BC, Canada: Is­su­ing ‘dim sum’ boosts China ties

China Daily (Canada) - - FRONT PAGE - By MICHAEL BAR­RIS in New York michael­bar­ris@chi­nadai­lyusa. com

It was a risky move by a govern­ment seek­ing to im­press China. It paid off in se­cur­ing the na­tion’s friend­ship, a key move in at­tract­ing Chi­nese in­vest­ment.

Last Novem­ber, the govern­ment of the Cana­dian prov­ince of Bri­tish Columbia be­came the first for­eign govern­ment to is­sue an off­shore bond de­nom­i­nated in yuan. The is­suance of the one-year bond — nick­named the “dim sum” bond for the Chi­nese cui­sine that in­volves serv­ing a va­ri­ety of small del­i­ca­cies — raised an un­ex­pect­edly high 2.5 bil­lion yuan ($405.1 mil­lion).

The high- pro­file step marked a mile­stone for China in the in­ter­na­tion­al­iza­tion of its cur­rency, a key is­sue in its fi­nan­cial re­form plan.

“I’m sure the Chi­nese govern­ment al­ways will re­mem­ber it,” Teresa Wat, BC’s In­ter­na­tional Trade Min­is­ter and min­is­ter re­spon­si­ble for Asia-Pa­cific strat­egy and mul­ti­cul­tur­al­ism, told China Daily in an in­ter­view. She was in New York as part of an East­ern US swing aimed at at­tract­ing in­vest­ment to Canada’s west­ern­most and most eth­ni­cally di­verse prov­ince — the clos­est in prox­im­ity to China.

BC Fi­nance Min­is­ter Mike de Jong said of­fi­cials had in­tended to raise only 500 mil­lion yuan with the bond of­fer­ing but de­mand ex­ceeded ex­pec­ta­tions. Cen­tral banks and for­eign in­sti­tu­tions snatched up 62 per­cent of the bonds while fund as­set man­agers bought 18 per­cent. In­vestors in Hong Kong took 46 per­cent, and US in­vestors grabbed 40 per­cent. The bonds car­ried a yield of 2.25 per­cent — 10 to 15 ba­sis points lower than bonds sold by the Chi­nese govern­ment, ac­cord­ing to of­fer­ing man­ager HSBC.

Dim sum bonds ap­peal to for­eign in­vestors who seek ex­po­sure to yuan-de­nom­i­nated as­sets, but are re­stricted by China’s cap­i­tal con­trols from in­vest­ing in do­mes­tic Chi­nese debt. Un­til BC is­sued its bond, the is­suers of dim sum bonds had been largely en­ti­ties based in the Chi­nese main­land or Hong Kong, and oc­ca­sion­ally for­eign com­pa­nies.

Help­ing China “leaves a good im­pres­sion”, Wat said dur­ing the in­ter­view at a Man­hat­tan ho­tel. By be­ing “bold and risky and cre­ative enough to break it open”, the prov­ince can at­tract more Chi­nese in­vest­ment to Canada, and par­tic­u­larly Bri­tish Columbia and the Van­cou­ver area, she said.

China “has been very ac­tive in their fi­nan­cial world for many years, and yet how come not even one govern­ment had thought about is­su­ing a bond in RMB?” Wat asked. “Do they have con­fi­dence in the RMB? That tells a lot. We at the BC govern­ment re­ally have con­fi­dence in the RMB, we know one day it will thrive — and sure enough it did take off suc­cess­fully.” The prov­ince plans to hold an­other dim sum bond of­fer­ing “when op­por­tu­nity arises”, Wat said.

Jim Hop­kins, as­sis­tant deputy min­is­ter of Bri­tish Columbia’s fi­nance min­istry, said the prov­ince wanted to be an early en­trant in the off­shore yuan mar­ket, which is ex­pected to grow rapidly and ben­e­fit par­tic­i­pants in terms of lower trad­ing cost with China and more di­ver­si­fied fi­nanc­ing and in­vest­ment chan­nels.

Since 2001, BC’s goods ex­ports to China have sky­rock­eted 691 per­cent, ac­cord­ing to the BC govern­ment, to $5.75 bil­lion in 2012.

The pres­i­dent and CEO of a mul­ti­cul­tural broad­cast­ing com­pany, Wat has rep­re­sented the Van­cou­ver-area elec­toral district of Richmond Cen­tre as a mem­ber of the BC Lib­eral Party since she was elected to the leg­isla­tive as­sem­bly in 2013. Last June, Pre­mier Christy Clark ap­pointed Wat as Min­is­ter of In­ter­na­tional Trade, and Min­is­ter Re­spon­si­ble for the Asia Pa­cific Strat­egy and Mul­ti­cul­tur­al­ism.

Wat said she wants to tighten BC’s bond with China by “lev­er­ag­ing” its di­verse pop­u­la­tion.

In 2011, Canada had a for­eign-born pop­u­la­tion of about 6.8 mil­lion, rep­re­sent­ing 20.6 per­cent of the to­tal pop­u­la­tion, ac­cord­ing to Cen­sus data. From 2006 to 2011, Asia was Canada’s largest source of im­mi­grants.

“Im­mi­grants to Van­cou­ver still main­tain their per­sonal, cul­tural, fam­ily, busi­ness and govern­ment re­la­tion­ship,” the Hong Kong-born Wat said. The com­mu­nity’s ties to over­seas mar­kets “can turn into meet­ings” that even­tu­ally lead to deals, she said.

Re­la­tion­ships are par­tic­u­larly im­por­tant in do­ing busi­ness with China. “When you are deal­ing with a Chi­nese busi­ness­man, you have at least seven or eight meet­ings be­fore you can strike a busi­ness deal,” Wat said. “That’s some­thing a lot of Amer­i­can busi­ness people don’t re­ally get — you re­ally have to in­vest time. It’s like a mar­riage — you have to try to un­der­stand each other. And you have to nur­ture that re­la­tion­ship even af­ter you be­come friends.”

Grow­ing up, Wat’s hero­ine was Hua Mu­lan — the leg­endary girl who takes her fa­ther’s place in the army to fight in­vaders. It is a story of fem­i­nism, “since the fe­male tra­di­tion­ally never gets a place in Chi­nese so­ci­ety,” Wat said. Hua Mu­lan “shared a great wish of help­ing her fa­ther... do­ing the things a fe­male can’t do — that’s why she’s my hero­ine”.

Her ad­mi­ra­tion of Hua Mu­lan and the mes­sage she ab­sorbed from her par­ents still drive her to­day. “Even if you are a woman, you have to be in­de­pen­dent, you have to be able to look af­ter yourself, you can’t de­pend on get­ting mar­ried to a rich hus­band”, she said.

Scan it!

HU HAIDAN / CHINA DAILY

Teresa Wat, the Cana­dian prov­ince of Bri­tish Columbia’s in­ter­na­tional trade min­is­ter and min­is­ter re­spon­si­ble for Asia-Pa­cific strat­egy and mul­ti­cul­tur­al­ism, was in New York as part of an East­ern US swing aimed at at­tract­ing in­vest­ment to Canada’s most eth­ni­cally di­verse prov­ince — and clos­est ge­o­graph­i­cally to China.

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