What China’s rising cities mean for Canada

John Baird, Ottawa Citizen

China is witnessing the migration of hundreds of millions of its citizens from the countryside to rapidly rising cities. As its population becomes overwhelmingly urban-dwelling and middle-class, major new economic opportunities are being created. The trend is also driving social change within China and accelerating China’s interconnectivity to the world. Canadians should pay attention on both counts.

I am returning to China — not only to its capital, Beijing, but also to the metropolis of Shanghai as well as two of the emerging megacities of the interior, Chongqing and Chengdu. In fact, Canada’s minister of international trade, Ed Fast, will be in China this same week, travelling to Beijing and to another of the country’s 10 largest cities, Shenyang. These five cities combined already account for more than 2.5 times the entire population of Canada. The Economist observes that the number of “megalopolises” of 10 million residents or more in China will grow from three in 2000 to 13 in 2020. The McKinsey Global Institute, meanwhile, predicts that Chinese cities of more than a million residents will increase from 160 to 221 within 12 years. By 2025, 70 per cent of China’s population, or some 900 million people, will live in cities. Only half that amount does so today.

As the face of China changes, so must we change in our diplomatic and trade dealings. It is China’s urban centres that are expected to drive most of the county’s future economic growth, so we must turn our focus to these future markets. These cities will require massive investments in new infrastructure. As Chinese labour costs rise, the economy is shifting from low-cost manufacturing to an innovation economy. China’s cities are again at the centre of this process. Canadian small and medium-sized enterprises (SMEs) are well placed to benefit from this transformation.

China’s increasingly middle-class residents will deepen their desire, and ability, to own homes, diversify their diets, invest in financial services, pursue post-secondary education, travel abroad and connect to one another and the world. The proportion of Chinese households with a computer rose from six per cent in 1999 to 66 per cent in 2009. China already surpassed the United States as the largest Internet user in 2008. In 2012, fully 82 per cent of Chinese citizens had a cellphone. This amounts to more than 1.1 billion people. The onus is on us to engage with this burgeoning economy.

We are beginning to do so. Last year, China became Canada’s second-largest export market after the U.S. More than 84,000 Chinese students are studying in Canada, contributing almost $2 billion to the Canadian economy every year. China is Canada’s fourth-largest source of foreign visitors, and the number of visitors from China grew 20 per cent in 2012 alone. During his 2009 visit to Beijing, Prime Minister Stephen Harper announced that China had granted Canada Approved Destination Status, which will make it easier for Chinese tourists to travel to Canada. This will help boost invaluable people-to-people engagement. With China projected to be the world’s largest source of outbound tourists by 2020, Canada is well placed to attract many of these estimated 100 million international travellers.

Canadian investment in China is growing — from our large and SME firms, and from every region in Canada. Whether it’s Manulife operating in more than 40 Chinese cities, or Bombardier’s manufacturing joint ventures in Changchun, Qingdao and Changzhou, Bank of Montreal with branches in Beijing, Guangzhou, Shanghai and Hong Kong, or Singer Valve’s plant in Taicang or McCain Foods’ operations in Harbin, Canada’s private sector is deepening the role it plays in a changing China and is creating vital jobs in Canada as it does so.

To help Canadians capitalize on these opportunities and navigate China’s diversity, our government has expanded Canada’s network of China offices. Long established in Beijing, Shanghai, Guangzhou and Chongqing, our government opened trade offices in Chengdu, Shenzhen, Nanjing, Qingdao, Shenyang and Wuhan in 2009. These six megacities today have a combined population of some 65 million, more than the entire population of either France or the United Kingdom. This week there will be delegations in China from the economic development agencies for both Ottawa and Calgary. Such visits reflect the importance placed on trade, investment and people-to-people contact by many of our cities.

Along with a forward-looking plan to be part of China’s economic fabric, it is also important for Canada to help shape the future political landscape of China. That is why over the past two and a half years I have met with dozens of ministers, mayors and party officials, building a foundation of relationships to carry us forward.

Throughout this visit, including to more of China’s cities of the future, I will continue to promote not just Canadian interests but also our values, including the promotion of human rights and religious freedom. Both Canada and China will benefit.

What do China’s rising cities mean for Canada? A wealth of challenge and opportunity.

John Baird is Canada’s Foreign Affairs Minister. Baird will travel to China from Oct. 9 to 18, his fifth trip to the country since becoming foreign minister in 2011.

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