As the world’s second largest economy, and an average yearly GDP growth of about 10 percent since 1980, China’s presence as a commercial force is felt around the world. Following several years of double-digit growth, economic expansion in China throughout 2008 was hampered by monetary policy tightening and the collapse of the stock market. This domestic slowdown was exacerbated by the financial turmoil that engulfed major industrialized economies, dramatically reducing demand for Chinese exports while slowing the pace of foreign direct investment. China’s real GDP growth sank to 6.2% in the first quarter of 2009, down from 10.6% a year earlier. However, following strong intervention from the Chinese government, China’s economy achieved an overall growth rate of 8.7% in 2009, followed by 12% in the first quarter of 2010. China has now recovered completely from the effects of the recession.
China took early and decisive action to counteract the effects of the global downturn, including a massive fiscal stimulus program. In November 2008, Beijing announced a wide-ranging RMB 4 trillion (CAD$700 billion) stimulus package. The package, consistent with President Hu’s stated objective of creating a “harmonious society”, combined economic growth (notably infrastructure development) with an emphasis on low income groups, regional agricultural development, pollution control and technological upgrades.
An important manufacturing centre for both Asian and global supply chains, the country is importing large amounts of machinery, oil, chemicals, vehicles and raw materials to feed its rapidly expanding industries. Its infrastructure needs are ballooning, generating tremendous opportunities in engineering, transportation and environmental technologies. Furthermore, China is an increasingly important source of investment capital with sharply rising outward direct investment flows that reached USD $48.0 billion in 2009. With a population of 1.3 billion, rising income levels, and a growing middle class, China’s potential as a consumer market is phenomenal. China is also a vast and complex country where conducting business can be difficult. Obtaining reliable information is a challenge, as is forging the right connections. The financial and taxation aspects of doing business there are intricate. Key challenges include import barriers, limitations on foreign service providers, inadequate intellectual property rights enforcement, subsidy practices and low transparency in contracting processes.
The stock of foreign direct investment in Canada from China accounted for less than 2 percent of total FDI in Canada, however, it has grown from $928 million in 2005 to nearly $8.9 billion in 2009.
The Government of Canada has identified China as a GCS priority market—based on extensive consultation with government, academic and Canadian business and industry representatives—and has developed a comprehensive Market Plan that identifies the following key sectors as offering clear opportunities well suited to Canadian capabilities and interests in the market:
Cleantech is increasingly becoming an important sector for the Chinese economy. Chinese companies are actively seeking partners to help develop their own technology and expertise and to find innovative solutions to some of the challenges created by the rapid economic growth of the past 30 years. Specifically, significant opportunities exist for Canadian technology companies involved in municipal and industry wastewater treatment technology.
Canada-China Commercial Relations, 2005-2009 ($ Millions)
An increasing number of exchanges and visits at the ministerial and deputy ministerial-level have recently reinforced Canada’s and China’s commitment to advancing the bilateral relationship and strengthening commercial ties. Most notable, was the Prime Minister’s visit to China in December 2009 and President Hu’s visit to Canada in June 2010.
October 13, 2010, marks the date of the 40th anniversary of diplomatic relations between Canada and the People’s Republic of China. Canada was among the first Western countries to establish diplomatic relations with China, in 1970. In jointly celebrating this anniversary with China, we hope to enhance the bilateral relationship and increase business opportunities for Canadians in China by highlighting the longevity of our relationship and by increasing Canada’s visibility as a dynamic and innovative country.
Opportunities such as Canada’s involvement in the 2010 World Exposition in Shanghai, will serve to heighten the awareness of Canadian business expertise and competitiveness in and throughout the Chinese market. China’s theme for Expo 2010 is “Better City, Better Life.”
The Government of Canada will continue to monitor and influence Chinese commercial policies and regulations in favour of Canadian interests. Bilateral agreements on science and technology and a new memorandum of understanding on the establishment of a working group on environmental protection and energy conservation will help open new doors for Canadian companies, as will ongoing work to secure Canada’s place as an important gateway for Asia Pacific commerce.
Canada’s Trade Commissioner Service expanded its presence in China with the addition of new trade offices in Chengdu, Nanjing, Qingdao, Shenyang, Shenzhen and Wuhan and expanded resources in other cities. The offices will further support Canadian interests and develop opportunities for Canadian business in these emerging business centres.
Canadian Trade Commissioners will continue to actively promote Canadian commercial capabilities throughout China, while providing Canadian companies with the market intelligence, connections and support they need to capitalize on specific opportunities.
Canada has a number of bilateral trade and investment policy instruments in place that are helping to facilitate and support Canadian commercial engagement in the region:
The Government of Canada’s Market Plan for China is available on the Virtual Trade Commissioner website.
Read the Market Sector Reports, prepared by the Canadian Trade Commissioner Service, related to China.
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