VANCOUVER, BC-Canadian trade with China represents just a
miniscule portion of Canada's overall international trade and
the country has a long way to go to fully take advantage of the
opportunities presented by one of the world's fastest growing
markets, concludes a new study released today by independent
research organization the Fraser Institute.
Just two per cent of Canadian exports were sent to China in
2007 (the last year of available data at the time the report
was written) compared to 80 per cent of Canadian goods exported
to the United States. In terms of imports, Canada imported nine
per cent of its goods from China, with more than 50 per cent
originating in the United States.
"For many years now, we've been hearing about the
opportunities presented by the Chinese market. Yet so far,
Canadian companies have failed to fully capitalize on these
opportunities," said Mark Mullins, Fraser Institute executive
"And while many Canadians may think everything we buy is
'Made in China,' the reality is far from the truth. Even though
China's share of Canadian trade has tripled in the past decade,
it is relatively small and narrowly based."
Canada's Economic Relations With China, is the first attempt to quantify the flows of goods, services and people between Canada and China.
"While Canada enjoys a robust trade relationship with the
United States, and this should not be neglected, the economic
recession experienced by our neighbour and largest trading
partner shows the necessity for Canada to find expanded markets
for its goods and services," Mullins said.
The study paints an even worse picture when it looks at
trade in services and direct foreign investment.
Canadian services trade with China represented only 1.2
percent of Canada's overall services trade in 2005 (the last
year of available data at the time the report was written),
while its services trade with the United States accounted for
58 per cent of overall services trade in the same year.
Similarly, Canada's direct foreign investment in China is
just 0.3 per cent of the total while China's direct foreign
investment in Canada is a paltry 0.1 per cent. By comparison,
almost 44 per cent of Canada's worldwide investments went to
the United States in 2007 with 58 per cent of overall
investments in Canada coming from the U.S.
David Emerson, Canada's former industry minister and
minister of international trade, points out that Canada has a
long history of friendship with China and while commercial
relations have grown significantly, Canada has fallen short of
the vast potential for mutually beneficial trade, investment,
and broader bilateral opportunities.
"Many countries have seized the opportunity and realized
substantial benefits from a strategy of friendship and
engagement with China," said Emerson, who wrote the foreword to
"This excellent study provides important quantification and
analysis of our trade with, and investment in, China. I hope
that senior Canadian decision makers in business and in
government will take advantage of this information to encourage
further engagement and an intensification of Canada's economic
relations with China."
Emerson is prescient in sounding the alarm that Canada is
falling behind other nations in terms of competing for a share
of China's market.
The study notes that Australia, which has a similar resource
and economic base as Canada, has established much stronger ties
with the Asian super power. And China's neighbour Japan has a
far larger share of the Chinese market. In 2007, 2.7 per
cent of China's overall imports came from Australia, while 14
per cent came from Japan. Just 1.1 per cent of China's overall
imports came from Canada.
The study also points out that at present, Canadian exports
to China consist mainly of natural resources such as minerals
and forestry products. Within that trade envelope, Alberta
stands out with its trade surplus and a concentration on
chemicals and petroleum products.
"If Canada is to be more than hewers of wood and providers
of minerals, we need to expand and focus on finding Chinese
markets for our retail trade and services sector among China's
growing middle class and its burgeoning cities," Mullins
The study concludes that Canada has a number of advantages
that it is not fully utilizing in its quest to gain a larger
share of the Chinese market; among them the country's varied
natural resources, superior technology, an energetic business
sector, and a growing local Chinese population.
"The Chinese market offers great opportunities but Canada is
competing with every other nation on the globe to reach that
market. If Canada is to strengthen its trade relations with
China, it needs to make better use of its comparative
advantages," Mullins said.
News Release - Chinese Translation