Canada’s business with China appears to be thriving during the pandemic even as diplomatic relations remain in a deep freeze.
Exports to China increased close to 10 per cent in the first seven months of the COVID-19 pandemic over the same period a year previous, according to new analysis from the Canadian International Development Platform (CIDP), which is part of the Norman Paterson School of International Affairs at Carleton University.
This growth occurred even as exports, by value, to many other traditional customers sunk during the pandemic, which hit Canada in March.
Overall, Canadian exports fell nearly 20 per cent in the same March to September period, CIDP’s analysis of Statistics Canada data shows. For instance, exports to the United States declined 22 per cent in this period.
Exports to China for the March to September period exceeded $14.7-billion, compared with $13.4-billion in 2019.
Aniket Bhushan, an adjunct research professor at the Norman Paterson School, said one of the reasons exports to China are growing is that sales are rebounding from a bad year in 2019 when China punished Canada for arresting Huawei Technologies chief financial officer Meng Wanzhou. China blocked sales of pork and beef for several months in 2019.
Still, Prof. Bhushan said, Canadian exports to China appear to be on track to exceed 2018 levels by the end of this year.
Perrin Beatty, president of the Canadian Chamber of Commerce, said Canadian exports to China are up in 2020 because China’s economy is one of the few that will grow this year. The country, where COVID-19 first appeared, recovered much more quickly than most and is expected to expand economic output by a modest 2.1 per cent this year.
Diplomatic relations between China and Canada have steadily eroded since late 2018 when Canada arrested Ms. Meng on a U.S. extradition request and Beijing locked up two Canadians – Michael Kovrig and Michael Spavor – in what Prime Minister Justin Trudeau has called an effort to exert “political pressure.” Beijing applied, and then lifted, restrictions barring imports of Canadian pork and beef, while Canada’s two biggest exporters of canola seed remain barred from shipping to the Chinese market.
In October, Deputy Prime Minister Chrystia Freeland denounced China’s ambassador to Canada for threatening Canadians living in Hong Kong, saying envoy Cong Peiwu overstepped his diplomatic role when he warned granting asylum to pro-democracy dissidents could jeopardize the “health and safety” of 300,000 Canadians living in the Asian city. Mr. Cong was also reprimanded by the Global Affairs department.
Trade data analyzed by CIDP show rising exports to China include ores, cereal grains such as wheat, meat, animal or vegetable fats, and vegetables. Statistics compiled by the federal agriculture and agri-food department show that in September, for instance, Canada exported 61,570 metric tonnes of pork to China compared with 346 tonnes in September, 2019.
Mr. Beatty, whose organization represents 200,000 Canadian businesses, said the political differences between Ottawa and Beijing should not be allowed to “contaminate our commercial relationships.” He said it “makes no sense for the Chinese to use imports of Canadian agri-food as a weapon” and that “politicizing trade” destroys the benefits of trade.
“Half a century ago, Canada supplied China with wheat when other countries refused to sell to them. It was the right decision, and both Canadian farmers and the Chinese people benefited,” he said.
Gordon Houlden, director of the University of Alberta’s China Institute, suggested that China is being pragmatic in dealing with Canada for economic and political reasons.
“I think there may be a desire not to make things worse on the political side because taking the two Canadians has not worked out and maybe there is a desire not to add economic pressure to the equation,” he said.
In a recent report, the China Institute documented how China is continuing to buy Canadian agricultural goods at a solid pace.
David Mulroney, a former Canadian ambassador to China, said that aside from arresting Ms. Meng – who is fighting extradition to the U.S. in a B.C. court – Ottawa has avoided taking significant measures that might antagonize Beijing.
By comparison, Australia has faced an increasing list of trade reprisals from China after challenging China in ways Canada hasn’t. Australia has banned Huawei from 5G networks, called for an inquiry into the origins of COVID-19, and led a pushback against authoritarian states by enacting a law to monitor agents acting for foreign governments.
Prof. Houlden said it would be unwise for Canada to try to decouple its trade with China. He added that trade accounts for 64 per cent of Canada’s GDP, compared with 24 per cent for the U.S. and 37 per cent for China.
“We are far more export dependent than China and we can’t maintain our prosperity without that, so [the] idea that we can’t or shouldn’t sell to China is not sustainable,” he added.
While Canadian canola seed exports continue to face targeted restrictions from Beijing, the China Institute report said 2020 has been marked by relative gains in both export value and tonnage. The cumulative value of canola seed exports to China has risen by 52 per cent on a year-to-date basis to $976-million. That’s still far below the $2.7-billion in canola seed Canada exported in 2018, however.
ROBERT FIFE, OTTAWA BUREAU CHIEF
The Globe and Mail, December 1, 2020