Finance Minister Jim Flaherty is set to lead the highest-profile delegation to China in more than four years, signalling a new chapter in the Harper government's relationship with the world's fastest growing major economy.
Mr. Flaherty's entourage will include Bank of Canada Governor Mark Carney; Julie Dickson, the head of the federal banking regulator; Manulife Financial Corp. CEO Donald Guloien; Sun Life Financial CEO Donald Stewart; and several senior executives from some of Canada's big banks.
Mr. Flaherty indicated he intends to leverage the success of the country's financial institutions in weathering the financial crisis, saying in a statement that Chinese authorities are “looking to Canada” as they develop banking and insurance systems based more broadly on free-market principles.
Mr. Flaherty's trip represents a new phase of diplomacy for a government that has been accused of alienating the world's third-largest economy by placing too much emphasis on China's human rights abuses.
Mr. Flaherty said China is one of Canada's most important trading partners. “Much like Canada, China has managed to escape many of the negative effects of the crisis, and it is clear that our two countries must see how we can continue to work together,” he said in a statement.
Prime Minister Stephen Harper stands out among major world leaders as never having visited China in more than three years in power, notably skipping the Olympics last year in Beijing.
But as China leads the world out of the global recession, there has been a noticeable thaw in Mr. Harper's relations with the country, suggesting Canada will follow countries such as the United States, Germany and Australia in seeking to balance its political and economic interests.
Trade Minister Stockwell Day, Foreign Affairs Minister Lawrence Cannon and Transportation Minister John Baird already have visited China this year, and Mr. Harper is planning a trip in mid-November.
“It's a recognition that we need to increase our engagement with the Chinese,” said Gregory Chin, a senior fellow at the Waterloo, Ont.-based Centre for International Governance Innovation and a former diplomat who served in Canada's embassy in China.
“By ignoring China, we aren't putting ourselves in the best strategic position, long-term.”
Mr. Flaherty's delegation, scheduled to stop in Beijing and Shanghai Aug. 8-14, will also include his most senior international and financial advisers from the Finance Department; Bank of Canada Deputy Governor Pierre Duguay; TMX Group Inc.'s senior vice president of trading Robert Fotheringham and senior deal-makers from all of the country's five biggest banks.
The group represents the most significant contingent of Canadian officials and executives to descend on China since January 2005, when former Trade Minister Jim Peterson led a seven-day trade mission that included representatives from 279 companies and an appearance by then-Prime Minister Paul Martin.
For Mr. Flaherty, who visited China on his own in January 2007, next week's mission builds on a personal effort to engage with the world's rising economic powers. Last month he spent a week in Latin America, including Brazil, the region's biggest economy.
“We are very pleased that Minister Flaherty is leading this delegation,” Gilles Ouellette, Bank of Montreal's head of private banking and a participant in the mission, said in an e-mail.
“This is his second trip and that will not be lost on the leadership in China.”
Canada's financial institutions are relying on Mr. Flaherty and other Canadian leaders to help them gain entry into an economy that is controlled almost entirely by the government.
While most of Canada's big banks and other financial firms are actively trying to break into China's lucrative market, many say real progress remains elusive for non-Chinese companies.
Last week, Sun Life unveiled a restructuring of its Chinese operations that will see it bring in new Chinese investors in order to qualify as a domestic operation.
The result will be a doubling of capital in the insurance operation, although Sun Life will end up holding a smaller piece of the bigger firm.
Scotiabank has six offices and a subsidiary bank in China, as well as a minority stake in Xi'an City Commercial Bank.
China's regulations allow it to make a strategic investment in one other bank. Scotiabank disclosed in 2007 that it was in talks to buy a minority stake in Bank of Dalian Co. Ltd., but those negotiations since stalled.
Mr. Flaherty's visit should send a message to China's government that Canada wants to engage, Mr. Chin said.
“That shows a certain level of commitment that leaders in Beijing will notice.”