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Remarks by Consul General Xue Bing on the Canada-China FTA Forum
(April 8th, 2016)
2016/04/15

President Howard Shen,

Honorable Majid Jowhari, Member of Parliament,

Honorable Minister Michael Chan,

Honorable Minister Reza Moridi,

Ladies and Gentlemen,

Good Afternoon! It gives me a great pleasure to attend the forum this afternoon. First of all, on behalf of the Chinese Consulate General in Toronto, I would like to thank the Jiangsu International Business Association of Canada for what you have done in preparing for this important event. Over the years, you’ve made many contributions to the development of the China-Canada economic and trade relations and the promotion of the friendship and mutual understanding between the two peoples, for which I would like to express my appreciation.

The friendship between China and Canada goes a long way back. Over the past 46 years of our diplomatic relations, the economic and trade cooperation have maintained a sound momentum of development. Our economic ties have been developed from the single commodity trade to the nowadays all-round, cross areas and diversified cooperation. Within 45 years, the bilateral trade volume has grown from 150 million US dollars to 55.7 billion US dollars. China remains the second largest trading partner of Canada. In October 2014, the Foreign Investment Protection Agreement came into effect, marking a significant milestone in our trade relations. In March 2015, the first RMB Clearing Center in North America was launched and operated in Toronto, opening a new era for the future financial cooperation between China and Canada.

In the meantime, China and Canada enjoys ever closer people-to-people exchanges. Chinese students in Canada have reached 140 thousands. Mutual agreement to issue multiple-entry visas valid for 10 years facilitated more frequent interactions. In 2015, there were 500 thousand Chinese visiting Canada. Two giant pandas, Da Mao and Er Shun, have lived happily in Toronto for two years. Last October, the birth of two panda cubs Jia Panpan and Jia Yueyue brought new happiness and blessings to our two countries.

Ladies and Gentlemen,

Currently, China’s economy is entering the New Normal, featuring a shift from high-speed growth to medium-to-high speed growth, the economic volume grow steadily, while the structure becomes more rational. Faced with continued weak world economic recovery in 2015, China's GDP grew by 6.9 percent, with an increment of over 500 billion US dollars, and ranking top among major global economies. China contributed 25% to the economic growth of the world. Now China is in a critical stage of restructuring the economic for steady growth. A large amount of outdated industrial capacity is being eliminated. The ratio of consumption and service industry in the overall economy has been increased. Significantly improved in quality, China’s economy still shows a strong growth momentum.

In the next 5 years, China will spend more than 10 trillion US dollars on imports and more than 600 billion US dollars on foreign investments. More than 500 million Chinese tourists will visit abroad. Just in March, the Fourth Session of the 12th National People’s Congress set the annual GDP growth target of 6.5% to 7% for the year of 2016. We will stick to the reform and opening up policy,strengthen the structural reform on the supply side, foster new driving force for the economic growth, improve the livelihood of the Chinese people and ensure that the economic growth is sustained within a reasonable level.

Looking ahead, we are confident to maintain a healthy and stable economic development and make new contributions to the economic growth of the world.

Ladies and Gentlemen,

China and Canada enjoy broad common interest and sound cooperation foundation.With the deepening economic ties, the time has come for the two sides to start the process of the free trade agreement negotiations.

Since 2003, China has started FTA negotiations with its trading partners. Now China has concluded 14 free trade agreements with 22 countries and tariff territories and is now undergoing another 8 FTA talks. The trade volume under those FTAs accounts for 38% of China’s total foreign trade volume. It’s worth mentioning that last December, China’s FTA agreements with Australia and South Korea went into effect respectively. In 2004 when China and South Korea started the feasibility study of the FTA, the bilateral trade volume was only 90 billion US dollars. In 2014, the number has increased to 300 billion, with an annual growth rate of 22.3%. Research shows that the building of China-South Korea Free Trade Zone will create a 12-trillion-US-dollar market, bringing huge opportunities for the two countries. The South Korean government predicts that in the next 5 years, the South Korean GDP will increase by 1.25% as a result of the FTA. For Australia, it is also expected that the China- Australia FTA will bring Australian GDP up by at least 0.7%, and save more than 300 million Australian dollars of import tariff for the Australian exporters of agricultural products. In the diary industry alone there will be 600-700 new job opportunities in 2016.

