Shanghai, China- May 18, 2010
Address by the Honourable Stockwell Day, President of the Treasury Board and Minister for the Asia-Pacific Gateway at Luncheon hosted by the Canada China Business Council
Based on a transcript.
Thank you so much for the overly kind introduction. Thank you for all those who worked on putting this event together. And I want to say that the Prime Minister still talks in the most positive of terms about his visit here, especially about being in Shanghai, the wonderful time he had and all the work that people did to make that all possible. I will be happy to tell him that you are as energetic and capable as ever and I can tell you that he is excited about what has been taking place between our two countries.
What Diane [Gray] has just talked about here is incredible, and it is one of a number of examples of what happens when people get together with ideas. And what has happened in the centre part of our country, in the Winnipeg area and also in the Cuntan area, with people realizing that by combining synergies, looking at what they can do together, they can enhance opportunities and enhance prosperity in both of our regions. I want to congratulate all of you who have been involved. Mr. Zhu, Diane and others, congratulations for a great initiative.
I have already heard one example of what will soon be happening. Just one product alone - something we call red durum wheat which can be used for the preparation of a certain type of bread that is very much sought after in the area where your activities take place, Mr. Zhu. And presently the way that that's been working, the way that particular product is handled - the seed product, bread product, wheat product is handled about six times before it actually finally winds up in the hands of consumers in China.
With this type of synergy being developed between these two areas that will be handled once, which speeds up the efficiency and lowers the possibility of contamination and gets to the people right here in China so that they can be enjoying the great product from the Canadian prairies. This is just one of many examples.
I want to congratulate also the entire Shanghai community and everybody throughout Shanghai who has anything at all to do with this Expo that is now before us as a treat to the entire world. I just want to say that I have been to the Expo '67 in Montreal. The thing that somewhat depresses me about that now is working with teams of people who weren't even born then. I have been to Vancouver's Expo in 1986. I will tell you what, this Expo will be talked about for generations to come. It is a magnificent job and if we could just take a minute to acknowledge what Shanghai has done in putting on a fabulous world fair here.
I am being asked already about which pavilions I thought were the best. Well, we have Canadians here, so I have to talk about Canada's pavilions, and I encourage you to get to Vancouver's pavilion, and also Montreal, and of course the Canada Pavilion itself. I can say without any bias at all it is absolutely fabulous, stupendous and something you won't want to miss. But I quickly add that we got to a number of pavilions and there is one that I am very pleased was a priority on my list after Canada's, of course, was China's pavilion.
You know politicians have to do polls. You know they can't last for too long. So I am doing a survey of some kind so I just want to do a survey and it is not a tricky question. How many of you have the opportunity to go to China's Pavilion. Three of you, oh a little more than that. Great. Okay.
Was it not fantastic? Just amazing! You must get to that pavilion. I mean that it sounds obvious and understated but architecturally, it is breathtaking. What you are going to see inside. I am going to give you a little hint. And I don't get any commission for how many people go, as a result of my speech or anything like that. But in just one particular dimension that they have taken a 600 year old scroll depicting a village scene along a river about 1000 years ago, and this is the original scroll. And what they have done with that will absolutely take your breath away. That is a hint you do not want to miss. So, congratulations on what is happening there.
Even more exciting is what's been happening globally even since the last time I was here. We were commenting on the fact that we were still really in the grip of a global downturn, a global recession. And there were predictions, dire predictions on what was going to be happening to the global economy. Some of those came true. We felt in Canada and people in China felt that we will be able to work our way through this, because of certain policies and principles that we had in place.
And in fact China is continuing to and has weathered the storm because of some good policies and Canada is being heralded as and noted by the International Monetary Fund, the World Economic Forum, the OECD and most recently by the Economist Intelligence Unit: that they are calling Canada among the G8 countries, among Western countries, the economic miracle. We have come through what is still a fragile situation, in the recovering economy globally the signs of cautions are still out there. We are seeing increases everywhere and China is seeing increases everywhere.
