China willing to deepen economic ties with Canada as Trump brings trade chaos
China says it’s willing to deepen economic relations with Canada as this country’s trading relationship with the United States hits a rough patch.
The People’s Republic of China is Canada’s second-largest trading partner after the U.S. and, in 2017, Ottawa came close to starting talks with Beijing on a trade agreement.
In 2019, China restricted imports of several Canadian products, including canola seed, in apparent retaliation for Ottawa arresting a Chinese tech executive. The value of the economic fallout – billions in lost sales – pales in comparison to the threat U.S. president-elect Donald Trump has made to Canada, vowing 25-per-cent tariffs on all Canadian goods when he takes office. Canadian exports to the U.S. in 2023 exceeded $592-billion.
China’s embassy in Ottawa said in a recent statement to The Globe and Mail that it’s willing to talk about increasing trade and ties. It was responding to a question about whether China would be interested in resuming talks on a trade agreement with Canada given the trade threats from the U.S.
“China is willing to work with Canada to create a good environment for China-Canada economic and trade co-operation based on the principles of correct understanding, mutual respect, seeking common ground while reserving differences, and mutual benefit and win-win results,” the diplomatic mission said.
“This is in line with the fundamental interests of the two countries and their peoples. China has always advocated trade liberalization and facilitation, and actively participated in Asia-Pacific regional co-operation and economic integration.”
The embassy, currently led by Ambassador Wang Di, said it would be up to Ottawa to lay the groundwork for trade talks. “Regarding the negotiation of the China-Canada Free Trade Agreement you mentioned, it is hoped that the Canadian side will create a good atmosphere for this,” the diplomatic mission said.
Carlo Dade, director of trade and trade infrastructure at the Canada West Foundation, said he’s sensing a similar openness from China. In a recent visit to Beijing, he said, officials at the ministries of foreign affairs and of commerce did not dismiss his suggestions that, in light of Mr. Trump’s threats, China should take the initiative to demonstrate it’s serious about improving trade relations with Canada.
Relations between Canada and China hit a low point in 2019 after Canada arrested Huawei executive Meng Wanzhou on a U.S. extradition request in December, 2018, and Beijing, in apparent retaliation, jailed two Canadians. China stopped buying Canadian soybeans, canola and pork – measures it reversed over time but not before producers in Canada saw billions of dollars in lost sales.
Foreign Affairs Minister Mélanie Joly this past July travelled to China in a bid to reopen diplomatic channels.
Mr. Dade said China, the world’s second-largest economy after the United States, is already taking steps to prepare itself for a trade war with Washington. Mr. Trump has threatened steep tariffs on China and recently Beijing announced it would eliminate tariffs for imports from the world’s least-developed countries.
He said China appears to have realized it needs to signal more openness on trade with other countries. “This openness globally, I think, is partially behind, you know, their willingness to talk to Canada.”
Guy Saint-Jacques, a former Canadian ambassador to China, said he would not be surprised if after this year’s expected federal election, China were to engage with whoever is prime minister and propose a reset of relations that focuses on increasing trade – with the argument that Beijing would be a more reliable partner than the Trump administration.
He said this would be consistent with China’s past approach, in which Beijing previously argued to him as ambassador that Canada needs to reduce its trade dependency on the U.S. “They would tell me ‘We have complementary economies so why don’t we try to increase trade flows and, by the way, we are growing at a faster rate than the United States,” Mr. Saint-Jacques recalled.
Canadian exports to China exceeded $30-billion in 2023, making it the second-biggest export market by country. The European Union ranks higher but is composed of 27 countries.
Mr. Dade said China could represent a growing market for Canadian green technology, particularly if the U.S. under Mr. Trump backs away from clean-energy policies. “If China is serious about investing in clean energy, can we talk to them about carbon capture and other technologies?” he said. “China is also desperately trying to ramp up agricultural production; we could also sell them services, equipment, technology for farming.”
Mr. Dade said a Trump White House would not like to see Canada sign any trade deals with China but he noted that during the first Trump administration, Washington signed its “Phase One trade agreement” with Beijing in January, 2020, which was portrayed as rebalancing trade between the two countries.
“The Americans are demanding that we cut trade with China, that we align with their containment agenda on China,” he said, adding that any measures to boost trade with China would have to be low-profile.
“We can’t run around and say that we’re strengthening ties with China,” he said. But he said Canada could point to the 2020 U.S.-China trade deal as an example of how Ottawa is merely following Washington’s lead.
Mr. Dade said any expansion of trade with China would take place with companies aware of the risks of doing business there. Technology and intellectual property theft represent a challenge. “We’re not naive about China. We’re saying this knowing China is China.”
This article was first reported by The Globe and Mail
