Even as Political Relations Deteriorate, Canada-China Trade Continues to Thrive

Canada’s business with China appears to be thriving during a pandemic, even as diplomatic relations remain deeply frozen.

Exports to China rose almost 10% in the first seven months of the COVID-19 pandemic year-over-year, according to a new analysis from the Canadian International Development Platform (CIDP), part of the Norman Paterson School. International Affairs at Carleton University.

This growth occurred even as exports, in terms of value, too many other traditional customers were engulfed in a pandemic when it hit Canada in March.

Overall, Canadian exports fell nearly 20% during the same period from March to September, an analysis of data from CIDP’s Statistics Canada shows. For example, exports to the United States fell 22% during this period.

Exports to China in the March-September period exceeded $ 14.7 billion, compared with $ 13.4 billion in 2019.

Aniket Bhushan, professor of research assistant teaching at Norman Paterson School, said one of the reasons why exports to China are soaring is because sales are recovering from a bad year in 2019 as China punishes. penalty to Canada for arresting Huawei Technologies’ CFO Meng Wanzhou. China has blocked sales of pork and beef for several months in 2019.

However, Professor Bhushan said Canada’s exports to China appear to be on track to surpass 2018 levels by the end of this year.

Perrin Beatty, president of the Canadian Chamber of Commerce, said Canada’s exports to China will increase in 2020 as China’s economy is one of the few that will grow this year. The country where COVID-19 first appeared has recovered much faster than most and is expected to expand its economic output at a modest 2.1% this year.

Diplomatic relations between China and Canada have been steadily eroding since the end of 2018 when Canada arrested Ms. Meng at the request of US extradition and Beijing locked two Canadians – Michael Kovrig and Michael Spavor – in which Prime Minister Justin Trudeau calls a “political pressure.” Beijing adopted and then lifted restrictions on Canada’s pork and beef imports, while the two exporters of canola Canada’s largest is still banned from shipping to the Chinese market.

In October, Deputy Prime Minister Chrystia Freeland accused the Chinese ambassador to Canada of threatening Canadians living in Hong Kong, saying that special envoy Cong Peiwu had exceeded his diplomatic role by warning the granting of asylum rights. for those who oppose democracy could endanger the “health and safety” of 300,000 Canadians living in Asian cities. Mr. Cong was also reprimanded by the Global Division.

The trade data analyzed by the CIDP shows the increased exports to China include ores and grains such as wheat, meat, animal or vegetable fats and vegetables. Statistics compiled by the federal agricultural and agricultural agency show that Canada exported 61,570 tonnes of pork to China in September, compared with 346 tonnes in September 2019.

Mr. Beatty, which represents 200,000 Canadian businesses, said that the political differences between Ottawa and Beijing should not “pollute our commercial relationships”. He said that it “does not make sense for China to use Canadian agricultural imports as a weapon” and that “politicization of trade” takes away the benefits of trade.

“Half a century ago, Canada supplied China with wheat when other countries refused to sell them. It was the right decision, and both Canadian farmers and Chinese people benefit, ”he said.

Gordon Houlden, director of the University of Alberta’s China Institute, suggests that China is pragmatic in dealing with Canada for economic and political reasons.

“I think there may be a desire not to make things worse politically because bringing in two Canadians has failed and there may be a desire not to add economic pressure to the equation,” he said.

In a recent report, the Chinese Institute recorded how China continues to buy Canadian agricultural goods at a steady pace.

David Mulroney, a former Canadian ambassador to China, said in addition to arresting Ms. Meng, who is resisting extradition to the United States in B.C. Court – Ottawa has avoided taking important measures that could backfire against Beijing.

By comparison, Australia has faced a growing list of trade retaliation from China after challenging China in ways Canada has not. Australia has banned Huawei from joining the 5G network, called for an investigation of the origin of COVID-19 and led a fight against authoritarian states by enacting laws overseeing agents working for foreign governments.

Gordon Houlden, director of the University of Alberta’s China Institute, said it would not be wise if Canada tried to cut off trade with China. He added that trade accounts for 64% of Canada’s GDP, compared with 24% for the United States and 37% for China.

“We depend more on exports than China and we cannot sustain our prosperity without that, so the [idea] that we cannot or should not sell to China is unsustainable ”. Professor Houlden said.

While Canada’s rapeseed exports continue to face targeted restrictions from Beijing, the China Institute report said 2020 was marked by a relative increase in both export value. and output. The cumulative value of rapeseed exports to China has risen 52% year-to-date to $ 976 million. However, this is still much lower than the $ 2.7 billion of rapeseed that Canada exported in 2018.

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