Canada looks to China as trade diversification gains momentum

Green synergy

Green supply chains could be one such area, said Lu Hai, a professor of accounting at the Rotman School of Management at the University of Toronto.

Lu said China's green transition could have direct implications for Canadian companies because of their supply-chain links with Chinese manufacturers.

"Chinese supply matters for Canadian firms' decarbonization," he said, noting that many Canadian companies source machinery, electrical equipment, base metals, manufactured goods, textiles and apparel from China.

He said Canadian companies should look beyond the purchase price when choosing suppliers and increasingly consider both carbon emissions and supply-chain resilience.

"Nowadays, we are rethinking the fight against climate change, and we are adding another dimension: low-cost, low-carbon, and supply-chain resilience," Lu said.

Lu also pointed to China's development of renewable energy and zero-carbon industrial parks as examples of areas where the two sides could learn from each other.

"I think Western countries and China sometimes need more communication, as many issues are due to misunderstandings," he said. "I think there are some things we can really learn from each other."

He said China has been pursuing a green energy transition from fossil fuels to renewable energy while developing zero-carbon industrial parks that combine green electricity, energy storage, emissions reduction and resource recycling.

For Canadian companies with supply chains in China, Lu said such developments could create opportunities to reduce emissions associated with production and sourcing.

Former Canadian finance minister Bill Morneau also pointed to investment as an important part of the diversification equation.

"There is a lot of space, so there are lots of opportunities," Morneau said.

He said Canadians are increasingly willing to consider diversification and greater engagement with Chinese investment, although he acknowledged that Canada would have to navigate its relationship with the US.

At the same time, he said there are opportunities in areas including artificial intelligence, infrastructure and natural resources.

"Artificial intelligence is a growth engine, certainly. It's having a significant impact.

"So I'm an optimist, seeing people here thinking about how they can invest, thinking in particular about infrastructure and natural resources in Canada. These are places where there will be big opportunities," he said.

But Morneau also pointed to a structural constraint on how far Canada can move in its diversification efforts.

"We do have the challenge that we can't be offside with the US, so we can only go so far," he said.

Jiang also argued that diversification should be treated as a long-term strategy rather than something that changes with each turn in the geopolitical cycle.

"Relationships among countries are like people," Jiang said. "You need to manage that relationship in a steady manner and diversification cannot be waived depending on time. You need to be persistent."

He cited Canada's earlier experience with Chinese investment in the energy sector as an example of how economic ties can develop over time when governments and businesses create mechanisms for cooperation.

His remarks underscore the longer-term challenge facing Ottawa as it seeks to broaden Canada's economic relationships while maintaining its ties with the US.

China is already a major trading partner for Canada. The next challenge is whether the momentum in bilateral trade can be broadened into more sustained cooperation across investment, agriculture, critical minerals, advanced technology and green industries.

gaoyang@chinadailyusa.com