Canadian businesses will suffer greatly if China imposes security measures on the economy, experts say | Techno Glob

China’s moderate economic growth has raised concerns about the country’s lack of focus on economic policy, with the recent 20th National Congress of the Chinese Communist Party ignoring the issue.

Ignoring the world’s second-largest economy could have damaging effects on Canadian businesses and beyond, according to experts.

China announced on Monday that its gross domestic product rose 3.9 percent in the third quarter from the same period a year earlier. The figure fell short of Beijing’s 5.5 percent growth target and the eight percent that experts say is needed to support China’s future population and economic growth.

Beijing had delayed the release of GDP data on October 18, the day after the party congress. Beijing wanted to keep economic growth and its effects out of the headlines during the congress, which ended on Oct. 22, said John Gruetzner, co-founder of Asia-focused business consulting firm Intercedant and a Canadian global affairs fellow. Institution.

The week-long party congress, held twice a decade to appoint new leaders, evaluate the constitution and confirm China’s ideological orientation, is perhaps the most important event on the Chinese Communist Party’s calendar. It ended with President Xi Jinping securing an unprecedented third term as party leader, presiding over a cabinet loyal to his ambitions to consolidate power, curb dissent and extend terms.

A man reads newspaper coverage of the 20th Communist Party Congress as he stands in a public display case in Beijing on Monday. The week-long party congress, held twice a decade, is perhaps the most important event on the party calendar. (Thomas Peter/Reuters)

Canada’s exports to China increase in 2021

Withholding data as important to trade relations as GDP is “unprecedented for any major trading country,” said Charles Burton, a senior fellow at the MacDonald-Laurier Institute, a former adviser and associate professor at the Canadian Embassy in China. By 2020 St. Catharines, Ont. Chinese and Comparative Politics at Brock University here.

“I’m not sure what the statement of China’s economic prospects will signal if China doesn’t provide the normal kind of interaction with global trading partners that we expect from them,” Burton said ahead of the GDP release.

China’s 3.9 percent third-quarter growth was a bounceback from the spring’s meager growth of 0.4 percent. Ultimately, “the numbers were stronger than many, including us, expected,” said TD Bank senior economist Andrew Hensick. Its economists had forecast 2.8 percent growth.

13 Oct. New vehicles ready for export line up at a dockyard in Yantai, east China’s Shandong province, on Nov. China’s 3.9 percent GDP growth in the third quarter was a big improvement from a sluggish 0.4 percent growth in the spring. (Chinatopics/The Associated Press)

“Looking forward, we’ll see to what extent that moment can be overcome,” Hensick said. This is especially true as countries around the world, including Canada, are anxious to see if Xi will put national security and politics ahead of economic performance, to their detriment.

“It’s clear that over time, one-party states eventually hit a wall,” Gruetzner said. “If you don’t have multiple inputs into your economic and social policy, you will eventually have a problem with economic growth.”

Canada ranks as China’s third-most valuable trading partner, behind the United States and the European Union, but second if EU countries are counted individually. Canada’s exports to China will rise steadily to $28.8 billion in 2021, according to the University of Alberta — the highest amount since before the Covid-19 pandemic and $10 billion more than exports in 2016.

Gruetzner said the agriculture, meat, paper and mining industries, which drive Canadian exports to China, need to be aware of how a GDP slowdown could affect investment in the Chinese economy.

Miners work underground at Vale’s Thompson mine in northern Manitoba. Along with the mining industry, agriculture, meat and paper are Canadian exports to China. Canada ranks China as its third-most valuable trading partner, after the United States and the European Union. (Katie Nicholson/CBC)

Iron ore, oil, coal and copper prices, in particular, react “very, very quickly” to changes in Chinese GDP growth, he said. “There’s a whole segment of the Canadian economy that needs to be in demand from China. Certainly in the western provinces.”

Nutrion, a Canadian fertilizer company based in Saskatoon, and Tech Resources Ltd., an agricultural feed developer and metals company headquartered in Vancouver, both fell on the Toronto Stock Exchange on the day of China’s GDP release ($113.07 to $108.33, and $48.5). up to $46.95 respectively).

