Riding the Dragon: Canada-China trade surges in ’07

OTTAWA — The rate of Canadian exports to China surpassed that of any other G7 country, and this year put China neck-and-neck with Japan as Canada’s third largest export market.

According to a recent report by Stats Canada in the Canadian Economic Observer, Canada’s exports to China surged 43 percent in 2007 from the same period in 2006, while its imports from the Asian powerhouse rose only 17 percent.

Merchandise exports to China in the first seven months of this year have grown at more than twice the pace of its imports on the strength of the Asian giant’s demand for Canada’s natural resources. Accelerating Chinese demand, combined with higher world prices for metals, potash and canola, boosted industrial goods and agricultural exports. China also became Canada’s number two export market for crude oil.

Canada is clearly benefiting from the magnitude of China’s demand for natural resources, says StatsCan. The nation of more than 1.3 billion people is expanding its manufacturing base and building massive infrastructure projects, from ports and bridges to facilities for the 2008 Olympic Games.

China Leads Canada Trade Diversification:

Canada’s declining exports the U.S. has been offset more
than enough by booming Chinese demand for metals and oil.

Increasing exports to Asia, and to a lesser extent, to Europe, resulted in nearly one-quarter (24%) of Canada’s exports headed to non-US destinations in 2007, compared with 16 percent just five years ago.

The recent shift to increased trade with the rest of the world was well-timed, reports StatsCan, given the onset of the housing-induced slowdown south of the border.

All regions of Canada have benefited from this shift in exports toward non-US countries. In the cases of Ontario, Quebec, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, the growth was more than sufficient to offset declining exports to the United States.

For British Columbia, Manitoba, Saskatchewan and New Brunswick, exports to non-US countries boosted overall exports beyond the more moderate growth in shipments to the United States.

Alberta was the only province not to show an increased share of its exports shipped to countries other than the U.S. — mainly because exports south of the border are growing as fast as those to non-US countries, thanks to crude oil, Alberta’s main export stateside.

Import Growth More Restrained:

Since 2002, China’s share of Canada’s imports has tripled to nearly 10 percent of total imports. However, such imports grew only 17 percent over the first seven months of 2007 compared to last year, because values have been dampened by the stronger Canadian loonie vis-à-vis the Chinese currency.