Jason Henderson, head of global banking for HSBC said:
"What this is, hopefully, is a wakeup call to Canadian business to do more trade with China. Instead of being 21st on China’s list of trading partners Canada should be closer to 10th or 12th based on the relative size of the economy."Prime Minister Harper has urged Canadian business to expand international trade efforts to reduce dependence on the state of the US economy and also to increase demands for Canadian goods. At the same time his government has been somewhat wary of Chinese government owned or controlled corporations gaining too much control in our energy sector.
Canada's present trade with China runs at $73 billion a year but the Canadian Chamber of Commerce estimates the hub could boost those figures by as much as $32 billion over a decade. At the same time, the Chamber claims costs to importers would be reduced by up to $2.75 billion.
Canadian trade with China is done through a third currency, usually the US dollar. Now deals could be done directly using RMBs. Over half of Chinese businesses would offer discounts of up to 5 percent if Canadian customers convert Canadian dollars directly into RMBs, a survey carried out by the HSBC bank found. The hub will be the first in North America but there are hubs already in Frankfurt Germany, and London in the UK as well as Seoul, South Korea. Paris will also soon become a hub. China has named the Industrial and Commercial Bank of China in Toronto as the clearing house for RMB transactions.
C. J. Gavsie from BMO Capital Markets said:
“The goal here in Canada, from my perspective, is we want a Canadian company anywhere in Canada to be able to walk into their local bank of choice and say, ‘I need this RMB product.’ Whether it’s in Vancouver, Calgary, Toronto, Montréal or Ottawa shouldn’t make a difference,”A number of other countries are attempting to establish trading hubs for the RMB. The RMB passed the Euro to become the second most used currency in international trade after the US dollar. Gavsie notes:
“We are gearing ourselves up to be able to offer renminbi related financial services. Everybody that monitors that activity in Canadian dollars today, we are all huddled around a table saying, how are we going to offer this in renminbi?”China also recently signed a hub deal with Qatar.
Stewart Beck, president of the Asia Pacific Foundation of Canada said of the hub deal:
"It's a great boon for the Canadian business community, both importers and exporters, because they can now do business in China with the currency and not have to go through multiple financial exchange transactions So the pundits are saying it could double maybe even triple the level of Canadian trade between Canada and China."
Harper did bring up human rights in his talks, in particular the imprisonment for three months of Kevin and Julia Garratt, although not publicly. But Premier Li Kequiang mentioned that he and Harper had discussed the rule of law and human rights. The Garratt case is somewhat surprising since the couple have lived and worked in China for 30 years. However, they operate a coffee shop near the North Korean border and were arrested in August on suspicion of spying. When asked about the Garratt case the premier replied:
"As for individual cases, I want to reiterate that as China continues to build a country under the rule of law, I believe that judicial authorities should be able to handle cases in accordance with the law."The Canadian government has also accused the Chinese government of cyber espionage.
As well as the hub deal Canada and China signed 20 other deals with a total value well above $1 billion. Among the larger deals was an agreement with Bombardier to sell over $1 billion worth of its aircraft to China Express Airlines. Details of some of the deals can be found here. and deals even include export of BC cherries to China. Somewhat ironically, Canada is also involved in the secretive Trans-Pacific Partnership trade agreement negotiations which excludes China but includes the US.