PM Harper arrives in China hoping to increase exports

Prime Minister Stephen Harper arrived in China on Thursday to begin a four-day visit that will focus largely on building closer economic ties to Canada's No. 2 trading partner.

On a mild, hazy night, Harper and his wife, Laureen, were greeted at the Hangzhou airport by Liang Liming, vice governor of the Zhejiang province, and other dignitaries.

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The prime minister is leading a delegation of Canadian business representatives on Friday in Hangzhou, a fast-growing industrial metropolis south of Shanghai, before heading to the Chinese capital on the weekend.

Those in his entourage include Canadian pork, beef and grain producers, officials from financial services companies and mining and oil and gas firms. Industry Minister James Moore and International Trade Minister Ed Fast are also along for the trip.

In Hangzhou, Harper is scheduled to meet with the Zhejian province party secretary as well as the province's governor. The city presents opportunities for Canadian small- and medium-sized businesses to tap into China's exploding middle class.

Currently, Canada has a trade deficit with China of approximately $31 billion. The Conservative government is aiming to increase exports to China to help balance trade.

Harper is expected to make a trade-related announcement in the city.

Meeting with Alibaba chairman

As well, Harper will pay a visit to the Hu Qing Yu Tang Museum of Traditional Chinese Medicine. Studies have shown increasing numbers of Canadians, almost 75 per cent according to some estimates, use alternative or complementary medicines, including traditional Chinese medicines.

He'll also meet with Jack Ma, executive chairman of Alibaba Group, the world's largest mobile commerce company, to discuss how Canadian businesses can leverage e-commerce platforms like Alibaba to grow their businesses internationally.

In Beijing on Saturday, Harper will meet with Chinese President Xi Jinping, who has called for a more open form of government since taking office in 2012.

A senior government official says Harper will raise China's human rights record during their discussions.

But the biggest announcement of the trip is expected to be a deal on a so-called currency hub designation for Canada.

Yuanhub for Canada

That pact would make Canada the first country in the Americas to have an offshore hub for the yuan, also known as the renminbi. Hubs are currently located in Hong Kong, Singapore, Seoul, Tapei, London, Paris, Frankfurt, Luxembourg and Sydney.

The designation essentially allows for faster, more secure execution of trades into the Chinese currency.

Authorized by China's central bank, it will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man in most cases, the U.S. dollar.

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Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.

The currency hub designation is also expected to help Canada attract international business, and gives it an advantage over its American competitors.

John Manley, head of the Canadian Council of Chief Executives, says the Chinese will also be looking to Harper to clarify Canada's positions on Chinese investment in Canada.

"And I hope he does, because we're always going to need capital in Canada in order to develop our natural resources, and this is a big source of international capital, so we have to be somewhat open to China as a source of developing Asian supply chains," he said.

Canadian couple still held

The Canada-China relationship has been particularly strained in recent months. The chilly relations almost iced the visit entirely.

Since Harper's last visit to China in 2012, the Conservatives restricted state-owned Chinese investment in Alberta's oilsands and have yet to respond to an invitation to negotiate a free-trade agreement with China.

The government also dragged its heels on ratifying a Foreign Investment Promotion and Protection Agreement with the Chinese.

Tensions reached a fever pitch in recent months after Harper accused the Chinese of a cyberattack on the National Research Council; the Chinese, meanwhile, have accused a Canadian couple living in China of spying. Kevin and Julia Garratt have been detained since August.