We have come through for a number of reasons. It is something we have been practicing and putting in place that others are now talking about. I believe that in our relationship with China's business community, in China, I believe, there is an awareness of that. That this is one of the reasons that we continue to see trade increase and investment increase, back and forth.
As a matter of fact, the 2009 closing out figures for foreign direct investment from China into Canada was about 8.8 billion dollars, and that was an increase of almost 70% over the year before. And that is in a time of downturn. So, what would cause people to continue to want to invest when all around them, when they are picking up newspapers watching TV or checking in the internet when it is just dire predictions and doom and gloom? What would cause people to continue to want to invest?
I'd like to suggest to you that there are a number of things that we put into place to send out a signal of some confidence that business people, small, medium or large, who have been investing in Canada are going to have some kind of a sense that they want to get a return on their investment.
And why that happens? And why people would invest for instance in China for the same reasons why would they invest in Canada. We did take some very specific policy positions. First of all it has been very clear from the start of this downturn that we were going to aggressively pay down debt, freeze government spending, balance the budget within a certain number of years, 2014 in our case, and not raise taxes. And we have written textbooks on it. But in the most simplistic terms, that is what we have done.
Those are the combination of reasons because either individuals or organizations intuitively understand that if a government has its spending under control, it is not going have to overly tax people, to pay for its overspending and with that there can be some degree of certainty that your investments are going to have the opportunity to also be successful. And I believe the textbooks are being written now, the economic textbooks looking at countries that are faring better than others through this downturn that have taken this particular approach and they are coming through better and their investments are paying off better.
The largest bond investment company in the world, Pacific Investment Management in the US, the leader of that fund, and the people who organize that fund have said they are telling their institutional clients to invest in Canada, look at investing in Canada. Russia has just announced, about three weeks ago, that they are going to be buying, to shore up their own currency, they are buying Canadian dollars because there is a sense of stability there. I'd like to say that among the G20 countries -- we are happy to host the G20 and G8 events this year -- that we are taking a position very much opposed to the suggestions that the banks should be taxed.
Now before we make that sound like that we are worried about banks being taxed, we are worried about banks who had their act together being taxed, because the Canadian banking system did not have to be bailed out. The Canadian institutional systems did not fail and that is because they have certain requirements imposed upon them by government to govern their activities.
It just makes sense that if you are lending, you should have to have a certain amount of capital on reserve to back up those loans if people come calling for them, and we impose that on Canadian banks. In the mortgage industry, we had certain requirements that must be followed if people are going to get mortgages.
And other countries, but I am not mentioning any names specifically, did not have those same requirements and it became a policy issue of certain countries to lend out the mortgages even though people did not really have the ability to pay and to maintain those mortgages. That resulted in, as you know, the asset bubbles which then resulted in hedging instruments and various derivatives being thought up very creatively which got marketed around the world.
And when the asset bubbles started to pop, and the air started to come out of that balloon, things started to crumble and fail. And Canada's financial institutions did not profit from that creative time when financial institutions who weren't bridled with the same regulations were making all kinds of money and then governments had to step in to, as you know, to assist many of them. And that is why we are taking this very clear position. Canadian banks did not avail themselves of that opportunistic period and to now tax that would be an unfair position.
We also just take a basic position that I don't think you will find in economics history book or economics history case anywhere where a country taxed its way to prosperity. It just did not happen. Taxes are necessary absolutely. Regulations are necessary absolutely, but if you overtax or if you over regulate, you stifle, you take away incentive, you take away innovation. And it does not become a healthy situation.
So that is why we are taking that particular view and you will see that be discussed more and more in G20 meetings. We hope that becomes the prevailing view and we hope other people will follow and be able to get their nations back onto the road to prosperity. I was pleased to see, as you look at the situation taking place in Greece, what countries should be doing. We've seen a number of countries now bring in legislations requiring themselves to pay down debts, to restrict the growth of taxes and similar approaches. So we think this is catching on and we hope it is.
