Canada-China Deals Draw Cheers, Boos

Chretien returns with fistful of infrastructure contracts

CANADA'S top salesman - Prime Minister Jean Chretien - has just finished barnstorming across China on a trade trip that has irritated human-rights activists and enthused Canadian executives as the deals pour in.

This week, Canadian executives and Chinese officials signed 54 contracts and agreements in principle valued by Canadian officials at $8.6 billion (US$6.3 billion). The gold prize appeared to come on Tuesday when China signed a memorandum of understanding toward the purchase of two Canadian-designed nuclear reactors worth $3.5 billion.

Standing on the steps of China's Great Wall, Mr. Chretien told a gaggle of Canadian reporters that the deals from the trip would create thousands of jobs in Canada, where the unemployment rate is 10 percent.

``If you compare the level of activity that we will generate with [that of] any trip organized by any other nation, we will have done extremely well,'' the prime minister said.

China is one of the world's hottest export markets, with an economy growing at a rate of 10 to 15 percent annually. But until recently, Canadian businesses have not had much success getting a foot in the door. China had more direct investment in Canada at the end of 1993 ($378 million), than Canada had in China ($260 million).

From the start of the trip, Canada wanted to show the Chinese that it is serious. Chretien's huge ``Team Canada'' tour has involved an entourage of more than 350 business leaders, as well as nine out of 10 Canadian provincial premiers. Quebec Premier Jacques Parizeau did not go. Reportedly, the massive showing impressed Chinese leaders.

``Today marks a new era in Canada-China trade relations,'' Chretien exulted after the deals were penned. ``This catapults trade with China into new levels.''

Among the announced deals:

* Atomic Energy of Canada Ltd., the government-owned corporation, signed a pact with China National Nuclear Corp. that AECL officials say will lead to ``serious negotiations'' on the sale of two 700 megawatt nuclear reactors. Early reports misconstrued the signing as a commercial contract.

* Canadian Agra Corp. of Kincardin, Ontario won a $150 million contract to build a fuel ethanol plant in Jilin province.

* Dominion Bridge Inc. of Montreal will be building a highway and two cement plants in the city of Chengdu for an estimated $200 million.

* Hydro-Quebec and British Columbia Hydro and Power Authority signed a letter of agreement to build a $500 million hydro-electric dam in Sichuan province.

Yet aside from the hoopla over Canada's sales successes, some criticized Chretien for being weak on human rights in order to sell Canadian goods. Toasted in a final ceremony by hard-line Premier Li Peng, Chretien has maintained a low-key approach to the issue of human rights, which he says he will raise only in private.

Chretien told reporters he raised the rights issue Tuesday with Mr. Li, although a Chinese spokesman told reporters he did not. Nova Scotia Premier John Savage, who attended the private meeting, also initially said he wasn't aware of it. Both the Chinese and Mr. Savage have since recanted, saying the rights issue was indeed raised.

``Some Canadian businessmen say all we have to do is encourage more trade to solve China's rights problem,'' says Ed Broadbent, president of the International Centre for Human Rights and Domestic Development in Montreal. ``Well, while [China's political leaders] have been opening up the economy, they've been closing down human rights.''

China's rights situation has clearly worsened since March when the United States chose to renew China's status as a favored trading partner, according to Human Rights Watch/Asia in New York.

But other concerns had nothing to do with rights and more to do with the ``real'' value of the China trip. Some questioned the $8.6 billion total, since only about $2.6 billion was in commercial contracts. And there were concerns about the centerpiece of the trade trip as well.

AECL officials say $2 billion of the $3.5 billion reactor price tag will be financed in Canada. Critics say that suggests Canadian taxpayers will be financing most of this and perhaps other deals.

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