Thursday, April 07, 2005

My Comments to Geoff York on Wheat Sales and Canada's China Policy

China has been a major donor country of grain to the DPRK for some years now and has donated grain as disaster relief to other nations periodically over the years. China used to be a very important market for Canadian grain and wheat sales accounted for the lion's share of the value of our exports to China. When Alvin Hamilton, the Minister of Agriculture under Prime Minister Diefenbaker, decided to broach the US embargo on trade with Mainland China, the nation was in the throes of the Great Leap Forward famine. We know that something in the order of 30 million people died in that famine due to the effects of malnutrition. Undoubtedly without the Canadian wheat even more Chinese people would have died a miserable death by starvation. The strong support of Canadian farmers at a time of crisis and need was very much appreciated by the Government of China under Chairman Mao and Zhou Enlai. This gave Canada considerable advantage in competing for Chinese wheat purchases in the years afterward.

"Friendship" was a substantial factor in import decisions in those years. But today hard-headed economic calculations take the upper hand. Moreover China has improved the productivity of grain production through wider use of chemical fertilizers and improved seed strains. Also consumption of grain per capita has gone down in China as with increased prosperity people are eating much more meat and fish than they used to and moore rice in preference to mantou steamed bread. So wheat is no longer the main product of Canadian exports to China. The grain rationing system in Beijing used to be partly in rice, partly in rice and partly in zaliang (mixed grains mostly corn). People generally most preferred the rice, then the wheat, and then the zaliang (which was made into a very hard steamed bun called wotou) was definitely last choice. Wotou are very little eaten now except as a trendy curiosity, although I daresay they must have been quite nutritious albeit hard to digest.

Another relevant aspect of our grain trade to China is that the quantity of imports from Canada was not actually reflective of Chinese grain production shortfalls. It was more a response to bottlenecks in China's domestic transportation infrastructure. China would ship Canadian grain to the eastern coastal ports, particularly Tianjin and Shanghai,for use in the those cities and Beijing. Chinese rice would in return be shipped for export south to Southeast Asia (and in addition a modest profit would accrue as rice is higher price per pound than wheat).

The continuing need by China for developmental assistance is a factor of lack of political will and Government capacity to redistribute China's wealth to assist the poor. The Communist Party has repudiated Marxist ideology in favour a politics of national self-strengthening through economic growth. A by-product of this political change has been that socialist ideals of social and economic justice have also been discredited. Lip service is paid to the idea of a Government mandate to relieve poverty and encourage development in Western China, but the reality is that the Chinese Government only seeks to maintain political stability in the disadvantaged regions. Its priority is to engender a favourable environment for coastal based urban business to create great wealth. And so the gap between rich and poor in China continues to widen at an alarming rate. The result is that international development agencies still feel bound to respond to the significant needs of a very large proportion of the Chinese population who continue to live under conditions of great hardship and poverty.

Presently CIDA continues to engage in a broad range of programming in China. In my view our developmental aid program as well as our other programming in China --- immigration, trade and political relations is lagging badly behind changing reality in China. Canada urgently needs to engage in a major overhaul of our entire approach to China. We have been losing market share in this very important market over the past years. This should be cause for considerable alarm in Ottawa and with the shortest possible delay serious investigations and meaningful action taken to turn this trend around again.

As time goes by Canada is more and more missing opportunities in China that are potentially very important to us. As a Canadian I am very concerned because I see our current moribund China policy as a serious failure on the part of our Government that impacts on Canada's national interest, our future prosperity and place in the world.

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