tran­si­tion its do­mes­tic mar­ket to gen­er­ate con­sumer de­mand, be­com­ing a sup­plier of de­mand rather than cap­i­tal.

“That’s what the world wants from China,” he said. “What it will get from China, if it con­tin­ues on the path it’s on, is more cap­i­tal. … But what the world needs is not nec­es­sar­ily a sup­plier of cap­i­tal. What it needs is a sup­plier of de­mand.”

I re­mem­ber when U.S. pres­i­dents talked about tear­ing down walls, not build­ing them.

 ?? GOVERN­MENT OF B.C. ?? B.C. Fi­nance Min­is­ter Michael de Jong speaks at the Bei­jing Fi­nan­cial As­sets Ex­change in Jan­uary. De Jong cited the prov­ince’s sta­tus as one of the first ju­ris­dic­tions to is­sue Panda Bonds (bonds in ren­minbi is­sued in the Chi­nese mar­ket) as a sign of B.C.’s abil­ity to di­ver­sify.
GOVERN­MENT OF B.C. B.C. Fi­nance Min­is­ter Michael de Jong speaks at the Bei­jing Fi­nan­cial As­sets Ex­change in Jan­uary. De Jong cited the prov­ince’s sta­tus as one of the first ju­ris­dic­tions to is­sue Panda Bonds (bonds in ren­minbi is­sued in the Chi­nese mar­ket) as a sign of B.C.’s abil­ity to di­ver­sify.

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