Edition 1: China-U.S. chest-thumping on trade, what it means for Canada’s soy, pork, peas and other products, and what Heritage Minister Joly came home with after her recent trip to China.
Quote of the week
“The reality is, there’s no other country in the world where government-to-government relationships are so important to business opportunities.”
- Minister Mélanie Joly, who was recently in China promoting Canadian creative industries.
One Big Story: Trade tensions between China and the U.S.
While talk of an all-out trade war between China and the U.S. has cooled in the last few days, the world and global economy is on tenterhooks waiting to see how this plays out.
What has happened so far: Tensions between the countries have soared recently, but concrete trade actions started in January, when the U.S. announced a 30% tariff on imported solar panels and 20% on washing machines, many of which come from China. In March, the U.S. announced steel and aluminum tariffs – while global in nature, they were targeted at China – of 25% and 10%, respectively. China hit back on April 2nd, with the announcement of approximately $3 billion of tariffs on goods (such as pork and apples) from the U.S., in response to the steel and aluminum tariffs. The next day, the U.S. threatened to target another $50 billion in Chinese goods; the day after this, China threatened the same. On April 5, President Trump threatened to target $100 billion more of Chinese goods with tariffs. Since April 5, things have cooled down a bit: President Xi has promised to further open China’s markets to foreign investment, a move Trump says he is “thankful” for. However, on the same day, China took the U.S. to the WTO over the tariffs – so no backing down on either side just yet.
Whew. Now what?
Most of this has been chest-beating. The tariffs announced recently are still only threats, and whether they’re enacted remains to be seen.
Listen to our podcast on Canada and rising China-U.S. trade tensions – 010: Between two giants – with host Sarah Pittman, and guests Gordon Houlden, Director of the China Institute, University of Alberta; Carlo Dade, Director of the Trade & Investment Centre, Canada West Foundation
Canada’s place in all of this
While Canada isn’t directly involved in this, it has serious implications for us for several reasons. First, this trade spat – between two mammoth economies – can damage the global economy. Second, the U.S. and China are Canada’s two largest trading partners, respectively. How Canada interacts with both countries at this time could influence this, for better or worse. Third, while there is some optimism about Canada potentially gaining in a few specific sectors, the overriding sentiment from experts is that most scenarios for Canada in this trade spat are negative.
• For example, take a look at the recent piece by senior policy analyst Naomi Christensen on why Canadian soybean growers are going to be negatively impacted by the trade spat.
• Kevin Carmichael wrote about what he thinks Canada’s strategy should be (hint: it might not be what you think)
• Our director of trade and investment, Carlo Dade, wonders about the role the World Trade Organization will play, in this blog.
• A piece from an American think tank earlier this month outlines how this potential trade war would hurt both the US and its allies.
• In an episode of our What the West? podcast, Carlo joins me and Gordon Houlden, director of the China Institute at the University of Alberta, to discuss how Canada will fare in this trade action, and what Canada’s next steps should be.
We’ll be keeping an eye on this spat as it progresses. With the typically volatile strategies from our neighbours to the South, it could evolve very quickly.
This Week on the Noise-o-metre
The noise-o-meter tells us how many articles discuss China in the context of one of the four western provinces.[i] As is typical, China is discussed far more in the British Columbian context than the Prairie context. Many of these articles focused on the China-US trade spat, but there are several human-interest stories as well about China. Articles from Alberta focused on the trade spat, but also an upcoming trade mission for Alberta politicians. Manitoba and Saskatchewan both were discussed in the context of the trade spat, but more from an agriculture point of view (for example, how soybean and canola markets could be impacted).
Stories from the West
• From the Edmonton Journal, a discussion of Alberta’s trade mission to China.
• The Canadian Cattlemen analyze how there could be a growing window for Canada’s peas in light of the US-China trade spat.
• Global News reports that Saskatchewan soy producers hope to take advantage of tariffs on Chinese imports of American soybeans.
• And from Vancouver’s the Daily Hive, a discussion of how China’s largest online retailer will now be listing Canadian real estate.
Issues that Matter
Trade and Investment
• China’s ambassador has made it clear (to no one’s surprise): progressive trade is a red line for and Canada-China Free Trade Agreement.
• An early analysis of what the US-China trade spat could mean for Canada.
• Several industries in Canada could be particularly impacted by the spat – including fruit, pork and nuts, soybeans, and canola.
• The author of an op-ed in the Financial Post argues that we should not “be infected by imported anti-Chinese rhetoric, but instead recognize that China has become a major economic power, our second-largest trading partner and one of the most important sources of productive investment capital for our future growth and prosperity.”
• Canadian Heritage Minister Mélanie Joly was in China last week, promoting Canadian cultural industries: she comes home with 23 deals worth $125 million.
• Alberta’s economic development minister is “hopeful for a free trade deal between China and Canada”
• Finally, this piece argues that, if any country is to benefit from the US-China spat, it will be Australia – not Canada.
• To make up for a potential soy shortfall, China has changed its farm subsidies to favour soybean seeding. Speaking of soybeans – those soybeans that are usually sold by American farmers to China? They’ve already been scooped up by the EU. The Executive Director of Soy Canada, Ron Davidson, predicts that the U.S.-China trade spat will be a negative influence on Canada’s soybean market. One final note on soybeans – Carlo Dade spoke on Real Ag radio last week, saying it would not be wise to ship more soybeans to China, as it would increase our reliance on China for taking our agriculture shipments. Listen to the episode here.
• Farmers in the West are looking to take advantage of trade turbulence to sell more canola to China (our largest buyers).
Clean Energy & Natural Resources
• China has a bold energy vision.
• Solar power has led to record renewables investment – which is good news for China.
• China’s ban on importing waste back in January is continuing to have far-reaching implications. Countries around the world are still scrambling to find an alternative place for their waste.
• For every dollar the U.S. spent on renewable energy last year, China spent $3.
• Finally, an op-ed in the Globe and Mail argues that Canada’s best way to cut global emissions is by helping China reduce its emissions.
By the Numbers
• Is China destined to eclipse the U.S. as tech superpower? Don’t bet on it (Barrie McKenna, The Globe and Mail, April 8)
• How China is trying to export its soft power (William Yang, Deutsche Welle, April 5)
• Hollywood and the Limits of China’s Box Office (David Sims, The Atlantic, April 3)
• Why China will win the global race for complete AI dominance (Greg Williams, Wired, April 16)
That’s all for today! Questions, comments? Send them my way! Remember to subscribe, share and spread the word – Sarah Pittman, policy analyst
The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.
[i] Media measurement is provided by a third-party, independent media monitoring service. To be included in the noise-o-meter, “China” must be in the title, and one of the four western provinces somewhere in the article. While not a perfect system, this gives us an idea of how much China and the West are being discussed together.