Harper In China: When Diplomacy Turns Profitable

February 11, 2012

On both sides of the Pacific, PM Stephen Harper’s four-day China visit received nearly unanimous praise. Both Chinese and Canadian media regard the visit as a business triumph: a slew of commercial contracts worth as much as $30 billion have been signed in a single run. The economic impact of Harper’s visit to China is especially felt by the Canadian mining industry, as the two countries made significant commitment toward opening up “fast lanes” for trades in uranium. Also, a significant pact protecting mutual investment has been signed, reflecting “shared aspiration” and “fundamental interests”, quoting PM Harper.

On the list of achievements for PM Harper’s visit published by Xinhua, China’s official news media, “strengthening mutual uranium trade and development cooperation” ranks high. More than empty talks, the two sides have agreed to start working on the legal procedures of bilateral uranium cooperation, and clear the way for Canadian uranium exports to China from the administrative perspective. Naturally, the news is warmly welcomed by the Canadian uranium industry, which is still suffering the pain from the Japanese nuclear disaster and depressed uranium prices.

With hundreds of nuclear power plants planned for as far as 2050, China’s plan to dramatically expand its nuclear power industry demands stable supplies of the “yellow cake”. The potential of the Chinese market has long been targeted by Canadian uranium producers. The CEO of Cameco Tim Gitzel, Canada and the world’s largest uranium producer, joined PM Harper’s delegation to China. Clearly satisfied with the result, Gitzel commented that the uranium agreement would “open the door for us” (to deliver Canadian uranium to China). For exploration-stage uranium developers like Fission Energy, which was mentioned in DTS earlier this week, the general excitement might also lift stock values and create more highlights for their financial efforts.

Even higher on Xinhua’s list than the uranium deal, the investment-protection agreement signed by PM Harper received wide attention from mainstream media. To go through further legal examination, the agreement will protect investors against discriminatory and arbitrary practices. Diplomatic wise, the agreement is a milestone for the strategic economic partnership between China and Canada. As Chinese investment in the Canadian natural resources soars, the agreement would be a much-welcomed word of guarantee for Chinese business entities. Other business contracts signed involved railway, aviation, communications and other high-profile industries.

From a Political perspective, U.S. is likely to be partially responsible for Canada’s new found warmth with China. Last month, President Obama’s rejection of the Keystone XL Project left the Canadian oil & gas industry bloody-nosed, causing substantial financial damage to Canadian pipe-builder TransCanada. There is little doubt that China could make-up on the oil & gas front as well-- as long as Canada is willing to sell its resources, like PM Harper ardently showed during his visit.

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