Carney’s Course on China Is the Right One — Now Let’s Build on It

  • National Newswatch

Prime Minister Mark Carney’s recent moves to recalibrate Canada’s relationship with China signal a long-overdue and welcome shift in our foreign and trade policy. His call with Chinese Premier Li Qiang, the bilateral meeting between Canadian and Chinese trade ministers in Paris, and the agreement to reconvene joint economic dialogues are critical steps toward rebuilding a pragmatic and stable relationship with Canada’s second-largest trading partner. This direction is not only correct; it is essential.

Canada can no longer afford a reactive or inconsistent China policy. For too long, our posture has been marked by limited engagement, an absence of coherent strategy, and an overreliance on mirroring U.S. positions. This has come at a cost. Canadian exporters have lost ground in a market that remains central to global economic growth, and we’ve had little to show in return. Prime Minister Carney’s early actions represent a decisive break from that inertia, and now, the task ahead is to sustain and deepen this momentum.

The stakes are high. Over 75% of Canada’s exports still flow to the United States, leaving our economy vulnerable to trade disputes and policy volatility beyond our control. Diversification is no longer a policy preference; it is a national imperative. And among the markets that can anchor a serious diversification agenda, none is more consequential than China.

Despite recent diplomatic strains, China remains a vital market for Canadian sectors ranging from agriculture and agri-food to natural resources, forestry, and clean technology. Yet these opportunities have been constrained by tensions, including retaliatory tariffs on $3.7 billion in Canadian agri-food exports, unresolved barriers on beef and canola seed, and a breakdown in formal communication channels. These are not inevitable conflicts, they are the result of disengagement.

In stark contrast, many of our closest allies – including the European Union, the United Kingdom, Australia, Japan, and South Korea – have adopted a more balanced and pragmatic approach towards their economic relations with China. Australia’s experience is particularly instructive. Despite deep security ties with the U.S. and membership in both the Five Eyes and AUKUS, Canberra has successfully revived its crucial economic relationship with Beijing following a period of bilateral tensions. High-level diplomacy played a key role, characterized by several ministerial visits, including Prime Minister Albanese’s trip to Beijing in 2023 and Premier Li Qiang’s reciprocal visit to Australia in 2024. According to World Bank data, Australia's GDP per capita was nearly 15% lower than Canada's in 1990 but, in 2023, Australia had surpassed Canada and is now 20% ahead of us. They have pursued economic reform and systematic expansion of resource exports, largely to China, while pursuing a robust national security agenda tuned to rising risks in its neighbourhood. In 2023–24, Australia’s trade with China reached a record $290 billion, comprising an impressive 26% of its total trade. Their engagement demonstrates that dialogue and economic engagement can coexist with principled positions.

Canada, too, has real and measurable interests in strengthening ties with China. The expanded Trans Mountain Pipeline (TMX) now delivers nearly 350,000 barrels per day to Chinese buyers, potentially generating $6–7 billion annually. For context, that is nearly as much as our entire goods exports to South Korea ($7.6 billion) and more than those to India ($5 billion). Meanwhile, the newly launched LNG Canada terminal, where PetroChina is a joint venture partner, will help meet China's surging demand for natural gas, expected to grow by 50% by 2040. These are concrete, strategic opportunities that benefit Canadians.

To fully realize these critical economic opportunities and protect our long-term interests, Ottawa must prioritize and sustain its efforts towards engagement and recalibration of relations with China. This requires reviving the long-dormant bilateral dialogue instruments, including high-level government-to-government meetings, regular ministerial dialogues, and technical working groups. These mechanisms are essential for effectively advocating for market access, addressing the concerns of Canadian businesses, and supporting exporters.

Prime Minister Carney has rightly made trade diversification a cornerstone of his government’s economic strategy. But no diversification agenda is credible without deliberate and sustained engagement with China. This requires clarity, confidence, and continuity, not episodic gestures, but a strategic framework that advances Canada's economic prosperity while maintaining our national interests and global credibility.

Canada’s long-term economic resilience depends on bold, outward-looking leadership. With the right focus, we can build a China strategy that strengthens our global competitiveness, protects our sovereignty, and positions Canadian businesses to succeed in the world’s fastest-growing markets. The first steps have been taken. Now, it’s time to stay the course.

Graham Shantz is President of the Canada China Business Council (CCBC), a former Canadian ambassador and senior public servant, with over 25 years of experience at Global Affairs Canada, the Department of Finance, and the Privy Council Office. He has lived and worked for over a decade in Asia, including China.