Canada looks to China as trade diversification gains momentum

Energy, mining, agriculture

On the export side, however, the picture remains heavily focused on natural resources.

Energy products accounted for 35.8 percent of Canada's domestic exports to China in the first half of the year, while metal ores and nonmetallic minerals accounted for another 22.6 percent. Together, the two categories made up 58.4 percent of Canadian domestic exports to China.

Crude petroleum exports to China more than doubled to C$5.96 billion, while copper ore and concentrate exports increased by C$949 million to C$2.64 billion.

Alberta and British Columbia accounted for 92.3 percent of the net increase in Canada's exports to China, driven overwhelmingly by energy and mineral products.

Agriculture also showed signs of recovery following improved market access. Canola seed exports rose 19.4 percent to C$1.42 billion, while frozen boneless beef exports increased sharply after market access was restored.

Ahmadi said the figures point to a larger question than simply whether Canada can increase exports to China in the short term.

"China is already a leading destination for Canadian exporters, and the scale and growth of its market matter to any serious Canadian trade-diversification strategy," he said.

Canada has set an objective of increasing exports to China by 50 percent by 2030. Ahmadi said that target was achievable and could potentially be exceeded, but argued that future growth would need to extend beyond the sectors currently driving the trade relationship.

"Achieving this growth sustainably, however, will require broader participation across the sectors involved in Canada-China economic relations," he said, pointing to agriculture and agri-food, forestry, consumer products, value-added manufactured goods, clean technology and services.

He also identified stable and predictable commercial relations, durable market access, efficient trade infrastructure in Canada and stronger promotion of Canadian products in China as important conditions for further growth.

That question is also reflected in the views of Canadian businesses.

A survey released by the Canada-China Chamber of Commerce in September found that 68 percent of respondents expected trade with China to increase over the next two years, up from 52 percent in the previous year's survey.

Nearly half, or 48 percent, viewed China as a strategic market for their sector or business.

The survey also found that 64 percent of respondents viewed Chinese investment in Canada as ultimately advantageous for the Canadian economy, compared with 48 percent in the previous year.

Nearly 60 percent said they would work with Chinese counterparts to make products or services more accessible to Canadians, up from 47 percent previously.