The other thing that is catching on which is very exciting for us is the increase of activities between our two big countries between China and Canada. We are seeing that at so many levels and through our Asia Pacific Gateway, the investments that we have put into the infrastructure, in our ports in Vancouver, in Prince Rupert are certainly paying off, not just increasing the efficiency in the ports, but integrating road and rail lines.
So that we can say to people making shipping decisions in Asia that if they are thinking to ship to North American markets and using other ports, I don't want to get the rivalry too strong so I won't mention any direct names - Los Angeles -- but if they are thinking of some specific decisions in terms of sailing time alone from most ports in Asia, there are significant sailing time advantages by going to Prince Rupert. And then because the ports in Vancouver and Prince Rupert are not overly congested and they are highly efficient, we can get your product into the heartland of a free trade area, which is Canada, US, Mexico, of approximately 440 million consumers in the heartland area of Chicago or Omaha in slightly over 100 hours. These are huge advantages for people making these kinds of decisions.
And then because the ports are not overly congested and they are highly efficient, we can get your product into the heartland of a free trade area, which is Canada, US, Mexico, of approximately 440 million consumers in the heartland area of Chicago or Omaha within a 100 hours. These are huge advantages for people making these kinds of decisions.
Add to that, in dealing with officials in China on items related to investments, we've been able to look at our own investments guidelines, rules and regulations. And analyzing them and say are they responding to the investment needs and requirements of people, organizations, groups and companies in China who want to invest in Canada to see productivity and to enjoy prosperity. And in fact we are able to make some modifications related to investment so that Chinese investment and investors can still benefit from that and Canadians benefits through jobs, through taxes, through positive development. We have taken a very aggressive approach to that.
We got this amazing linkage between Canada and China with our population, 1.4 million Canadians of Chinese-Canadian descent offers a huge natural advantage, just on a human side alone which leads to business liaison, educational exchanges, science and technology exchanges.
All of these we continue to broaden out as we see the many natural advantages that are there for Canada and for China. These are the type of policies and issues which we are pursuing, which will not only benefit our people, will benefit people around us, I believe, as they follow our good example, an example of friendship, an example of trust, an example of where we can sit down together and work on things that matter most, clear the way for obstacles and look to expanding this wonderful and beneficial arrangement.
This is our 40th anniversary of recognizing diplomatic relations with China. But for this particular region, it's the 100th anniversary of us having official trade relations through our trade commission office right here in Shanghai. So Shanghai was leading this 60 years before the rest of Canada caught on and maybe some other parts of China. I want to acknowledge our Consul General who is here, Nadir Patel, and the people that work with him, the trade offices that are here, that are available to you as you look to expanding your opportunities. We are seeing those grow in every area.
And thank you for the acknowledgement of the Great Wall of China marathon. It was the most wonderful, excruciating experience that I was happy to do and I'm promising myself that I must never do that again. But it was very well organized by the organizers, 600 fairly insane people from around the world coming to take on that marathon portion, one of which actually - we are talking about our good trade officers- is here today and I hate to admit the fact that this woman actually beat a lot of us men quite soundly and roundly and discouraged us - we're all quitting running and taking up some other sport.
There were a number of Canadians who were there and to me that is just one again of a number of examples of where whether it's science or field of sport, or culture, we have so much in common we are going to pursue.
Our Olympics turned out well for us, we won the highest number of gold medals at a winter Olympics ever in history by a host country. Chinese athletes did amazingly well, and our one great fear is that if they discover whatever they discovered in skating, and if they ever start applying that to hockey, we're going to be in trouble. But we think we're going to be okay for a year or two yet.
Ladies and gentlemen, we have a great future ahead. The Shanghai Expo has shown and is showcasing to the world what the people of China can do, and what can happen when people from around the world get together. Thank you so much for being a part of that. We look forward to our future.
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