China wants Alberta to buy in
'World's biggest factory' seeks Alberta's investment in its future
by Paul Marck
‘World’s biggest factory’ seeks Alberta’s investment in its future
By Paul Marck
Have a conversation with Lei Jianxhong, consul of the economic and commercial section of the Consulate General of the People’s Republic of China, and it is quickly apparent that the affable trade official has a single-minded purpose — to sign deals. The most populous nation on earth is hungry to do business with Alberta.
“China is the world’s biggest factory,” says Lei. “Canada is a major source for Chinese manufacturing. I am getting more business questions about Alberta industry — especially the oilsands.”
Steel fabrication? Check. Bitumen upgrading? Check. Sulphur processing? Check. China can handle it all. And more.
China is Alberta’s second-largest trading partner after the U.S. — with business valued at $2.6 billion. Alberta is Canada’s largest exporting province to China, accounting for 32% of the country’s total. We ship petro-chemicals (antifreeze), sulphur, wheat, canola, polyethylene, metal and wood pulp, while importing a host of manufactured goods from textiles, to electronics, computers, metal parts and machinery from the People’s Republic.
One of the big investment attractions is that each Chinese province has generous manufacturing duty-free zones — for raw materials coming in, and for finished goods exported out. China’s interest is in the investment and jobs that manufacturing brings. “Anything is possible. It is an open choice, and China can do it with cheaper costs,” says Lei, who spends a lot of time meeting with Alberta companies interested in doing business with China.
Duty-free zones (DFZ) within our own borders is a concept that Canada has talked about for years. And talked about and talked about. Advantage? China.
And investment is a two-way street with China, says Lei, a 20-year veteran of trade policy with China’s government before being posted to Calgary a year ago. In a big way, the Chinese want in — and they want our investment in mainland China.
China’s big investment in Alberta to date was last fall’s $1.9-billion deal by Petro China in the Athabasca Oil Sands Corp. Lei suggests this is just the start of China’s investment in Alberta’s energy sector.
“Alberta is a major source of energy with oilsands and gas. As far as I know, we want to form some more alliances in both oilsands and gas, too,” says Lei.
China also completed a major deal for potash last year — Saskatchewan is the source for 30 to 40 % of that country’s agricultural fertilizing mineral — at a contract price below market rates. But still, Lei insists the potash industry drove the hard bargain on that deal.
Canola processing is one area where the Chinese would sooner invest and see grow as an industry in Alberta or elsewhere in Western Canada. That is because, as Lei explains, China is upset at the incidence of black-leg disease found in recent shipments of Canadian canola.
Process the canola here, and that removes the black-leg threat. Agriculture and Agri-Food Canada and Alberta Agriculture and Rural Development should take note — since they have played down the black-leg problem as a minor bureaucratic spat. For the Chinese, it’s a bigger problem than that.
But there are other areas where the Chinese simply want our raw materials or minimally processed commodities — such as barley for malting, since they can malt barley over there cheaper than paying for the process here. China sources half of its barley on world markets. Think about it: There is a lot of beer brewed in a country with 1.3 billion people, nearly 20 per cent of the world population.
And, says Lei, China is becoming a major consumer of construction-grade lumber. Wood-frame buildings are more common-place in China, though they do not like our wood for furniture manufacturing in the People’s Republic.
Nonetheless, Lei is willing to talk trade anywhere, anytime. His mandate covers Alberta, Saskatchewan and the Northwest Territories and his mission is to spread the word that China is not only open for business, but ready to compete.
Think you can manufacture something more cheaply domestically? Lei is eager to prove otherwise, and that China can be cost-competitive on a global scale.
“It’s very necessary to set up more contacts and make some linkages with organizations in Alberta and companies in China,” says Lei. “It is good for business on both sides.”
Lei says it is premature to talk about any deals yet, but there are plenty of discussions going on. A visit to Edmonton last week produced dialogue with eight companies and there will be followup with each of them.
Lei says the main questions he fields from prospective Alberta investors concern trade policy, import-export rules, prohibitions and harmonized regulations. Lei can be reached at 403.537.6909 or by emailing calgary@mofcom.gov.cn
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