Canada-China Economic Relations Report

Sino-Canadian economic relations have paralleled overall diplomacy between the nations since the 1940s. The Chinese Communist Party’s victory in 1949 against the Nationalists was met with Western powers sympathizing with the latter and as such Canada, in unison with its American counterparts, established and maintained diplomatic and economic ties with the Republic of China (also known as Taiwan)1. Despite the Communist victory in 1949, Canada did pursue limited diplomatic and economic ties with the People’s Republic of China between 1949 and 1951 under the direction of Liberal Prime Minister Louis St. Laurent who parallelled the approach of Britain’s socialist government at the time.2 However, the Korean War ensued in 1950 and saw Canada backing United Nations forces against Communist Chinese forces and as such, all diplomatic ties were shuttered in 1951.

Relations between the countries remained strained till 1970 when official diplomatic ties were established by Prime Minister Pierre Trudeau. It is important to note that the Dominion of Canada pursued relations with the Chinese ahead of both the United States' decision to do so and prior to the People’s Republic of China attaining rights to the United Nations seat in lieu of the previous one held by its Taiwanese counterpart. Furthermore, Pierre Trudeau visited China in 1973 and met his Chinese counterpart Mao Zedong, a historic first for a sitting Canadian Prime Minister. During this time period, the economic ties between the nations strongly favoured Canada as the Chinese economy at the time was still developing. The Canadian government at the time saw potential in Chinese economic progression with the proposed market-oriented policies China pursued in the 1970s and 1980s, however, such promise was short-lived given the government’s criticism of the chaotic execution and social impact of the Chinese Cultural Revolution instituted by Mao Zedong.3

In 1983, the Chinese Foreign Minister Wu Xueqian visited Canada and the two nations signed the Agreement on Developing Cooperation between China and Canada which called for the development of studies to improve China’s economic situation (Article 1) and established an official foreign economic relations programme between the nations (Article 2). The agreement was shortly followed by a state visit by the Chinese Premier Zhao Ziyang to the Parliament of Canada in 1984 where the Agreement on the Protection of Investment between China and Canada was signed. The agreement sought to strengthen the economic cooperation of both countries with the values of equality and mutual benefit in mind and it aimed to avoid unnecessary damage to the commercial, economic and financial interests of either nation.5 2 years later, the Agreement on Prevention of Double Taxation and Tax Evasions between China and Canada came into effect.

With the foundations for trade established in the 1980s, the 1990s were focused on Canada acting as a mediator to further push the Chinese economy onto the world stage. The Canadian International Trade Minister Roy MacLaren at the time enacted the Four Pillars Policy which represented Canadian interests in shifting away from economic reliance on the United States and sought to pursue further Chinese trade.6 In fact, Prime Minister Jean Chretien was a vocal proponent of China’s accession into the World Trade Organization as he believed doing so would open up further economic benefits for Canadian businesses operating or selling products in China.7 Furthermore, Canada from a human rights perspective believed that entangling China into the global economy would force it to revamp its human rights record to avoid economic repercussions from other member states of the world. As such, China attained its WTO membership in 2001, opening further avenues for economic collaboration between the nations as evidenced by Figure 1.


The term of Conservative Prime Minister Stephen Harper from 2006 brought new challenges to the Canadian-Chinese economic relationship. Harper’s government stressed the importance of collaboration with democracies and stoked criticism of authoritarian regimes such as China. Harper’s government enacted several policies such as accusing China of commercial espionage, granting Tibetan human rights leader Dalai Lama Canadian citizenship and further progressing Canada’s diplomatic and economic ties with the Republic of China based in Taiwan.8 Such moves caused distrust from the Chinese government, resulting in skipped joint economic meetings. The global economic recession in 2008 eased combative foreign policy ventures on behalf of the Canadian government resulting in a shift of Conversative policy platform to pursue further ties with China in an effort to safeguard Canadian economic interests and performance.  

These foreign policy endeavours continued early into PM Justin Trudeau’s term, however, economic and diplomatic relations soured during his term. Firstly, Canada is the world’s largest canola export nation and 40% of its supply ends up in China.9 China at many points in Trudeau’s early term threatened to impose restrictions on Canada’s canola supply and followed through with this with a ban in 2019; signifying the start of a period of distrust in diplomatic relations with economic retaliation. Furthermore, Canada fell victim to the trade war between China and the United States of America and often faced repercussions for the detainment of Huawei’s deputy chair Meng Wanzhou. 10 Other economic issues between the nations have also focused on foreign Chinese nationals purchasing property in Canada (especially Vancouver) which later resulted in a ban on foreign home purchases in an effort to address the ongoing housing crisis.11

As such, current relations between the countries have been negative, especially in the midst of Canada’s increased advocacy on China’s human rights record. In its earliest stage, Canada voiced its opposition to measures taken by the People’s Republic of China to limit the extent of democracy in Hong Kong and now more recently, Canada has become a vocal critic of the Uyghur genocide and its parliament has enacted measures to recognize it and even take in Uyghur refugees into Canada starting in 2024. Additionally, Canadian legislation will be introduced by 2024 to ban exports from the Xinjiang region that have ties to forced labour allegations from entering the Canadian supply chain. Early efforts of this are evident with Ottawa's corporate-ethics watchdog’s recent callout of brands such as Ralph Lauren Canada LP that have not placed satisfactory measures to ensure ethical supply chains from China.12 These efforts are sure to shake up the economic relations between the countries as it is increasingly evident that Canada is reliant on China for consumer goods as shown in Figure 3 and that many of the goods entering the country have significant Chinese-made parts as shown in Figure 4.13





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Anwar Subhani