China-Canada trade grows despite 'turbulence': Expert

Despite diplomatic relations that are still fraught with difficulties, trade relations between Canada and China have continued to grow, according to an economist from the Royal Bank of Canada, or RBC.

"We can see exports of Canadian goods to China have declined marginally in 2022, but the stuff that Canada imported from China as a share of total imports from the world is actually as high as a record high. That's really interesting," said Claire Fan, an RBC economist who recently addressed a group of Chinese Canadian media on the Canadian macroeconomic outlook and trade relations with China.

Fan said that although former US president Donald Trump-era geopolitical tensions and the pandemic had severely disrupted the global supply chain and trade system, the period was basically a black swan event of uncertainty, and that talks have largely continued to the present day.

"But moving forward, businesses are obviously aware of high amounts of uncertainties that are associated with political tensions. So, businesses will shelter themselves to make sure that the risks were essential," Fan added.

Meanwhile, according to a recent Canada-China trade report released by the University of Alberta, last year saw a return to growth in both exports and imports between the two countries. Because of the turbulence in exports and consistent growth in imports, Canada's trade deficit with China continued to grow.

In particular, exports to China expanded dramatically in the last few months of 2022. The rebound in exports can largely be explained by the easing of COVID-related policies in China, and the country's lifting of export restrictions on Canadian canola.

Furthermore, statistics show that Canada's imports from China in 2022 grew once again, at a rate of 16.36 percent compared to 2021. The year 2022 also marked the first time that imports from China surpassed C$100 billion ($74.5 billion), with the total value of imports at C$100.03 billion.

In line with previous years, telephone and communication technology was the top import product of 2022, with a total value of C$9.83 billion and a moderate growth rate of 7.5 percent year-on-year. Automatic data processing machines were the second-largest import category, with a total value of C$8.07 billion (-0.3 percent YoY), according to the report.

Complexity seen

The report concluded that broad relations between China and Canada had chilled throughout 2022, which will unquestionably have some impact on the complexity of future trading and investment relations.

"It is important to note, however, that through this turbulence, Canada-China trade has continued to grow to historic levels and this growth is expected to continue into 2023," said the report.

On the other hand, the RBC has also predicted that a recession will hit at the midpoint of 2023. Fan noted that the bank's earlier expectation of mild recessions in Canada and the US hasn't changed and is driven by several factors, such as inflation that is more persistent than expected, rapid interest rate hikes as a response from central banks, and a slower consumer spending profile.

"Our forecasts see a slowing in economic growth in Canada through 2023, led by slower household consumption as more consumers are constrained by higher prices and rising expenses to service existing borrowings," said Fan. "We're already seeing indications that growth in the economy is losing steam. That includes weakness in the labor markets as job openings decline, and rising consumer delinquency."

renali@chinadailyusa.com