Therefore, the benefits of a free trade zone is self-evident and it will bring tangible results for China and Canada, especially Canada in the following ways.

Firstly, in the mist of the global economic restructuring, the FTA could offer new driving force for Canada’s economy. Currently, most countries are facing economic downward pressure. Affected by low oil price and plunging commodity price, the global economy is recovering very slowly. Under such circumstances, expanding foreign trade and investment is an effective approach to boost economic growth. China is the second largest economy in the world, and there are remarkable complementarities between our two countries. Therefore, the FTA is not just an objective demand of the highly integrated economic ties, but also an inevitable trend for the deepening relations.

Secondly, the FTA could create more business opportunities and bring benefits to the two peoples. If we could make high level commitments in the commodity and service trade, the bilateral investment, both China and Canada will realize a more comprehensive balance of interest, and our enterprises will enjoy more opportunities. According to a recent study, a China-Canada FTA will contribute 0.14% to Canada’s GDP growth, add 7.7 billion Canadian dollars to the bilateral trade volume, and create 25,000 job opportunities by the year of 2030. Among the industries of Canada, auto-parts, chemstry, mechanical manufacturing and agriculture will benefit the most. The FTA is a win-win approach, and will bring tangible results for both sides.

Thirdly, an FTA with China will help Canada avoid the trade diversion effects of other FTA arrangements. Australia has a similar economic structure as Canada, with similar export goods and services. As the China-Australia FTA went into effect, Canadian export would gradually be marginalized in the Chinese market. The trade diversion effects resulted from other FTA arrangements should not be neglected. For example, after the United States signed FTA with South Korea in 2007, the trade volume between Canada and South Korea plunged by 40% in 2008.

To promote the bilateral economic ties, I would like to mention some areas where China and Canada could work together.

No.1, we should continue to support the multilateral trading system, and oppose trade protectionism.

China and Canada have always been firm defenders and promoters of the multilateral trading system. Now the Doha Round of the WTO talks are facing challenges. China is ready to work with Canada and continue to make contributions to the multilateral trading system. Both countries should always insist on trade liberalization, oppose all kinds of trade protectionism, handle trade frictions through dialogues and consultation, and maintain an open, fair and inclusive global trading system.

No.2,on the basis of mutual benefit and trust, we should initiate the process of FTA negotiations as soon as possible.

The past few years have witnessed the sound development of bilateral relations, including several milestone events, such as the ratification of the "Investment Promotion and Protection Agreement" and the establishment of Renminbi offshore trading center in Toronto. It is the right time to start the process of FTA negotiations between China and Canada. China is now speeding up the establishment of a high-standard free trade network, by carrying forward China-Japan-Korea FTA, China-Gulf Cooperation Council FTA, Asia Pacific Free Trade Area, and Regional Comprehensive Economic Partnership (RCEP). The commercial sectors of our two countries should fully understand the importance of the bilateral FTA, and push the two governments to look at the FTA issue from a strategic point of view, and to make political decision so as to benefit our two peoples.

No.3, we should further tap market potential and enhance free trade according to the trade demands of our two countries, so as to promote bilateral trade to a new level.

The current bilateral trade volume is disproportionate to the two countries' overall trade and economy sizes, China and Canada still have huge untapped potential in bilateral trade cooperation. In 2015, the trade between China and Canada contibuted less than 2% of the total Chinese foreign trade. Entrepreneurs from both countries should get to know more of the demand from each other's market and increase the trade in each other’s competitive products. The functions of the Renminbi trading center in Toronto should be fully utilized and we encourage enterprises from both countries to use more Renminbi currency in trade finance and settlement, in order to save transaction cost, mitigate foreign exchange risk, and better price the products. In addition, we should expedite the development of oil and gas pipelines and export terminals in the western part of Canada and build a maritime energy corridor linking the two countries at an early date.

Ladies and Gentlemen,

We are very proud of the achievements in our bilateral cooperation, and we have even greater confidence in the further development of our partnership. China is willing to make joint efforts with Canada, from a strategic and long-term perspective, to enhance the exchanges in all fields and accelerate the process of FTA negotiations, to create a better environment for the development of bilateral trade and a brighter future for the China-Canada relationship.

Thank you!

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