Canada China Relationship

  • China continues to be Canada’s second largest merchandise trading partner after the United States. Two-way merchandise trade amounted to $50.8 billion in 2009, a 4.3 percent decline over 2008 levels.
  • In 2009, Canadian merchandise exports to China totaled $11.2 billion, a 6.6 percent increase from 2008, making China Canada’s third largest export market.
  • China continues to be Canada’s second largest source of imported merchandise.
  • While a substantial number of Canadian firms have invested in China, Canadian Direct Investments (CDIA) to China stood at $3.3 billion in 2009 and accounted for less than 1 percent of the total Foreign Direct Investment (FDI) into China.

The stock of foreign direct investment in Canada from China accounted for less than 2 percent of total FDI in Canada, however, it has grown from $928 million in 2005 to nearly $8.9 billion in 2009.

Canada-China Trade and Investment Activity

In 2009, bilateral merchandise trade with China totalled $50.8 billion, consisting of $11.2 billion in Canadian exports to, and $39.6 billion in imports from, China.

China was Canada’s largest export destination in Asia in 2009 and third-largest in the world, behind the United States and the United Kingdom. China was also Canada’s largest source of imports in Asia and the second-largest source of imports worldwide in that year.

The Canada-China trade relationship has stood up well during the global financial and economic crisis. In 2009, Canada’s global exports were 26% below 2008 levels and imports were 16% lower. By comparison, Canadian imports from China fell by 7%, and exports to China were 7% higher in 2009 than in 2008. China is the only one of Canada’s top export destinations to have had positive trade growth in 2009.

Foreign Direct Investment (FDI) between Canada and China has grown significantly in recent years. Canadian direct investment in China reached $3.3 billion in 2009, making it the 21st largest foreign destination for Canadian investors.

The total value of Chinese investment in Canada was higher in 2009, at $8.9 billion. China is the 10th largest source of FDI in Canada. Chinese investment in Canada has increased considerably in recent years, with the acquisition of several energy and mining interests.

At the provincial level, Alberta and British Columbia are the largest exporters to China, followed by Ontario and Saskatchewan. In 2009, Alberta exported $2.7 billion in goods to China while BC exports totalled $2.6 billion.

Newfoundland and Labrador and Manitoba have seen the fastest growth in exports to China in recent years.

Nearly three-quarters of Canadian exports to China were of resource-based goods in 2009, up from 56% five years earlier. In 2009, exports of resource-based goods totaled $8.3 billion, while exports of manufactured and other goods totaled $2.8 billion.

Canada’s largest export products to China in 2009 were canola seeds, wood pulp, coal and nickel. Canola seeds and iron ore products are Canada’s fastest-growing major export products to China. Canola seed exports have risen by a factor of 13 since 2004.

Imports from China follow the opposite pattern. Manufactured goods, including clothing and textiles, accounted for 87% ($34.3 billion) of imports from China in 2009.

In terms of individual products, Canada’s leading import from China in 2009 was laptop computers, followed by console games, children’s toys and cellular telephones. Canada’s fastest-growing major imports from China include televisions and computer monitors, console games and telecommunications equipment.

Trade between Canada and China is becoming increasingly specialized. Canada is a small, but growing, net exporter of resource-based goods to China. For its part, China holds a considerable, and growing, trade surplus with Canada in manufactured goods.

The value of services trade between Canada and China is small relative to the value of merchandise trade between the two countries. In 2007, the most recent year for which data are available, Canadian services exports to China totalled $1.1 billion, the same value as services imports from that country.

Based on 2007 data, Canada had a small trade surplus in travel services and in commercial services and a small trade deficit in transportation and government services that year.

Canadian exports of travel services to China are expected to increase significantly in the near future. In 2009, Canada received Approved Destination Status from the Chinese government, making it easier for Chinese nationals to visit Canada.

Key sectors as identified by the Government of Canada

  • Agriculture, Food and Beverages:
    Driven by growing consumption and resource constraints, China is expected to become the world’s largest importer of agri-food by 2015-2020. Canadian exports of agriculture, food and beverages to China rose 56 percent last year to reach almost $2.6 billion in 2009, generating a trade surplus of $1.6 billion.

  • Information and Communication Technology (ICT):
    China is a world leader in both imports and exports of ICT products and services. Having made ICT industry growth a national priority China has been experiencing rapid increases in the use of cell phones and Internet users.

  • Automotive:
    China overtook the United States as the world’s largest car market in 2009, selling close to 13.6 million vehicles against the US’s 10.4 million. Canada’s total vehicle exports to China reached USD$49 million in 2009 (Source: J.D. Power & Associates; World Trade Atlas.)

  • Aerospace:
    It is expected that 600 new aircrafts will be added to China's fleet in the next five years and Chinese demand for new aircraft could reach more than 3,800 over the next twenty years (Source: Boeing, Airbus.)

  • Mining and Related Equipment and Services:
    China is a large consumer and producer of metallurgical minerals. Strong economic growth is driving the development of China’s mining industry, which is generating large demand for mining technologies, services and equipment and for mineral products.

  • Life Sciences:
    China’s aging population, expanding health insurance, strong government support and increasing health consciousness is driving growth in life sciences. Opportunities exist for Canadian firms in joint research and development (R&D) projects, manufacturing, clinical trials, financing and distribution.

Cleantech is increasingly becoming an important sector for the Chinese economy. Chinese companies are actively seeking partners to help develop their own technology and expertise and to find innovative solutions to some of the challenges created by the rapid economic growth of the past 30 years. Specifically, significant opportunities exist for Canadian technology companies involved in municipal and industry wastewater treatment technology.

This information has been summarized from the Department of Foreign Affairs and International Relations and the Parliament of Canada with permission. Full reports can be read at: http://www.international.gc.ca/commerce/strategy-strategie/r6.aspx and http://www.parl.gc.ca/Content/LOP/ResearchPublications/2010-41-e.htm.<