Start building China trade relationships right now, expert urges

OTTAWA — Even without a Chinese-Canadian free-trade deal, the federal government should be deepening its business relationship with the rapidly expanding Asian economy on multiple fronts, says a global expert tapped by Ottawa to help lift Canada’s lacklustre growth.

Dominic Barton, chairman of the Liberal government’s handpicked council of economic advisers, spoke to the Canadian Press about the country’s opportunities to do more business in China — and with its emerging middle class — in the absence of a free-trade agreement.

Prime Minister Justin Trudeau will travel to China next week for a week-long visit that will include bilateral talks and the G20 leaders’ summit.

Although Trudeau has said he wants to expand trade with the world’s second-biggest economy, an actual free-trade deal could still be years away amid concerns in Canada over human rights in China. For its part, China has repeatedly said it wants a free-trade agreement with Canada.

Barton, a sought-after expert who travels the globe helping presidents, governments and big corporations with economic strategy, supports a trade deal with China because it would give a “pretty significant” boost to Canadian exports.

But until then — if that day arrives — Canada has many options to help fuel its weak growth by taking a more proactive business approach with China, added Barton, the global managing director of consulting company McKinsey & Co.

“We need it,” Barton said of a free-trade deal. “There’s obviously politics that have to be looked at and how Canadians feel, but I think there’s a lot that could be done to prepare.”

Barton, a Canadian who spent years working in China, recommended Canada get moving in a range of areas when it comes to China, its second-largest trading partner. He said opportunities include everything from financial and health-care services to agri-food trade, from a coordinated effort to entice Chinese students to study at Canadian universities to finding new ways to help small and medium businesses tap into China’s vast market through e-commerce.

Barton also said Ottawa should proactively encourage China to make capital investments in Canada — an approach that would be more politically acceptable than wholesale takeovers of Canadian firms by Chinese state-owned enterprises.

For example, he predicted food demands from China’s middle class would grow in the coming years, which could lead to the expansion of Canada’s rail network. Barton said China could invest capital in related equipment, such as rail cars.

On balancing human-rights concerns with business potential, Barton argued Canada would wield more influence in Beijing with closer economic links.

“I think it’s very difficult to admonish people with no relationship because it’s kind of like, ‘Why should I listen to you?’ ”