Canada's Edge in China: People Movements

October 6, 2009

China’s ascendency on the world stage has forced a reconsideration of its role in all aspects of international affairs. The least understood feature of China’s impact on the world economy is human capital. It isn’t simply that a population of 1.3 billion potential consumers constitutes an enormous market for goods and services. Nor is it that the massive ranks of reserve labour in China’s rural areas will exert downward pressure on wages around the world. Rather, it is that human flows will be an increasingly important dimension of China’s connections to the world. In the same way that the People’s Republic is “Going Global” as an exporter of capital and as a host country for foreign direct investment, two-way flows of people will affect foreign policy, corporate strategy, and popular perceptions of China.

Of all the reasons for Canada to have a robust and forward-looking China policy, human capital is arguably the most fundamental. The strength of people movements between Canada and China is unmatched by China’s ties with any other OECD country. Canada-China human flows run deep, starting with the arrival of railway workers on the west coast in the late 19th century. The history of Chinese immigration to Canada has had its dark periods, most notably the imposition of a Head Tax between 1885 and 1923, followed by the Chinese Exclusion Act which was repealed only in 1947. However, the overall picture of China-Canada people movements, especially in the last 60 years, has been overwhelmingly positive.

The best measure of progress can be found in Canadian cities where there are substantial communities of ethnic Chinese residents that are successfully integrated into the mainstream. While there are predictable – and to some extent growing – challenges related to settlement, jobs, income, and integration, most of these difficulties are overcome within one generation. A new study of Canadian youth, for example, shows that 88 percent of young Chinese immigrants go to university, more than double the figure for young Canadians as a whole.

It is no wonder, therefore, that the People’s Republic has been Canada’s number one source of immigrants for the last 11 years. Between 1998 and 2008, an estimated 360,000 Chinese nationals immigrated to Canada, accounting for 14 percent of new immigrants over that period. Including immigrants from HK and Taiwan who arrived in the decade prior to 1997, new arrivals from Greater China in the last 30 years account for vast majority of the 1.3m ethnic Chinese population living in Canada today.

It would be a mistake, however, to think that Canada-China human flows amount to inbound immigration. Greater freedom of movement in and out of China, and the growing affluence of Chinese citizens are rapidly changing the pattern of human flows.

China is rapidly emerging as one of the most important sources of tourists in Canada, with double digit growth in the number of overnight visitors annually between 2000 and 2008. China is currently the 9th most important source country for Canada, rising from 14th position in 2000. More significantly, Chinese travelers spend an average of C$1819 on each trip to Canada, which is the highest among travelers from the top 15 source countries, exceeding the spending of visitors from Japan, the US, and European countries. While Ottawa continues to seek “Approved Destination Status” for group tours from China, the reality is that tens of millions of Chinese citizens already have the means to travel abroad and that Canada has so far tapped into a tiny fraction of this market.

Another big story in China-Canada human flows is in international education. From barely a few hundred students a year in the middle 1990s, the flow of Chinese students has risen to an average of 9,200 annually for the past 10 years. As of December 2007, there were 41,000 Chinese students in Canada, which represents about a quarter of all foreign students in the country. Whereas Chinese students in the 1990s would have been inclined to stay in Canada after graduation, the trend now is for students to return to the mainland where the job opportunities are seen to be more attractive.

This return flow is not limited to students. A large number of recent immigrants from China, Hong Kong, and Taiwan have also returned to their native countries, often as Canadian citizens. The Asia Pacific Foundation of Canada estimates that there are 2.8 million Canadians abroad, with perhaps 644,000 in Asia – mostly in greater China. The public policy implications of overseas Canadians are not well understood, but what is clear is that the Canadian population in China has never been as large as it is today, and yet it seems to be as invisible as it was before China’s opening to the world in 1978.

The key to understanding the importance of Canada-China human flows is to recognize that the same economic forces that have transformed China’s place in global production and finance are also affecting human resources. No longer just a country that sends out immigrants and students, the People’s Republic today is also a magnet for global talent. The popular perception that immigrants to Canada who return to their native countries are “failed” citizens is grossly mistaken.

The attraction of global talent extends to international education. There were more than 223,499 international students in 592 Chinese universities and other educational institutions from 189 countries/regions in 2008, a 14% increase over the previous year. China has in fact surpassed Canada as a destination for international students at the post-secondary level. In 2008, China was the 6th largest destination accounting for 7% of international students worldwide, with Canada just behind at 5% of the total.

Canada-China people flows will increasingly be characterized by two-way movements and by transnational citizens with personal, business, and emotional attachments on both sides of the Pacific. While there are many challenges that arise from diaspora-like populations at home and abroad, the phenomenon of international labour mobility – especially of the most talented (and sometimes the most notorious) – is here to stay. The challenge for policy is to take a holistic and multigenerational view of transnational citizens, rather than to treat international mobility as a problem.

Seen in this light, the Canada- China human capital nexus is a unique focal point for relations between Ottawa and Beijing. While other countries are lining up to sign trade and investment agreements with China, Canada can go a step further and investigate the possibility of a human capital agreement. Such an agreement could encompass citizenship, visa, education and training, professional accreditation, social security, taxation, and even extradition issues. Given the large numbers of Canadians and Chinese with deep and complex connections across the Pacific, it is certain that these bilateral issues will become bigger policy challenges for Beijing and Ottawa in the years ahead. There is an opportunity now to address these issues in a comprehensive fashion, and to turn potential problems into a fundamental strength of Canada-China relations.

An edited version of this article appeared in The Globe and Mail Report on Business on October 6, 2009.