China’s GDP growth is hampered

Burton said China’s zero-covid policy and the housing crisis have prevented the world’s second-largest economy from fully recovering from the pandemic. Both are likely to affect China’s export-oriented economy and “could be disruptive to Canadian business and the global economy in general,” he said.

Although Beijing’s zero-covid policy has kept total infections in the country of 1.4 billion to just 1 million, it has hampered the efficiency of China’s ports, canceled half of its highways and closed cities that together account for 40 percent. of China’s GDP, reports Alicia García Herrero, Asia-Pacific chief economist at French investment bank Natixis.

China reinforced its commitment to a zero-Covid policy this week, sealing buildings, locking down districts and keeping millions at home as the country reported more than 1,000 cases for three consecutive days on Friday.

People wearing face masks line up at a COVID-19 testing site in Beijing on October 12. Although China’s zero-COVID policy has kept cases relatively low in the country of 1.4 billion people, it has come at the expense of the economy. (Mark Schiefelbein/The Associated Press)

China’s housing sector is also in dire straits. A lack of government funding is causing many delays in housing construction, and Chinese borrowers who have paid upfront for their homes are left without their investments, Burton said. Local governments in China have traditionally funded operations through land auctions, and the effects have been felt in their coffers.

If China’s economic growth remains below eight percent, the country’s ability to service its more than $9 trillion in debt obligations as well as youth unemployment will be affected, Gruetzner said.

In 2020, China’s Ministry of Education reported that nearly a quarter of college graduates could not find work after years of employment due to strong economic growth over the past two decades.

A report to China’s 20th Communist Party Congress indicated that the government would still prioritize national security and military growth in the face of U.S. competition and focus on its own economy and that of its trading partners, Burton said.

See | China’s leader calls for military buildup at Communist Party Congress:

Xi opened the Communist Party Congress, calling for China’s military buildup

China’s Communist Party opened its 20th Congress in Beijing, with President Xi Jinping calling for a rapid military buildup. Xi also cited his government’s Covid-19 policies and ruled out the use of force against Taiwan.

China wants to redirect its agricultural and commodity imports away from Western suppliers and toward countries in South America and Africa, Gruetzner said.

Burton said both should be considered for Canada as it openly re-evaluates trade relations in the region.

Charles Burton is a senior fellow at the MacDonald-Laurier Institute, a former counselor at the Canadian Embassy in China, and until 2020, the St. Catharines, Ont. is an associate professor of Chinese and comparative politics at Brock University here. (Submitted by Charles Burton)

Canada plans to announce an Indo-Pacific strategy

During an October 12 speech in Washington, DC, Deputy Prime Minister Chrystia Freeland suggested that Western democracies prioritize free trade with each other and limit opportunities for states that actively work against their values. For example, regimes in Russia and China have become increasingly consolidated and autocratic.

These considerations may feature in an upcoming Indo-Pacific policy statement, which Canada’s foreign affairs minister, Melanie Joly, said will be released after the Chinese party congress and by the end of the year.

Melanie Joly, Canada’s foreign affairs minister, right, and U.S. Secretary of State Antony Blinken speak at the federal government’s official guest house in Ottawa on Thursday. Jolie announced that Canada plans to become a member of the Indo-Pacific Economic Framework for Prosperity. (Blair Gable/Pool/The Associated Press)

“In the coming decade, developments in the Indo-Pacific region will have a profound impact on the lives of Canadians from coast to coast,” Joly said in a news release, adding that Canada is committed to strengthening its presence in the region.

On Thursday, during a visit to Ottawa by US Secretary of State Antony Blinken, Jolly announced that Canada plans to seek membership of the Indo-Pacific Economic Framework for Prosperity to boost economic cooperation.

“There will be a strong section on the impact on the economy” in the coming policy statement, Burton said. “Many businesses would like to see what the government’s intentions are before considering their choices regarding investment in China.”

Workers wearing face masks ride tricycles loaded with goods in Beijing last month. China’s zero-covid policy and the housing crisis have prevented the world’s second-largest economy from making a full post-pandemic economic recovery, an analyst said. (Andy Wong/The Associated Press)

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