Canada looks to China as trade diversification gains momentum

Practical challenges

At the same time, the survey pointed to practical challenges facing Canadian businesses.

The share of respondents who considered it difficult for businesses in their industries to do business with China fell to 29 percent from 41 percent a year earlier, while respondents continued to identify trade policies and regulatory challenges among the obstacles to greater engagement.

Julian Karaguesian, an economics professor at McGill University in Montreal, said the need for diversification is becoming more pressing as Canada looks for new sources of growth.

"We need fundamental transformation of our trading relationships," Karaguesian said at a Canada-China roundtable in Vancouver this month.

He said the two economies have complementary strengths that could support a broader economic relationship.

"We, as we all know, are a natural resource superpower. China is a manufacturing superpower," Karaguesian said.

"We're also wonderful potential investment partners," he said.

Canada's trade with China could be significantly larger if geopolitical factors were less restrictive. "Our trade with China could be three times what it is today," he said.

Karaguesian said Canada's economic interests could differ from those of the US, given the different structures of the two economies.

That complementarity could be particularly relevant as Canada looks to attract capital for infrastructure and other large projects while seeking new markets for its resources, he said.

The potential for cooperation in newer industries also featured prominently in remarks by Jiang Wenran, president of the Canada-China Energy and Environment Forum.

Jiang said the relationship had gained new momentum since Canadian Prime Minister Mark Carney's visit to China in January, but "the new momentum is very fragile. The old certainties are gone but the new architecture is yet to be built".

He said the immediate challenge was to translate political agreements into concrete economic activity.

"There is a policy consensus at the top, there is business enthusiasm, but there is an implementation gap," Jiang said, pointing to the need for clearer mechanisms to turn high-level agreements into concrete projects.

He called for bilateral working groups at the central level in areas including critical minerals and agriculture, as well as rules and mechanisms governing investment. "We need to think beyond the current sectors of trade," he said.

He pointed to advanced electric vehicles, hydrogen, green vehicles, critical minerals, quantum technology and broader high-tech and science cooperation as areas that could shape the next stage of the relationship.

Jiang said China had developed capabilities in a number of these areas and Canada needed to consider where cooperation could create benefits for both sides.