Evidence of meeting #68 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chinese.
A recording is available from Parliament.
NDP
Raymond Côté NDP Beauport—Limoilou, QC
Mr. Lemieux, do you want to add anything in relation to the question I asked Ms. Ecker?
Director General, Finance Montréal
Strategically, the United States may have less interest than us in offering this. We agree on that point.
Director General, Finance Montréal
With the U.S. dollar currently dominating world trade, why would they add another currency? There's also the euro. The RMB is ranked fifth or sixth, but the percentage is very small.
I think that, as the RMB's advantages become apparent, U.S. companies will start using it and will go through Canada to do so. So we shouldn't be surprised if New York or another U.S. financial centre eventually took steps to become an RMB trading centre. Therefore, it is in Canada's best interest to establish its position and exercise its role fully.
This is a definite advantage for our companies and our financial position. I would use this situation to support companies in this area in the United States and even in South America, in countries such as Mexico, Argentina and Chile.
NDP
Raymond Côté NDP Beauport—Limoilou, QC
Is the platform's existence sufficient? If not, should we do more to reassure our Chinese partners by making them feel confident about concluding this agreement with Canada? Should more be done on that front?
Director General, Finance Montréal
I know Mr. Zhu. I've heard him say that China is Canada's second-largest economic partner, but that Canada is a small market for China.
Director General, Finance Montréal
I think we are strategic. That's what I wanted to show by saying that our country has an excellent regulatory system. We came through the 2008 financial crisis. So we have significant advantages that put us in a good position to play a major role in this area. That much has been recognized.
During our discussions, my Shanghai counterpart showed a lot of interest in our regulations and the way we weathered the 2008 economic crisis. The U.S. wasn't as successful.
I think that sound regulations and an economic relationship or even friendship with China, which we have had for a number of years, put us in a good position to play an important role.
NDP
Raymond Côté NDP Beauport—Limoilou, QC
Mr. Chair is letting me know that I have only one minute left.
Mr. Kingston, I will turn to you again.
Let's be honest here. Relations between Canada and China, between the Canadian and Chinese governments, have had their ups and downs. There was a low point in the mid-2000s. Witnesses who have appeared before us emphasized concerns about that. Just 5% of Canadian companies are involved and have business relationships with China. That's very low compared with U.S. companies. If memory serves, their figure is 17% or 18%.
Do you think the low point we experienced in the mid-2000s hurt us and resulted in a significant lag, and that it would somewhat explain our current situation?
Senior Associate, Canadian Council of Chief Executives
Yes, there's no doubt that the relationship has had ups and downs, but overall I'd say it's been on a positive trajectory. As I mentioned, we've had the FIPA, which is an absolutely great signal, and then we've had the complementarity study. I think we are on the right track with China. It is our second largest trading partner. Although that 5% figure is alarming, as you've pointed out, I think we're on the right trajectory. The RMB hub will only help.
Conservative
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thank you, Chair.
Thank you all for being here.
Mr. Lemieux, can you tell me what the estimated value of derivatives traded in the world is today?
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Does anybody know? From my reading, I read it's somewhere in the $200 trillion to $700 trillion range or something like that. Does that sound accurate?
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
I remember that when I read that figure, I thought I'd just try to understand derivatives, so I started reading. After about an hour I was more confused than when I started.
I'm hearing great things about the financial market, about how that's going to impact us, and how that's going to be beneficial.
I think I'm the average Canadian. I said at the last meeting I do a little farming, I sell a few cars.... My term of accounting is I take in x, I hand out y, and I hope there's a little bit of z left. Most people understand that.
This is all very complicated—at least it is to me.
Before I get to the question I want to ask, Mr. Brison talked about trade missions in the past. I remember those days. I remember when Mr. Chrétien led Canadian companies by the hordes into China. The result was that we lost a lot of manufacturing. What took place, in essence, was the manufacturers found that they could manufacture their goods much cheaper in China. Frankly, they handed us our butts when it came to that agreement. That's my own personal opinion.
What's to say that we're not going to have the same situation happen to us again with these extremely complicated financial transactions? What kinds of guarantees do you have that this is not going to happen again?
Anybody—Mr. Lemieux, Mr. Kingston?
Senior Associate, Canadian Council of Chief Executives
I'd be happy to start.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Be very brief because I have another part to the question, too.
Senior Associate, Canadian Council of Chief Executives
Just to respond, you pointed out that manufacturing has declined in the Canadian economy.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
By about 28%, or 18%, or something like that over the last 20 years.
Senior Associate, Canadian Council of Chief Executives
Yes, it's been significant, but what's been a really positive story has been the rise of the services economy. It makes up a huge portion of our economy. We've seen a 50% increase in services trade with China, from 2007 to 2012, and Canadian companies actually establishing foreign affiliates in China. I think there's a flip side to that story, and this RMB hub will be really good for financial services and also trade.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
You're saying we're going to do well in the financial sector.
Mr. Lemieux, I think you talked about Bombardier. I guess I'm looking for an example of that kind of thing. We do manufacture some things really well. We're world-class leaders in high-tech and in agriculture. I'm always flabbergasted at some of the innovation that comes from our agricultural sector. In mining, we're tops. There's nobody better.
Are there examples? Can you see where the Chinese are buying our products? I'm not talking about these other things that I'm not even going to try to understand. Substantial things that mom and pop I think was what Mr. Cullen talked about earlier...those sorts of things that the guy or gal who's producing this commodity or this product, tangible product, is going to say, after this agreement is made, “Geez, things are a whole lot better.” Can you give an example of that?
