Why Harper turned toward Asia: Ask Carney

by Paul Wells

An extraordinary speech today from Bank of Canada governor Mark Carney. Since it draws on trends that are years in the making, and analysis that would have been done some number of weeks or months ago at the Bank, one suspects it has much to do with Harper’s recent turn to China and the rest of Asia.

In a speech today to the Kitchener-Waterloo Chamber of Commerce, Carney flattered his hosts for a minute and then said Canadian recessions have always been cured, eventually, by export-led recoveries. But not this time.

“Exports still have not regained their pre-crisis peak, and in fact remain below their level of a decade ago. Canada has steadily lost global market share throughout this period.”

The current unsteady recovery is driven by household spending, which in turn is driven — to an extent “unsustainable over the medium term” — by household debt. As for exports? “Canada’s share of world exports has been declining since the turn of the millennium. In fact, our performance has been the second worst in the G-20.” The Canadian export lag amounts to 5 points behind average global export growth, every year.

Blame the high dollar? Yeah, sure, Carney says. But it’s not the main culprit. “Our exports are concentrated in slow-growing advanced economies, particularly the United States, rather than fast-growing emerging markets,” Carney said, on a day when the Prime Minister was visiting the White House.

“In short, our underperformance prior to the [2008-09] crisis was more a reflection of who we traded with than how effectively we did it.”

And it’s gotten worse since 2008. “The combination of overexposure to the U.S. market and underexposure to faster-growing emerging markets is almost entirely responsible for Canada’s further loss in world market share.”

Is this the way it has to be, Governor Carney? “It does not have to be this way. Many advanced countries have been more successful at capitalizing on the immense opportunity that emerging markets in general and China in particular represent.”

I wonder whether these trends can be expected to continue. “The obvious question is whether we can expect these trends to continue. The answer is yes.” The U.S. is tapped out as a growth market. But rapidly urbanizing Asia — “China and India are housing the equivalent of the entire population of Canada every 18 months” — offers much more opportunity. “Commodity prices have risen well above their historical averages, and are likely to remain there for some time.” And incidentally the dollar’s not coming down soon.

So Canadian business needs to refocus on commodities exports to Asia. Wasn’t this message a bit out of place, given that Carney was delivering it in Canada’s Technology Triangle? No way. “It is clear that K-W cannot directly satisfy China’s growing appetite for commodities, but you can and are taking advantage of other areas of the country that do. One out of twelve oil sands manufacturers and suppliers are from this region, and Ontario’s exports to Alberta of mining-related services grew 44 per cent in the last year measured.”

 

 

 




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Why Harper turned toward Asia: Ask Carney

  1. From Carney’s speech, something never heard out of the mouths of the opposition and their yahoo chorus in the mainstream media:
    “Owing to this resilience, Canada’s economy was the first of the G-7 countries to recover its recessionary decline in output and expand anew.
    Our labour market has bounced back too. All of the 430,000 jobs lost through the recession had been recovered as of early last year, and a further 180,000 jobs have been added since then. Most of the jobs created have been in the private sector and in industries paying above-average wages.11. 83 per cent are in the private sector; 90 per cent are in industries paying average or higher wages. [←]“

  2. Money talks….and these days it speaks Chinese.

    Harper should have gone to the Olympics.

    • Jean Chrétien certainly knew all that, and as I recall wasn’t too pleased that Harper missed the Olympics.  Reading Paul Wells, you’d think Carney/Harper have just reinvented the wheel…

        • Wow – only took them an extra 6.5 years to figure out what the Libs knew in 2005. Way to go CPC brain trust!

      •  Yeah, Harp majorly dropped the ball on trade…too busy being pious… and American.

        Everyone told him to go to China, but nooooo….until the numbers hit him.

        Suddenly he’s one eager beaver on ‘trade’….the basis of our economy since Canada began.

  3. Canada is well placed to increase trade with China and India, the two main growth economies for next few decades at least. Canada has plenty of resources that people want to buy and we have large populations of Chinese and Indo Canadians which will help facilitate trade. Government needs to get out of the way and let people start creating wealth.  

    I am not impressed with pols and their economic management of public finances but I read this article the other week and it made me feel better. Grass is not greener on other side, it is just a trick of light, and I should be happy to live in Anglo country because it could be much, much worse. 

    City Journal ~ The State of the Anglosphere:

    The world financial crisis has provoked a stark feeling of decline among many in the West, particularly citizens of what some call the Anglosphere: the United States, Canada, the United Kingdom, Ireland, Australia, and New Zealand. In the United States, for example, roughly 73 percent see the country as on the wrong track, according to an Ipsos MORI poll—a level of dissatisfaction unseen for a generation.

    It’s indisputable that the Anglosphere no longer enjoys the overwhelming global dominance that it once had. What was once a globe-spanning empire is now best understood as a union of language, culture, and shared values. Yet what declinists overlook is that despite its current economic problems, the Anglosphere’s fundamental assets—economic, political, demographic, and cultural—are likely to drive its continued global leadership. The Anglosphere future is brighter than commonly believed.

    •  a) we aren’t an ‘anglo country’, and to continue claiming that it is will lead to certain failure.

      b)  if you think the govt is standing in the way of Canadians creating wealth, you haven’t been paying attention. Candian companies haven’t pulled their thumb out in a century.  There won’t be any ‘innovation’ from them. 

      Macleans reviewed this book awhile back…..you should read it. Even just the first two chapters will clue you in.

      http://www.andreamandelcampbell.com/book.htm

      • Not an “anglo country”? So we aren’t, historically speaking, a remnant of the British colonial empire, and a place where most of the population still speaks English as their first or primary official language? Where, outside of the major urban areas, the population is still almost uniformly of European descent?

        Sure, we need to be forward-looking, and willing to adapt and change – but you seem bent on denying who we are and where we came from. 

        •  Canada began as ‘Canada’ with Quebec, and it’s still about 25% of the country.

          We speak English, then French, then…..Chinese… now, and have about 200 other languages used daily here.

          I live waaaay outside any urban area….and I have Sikhs, Eritreans, Chinese and Portugese etc as friends and neighbours.

          We aren’t a colony of the BE anymore, in spite of Harp’s ‘royal’ fixation…..we are a global country…..and we’d best be acting like it before we get left behind.

          • No, we aren’t a colony anymore, and yes we have quite a cultural mix, but our institutions and practices are, for better or worse, largely rooted in our BE past.

            And strictly speaking, if you take the history of all the provinces into account, the current Canada began with Nfld. :-) Last on board, perhaps, but our (non-aboriginal) history goes back futher than Quebec’s.

            Don’t know where you live, but I’ve been to many a place where a non-white face really sticks out due to their scarcity. It’s not right or wrong; it just is. They are areas where the economy isn’t growing, so there’s no influx of immigrants. People go where the jobs are. But it’s every bit a valid Canadian reality as the heavily east asian population of the city I currently live in.

            If you’re ashamed of our history, that’s your problem – but it’s what makes this country what it is. BE based, with an increasingly diverse mix of other cultures constantly being stirred into the pot.

            I’m not trying to begrudge anyone a place or a role – so please don’t try to begrudge me mine.

            As to where we’re headed, that’s a whole ‘nother story…

          •  I live in SW Ont.

            And history is a nice place to visit, but we don’t live there anymore.

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