Free trade with a communist country seems oxymoronic.
Mao Zedong would likely be rolling in his grave hearing of China’s free-trade negotiations with Australia, Canada and a host of other nations. That is, if his body wasn’t still on display in his mausoleum in Tiananmen Square.
Some Western Cold War warriors might be just as shocked to see negotiations start with a country they still view as a menacing threat rather than a major trading partner.
But the economic reforms that began nearly 35 years ago, two years after Mao’s death, have clearly transformed the People’s Republic into a capitalistic and cash-rich country, despite its notable Chinese characteristics of looming state-owned enterprises and command-and-control economic policies.
The next decade will undoubtedly see China take an even bigger role in global affairs and the world economy. The OECD recently forecast that China is set to overtake the U.S. and become the world’s largest economy by 2016.
Occidental consumers have contributed to China’s growth, buying up everything from razors and industrial machines to toys and bras. And now more foreign firms have set up shop in the Middle Kingdom, hoping to tap the growing middle-class consumer or its growing university-educated labour force.
According to a recent Asia Pacific Foundation report about Canadian businesses in China, 38% of respondents export to China and 24% have operations in the country. Another 10% import goods from China, and 20% of survey respondents were interested in the market.
The survey found that a majority of respondents believed a free trade agreement would provide a wide range of benefits. One of the most important would be the creation of a more rules-based system of doing business in China.
For Canadian companies, the report noted inconsistent interpretations of regulations and concerns over intellectual property rules and practices as key business challenges. Weak dispute mechanisms, lengthy and complicated certification processes and Chinese tariffs and border barriers rounded out the top five challenges. Many of these would likely be negotiated in an FTA.
But it will likely take at least another decade to be negotiated if Australia’s progress is any indication. The country began talks back in 2005 and thus far has gone through 18 rounds of negotiations.
