What’s at stake for Trudeau, Canada and Huawei

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What’s at stake for Trudeau, Canada and Huawei


Lost in the diplomatic crisis between Canada and China may be a giant missed opportunity for each country.

Ottawa is under intense global pressure to ban or restrict China’s Huawei Technology Co. from participating in 5G, or next-generation, wireless network development that is as much as 100 times faster than current technology.

For Canada, granting Huawei full opportunity to work with Canada’s telecom giants to develop 5G promises global competitive advantage for Canada.

But China has just as much at stake as Canada. Its Canadian envoy last week threatened “repercussions” if Canada does not assent to Huawei’s continued partnership with Canada on 5G development. Huawei employs about 500 people in its Canadian operations.

But if Canada does ban Huawei in 5G, where exactly will Huawei – and China – showcase its 5G prowess? Not in the U.S., the U.K., Germany and the other major economies that have frozen Huawei out of their markets or are poised to.

Huawei won’t exert cost and technological advantage over 5G rivals Ericsson and Nokia forever. And Canada last week signaled its interest in Nokia by granting the Finnish company $40 million in 5G-related R&D funding.

If China cares about Huawei’s precarious status in Canada it will scrap its threats and instead get on with releasing the Canadians it has incarcerated on bogus charges.

That’s China’s only option if it wants to use Canada as a Western platform for a thorough rollout of Huawei’s current 5G prowess. Ottawa understands the urgency of Huawei’s situation, and for now, Beijing still doesn’t.

Toronto’s alarming office vacancy rate

Civic boosters in most cities would be thrilled with Toronto’s downtown office vacancy rate, reported last week to have hit a new recent low, of 2.7 per cent, compared with an already low 3.7 per cent last year, according to commercial real estate broker CBRE.

How could it be a problem that Toronto is so attractive to traditional firms relocating from the suburban 905 or expanding their Toronto digs, and what has been described as an unprecedented wave of high-tech firms also either relocating to Toronto – often from abroad – or expanding their existing Toronto footprint?

The answer is downtown Toronto risks becoming unaffordable for such desirable tenants.

Their tax contribution to the city’s coffers is immensely welcome; and if the growth of this population of “knowledge workers” can be sustained, Toronto’s prowess as a centre of excellence is all the more assured.

But uncontrolled, there is a possibility of too much of a good thing. Upward pressure on rents eventually will turn desirable tenants away. And there has been no accommodation for the growing population of minimum-wage earners who serve the swelling ranks of high-tech and financial-services workers.

A proper city plan would re-direct developers away from their decades-long obsession with luxury condo towers to the provision of affordable and social housing in the city, and an acceleration of the trend in retrofitting historic, human-scale former factories and warehouses for both residential and high-tech-office space.

The complacency that allows current conditions to persist risks, at best, a return to the 1980s exodus to the 905, and at worst, a decision by employers worldwide that the entire GTA is no longer affordable as base of operations for the best and brightest global talent.

Making sense of the (latest) U.S. government shutdown

In its 152-year existence, the Government of Canada has never shut down. Not even partially. Not during times of war, Depression, or the failure of les Canadiens to make the playoffs.

By contrast, the current U.S. government shutdown is the 10th since 1976, the second to begin in 2018, and the longest on record at more than a month.

Approximately 800,000 U.S. federal employees have been furloughed, 40 per cent of the total, roughly the same number as in the 2013 shutdown. Americans appear sanguine, at least so far, about the resulting loss or compromising of food-quality inspections, air-traffic control and the inability to incorporate a small business.

There may be something to The Economist’s assertion that the shutdown is “the latest piece of evidence that America’s government is dysfunctional.”

But last week, the White House’s top economist explained the genius of these shutdowns. Yes, the U.S. economy will record zero economic growth in the first quarter of 2019 if the shutdown persists. But the eventual reopening of the U.S. government, Kevin Hassett told CNN last week, will trigger “humongous” economic growth in the following, second quarter of 2019.

Aha!

The chair of the White House Council of Economic Advisors has just provided a method for governments to show spectacular GDP growth, and for corporate CEO to deliver stupendous surges in revenue. Simply shut down operations for a lengthy period, and at a point of your choosing, re-open for business and report – and take credit for – a tremendous surge in GDP or corporate revenue.

Finally, it all makes sense. Not convinced? Well, it’s the best explanation you’ve had so far.

David Olive is a business columnist based in Toronto. Follow him on Twitter: @TheGrtRecession





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