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Canada’s exports to China up more than 38%, while imports shift heavily to machinery & equipment

Ottawa, ON -- Canada was one of the few nations whose growth in exports to China last year surpassed the growth in ...


Ottawa, ON — Canada was one of the few nations whose growth in exports to China last year surpassed the growth in imports, according to a new report from Statistics Canada.

In 2004, Canada exported more than $6.6 billion in merchandise to the Asian giant, a 38.8% increase. At the same time, Canada’s imports from China rose 29.7% to nearly $24.1 billion. China is now Canada’s second largest trading partner, behind the United States, according to the report published in the Canadian Economic Observer.

Since 1990, Canada’s imports from China have risen at an annual average rate of 22.8% while export growth averaged 12.5%.

In the first quarter of this year, exports to China were up around 20% from the same quarter in 2004, while imports rose 30%.

China trailed only the United States as a source of our imports last year, bumping Japan and Mexico to third and fourth place respectively.

IMPORTS SHIFT TO MACHINERY AND EQUIPMENT

The composition of our imports from China has shifted markedly. Machinery and equipment surpassed consumer goods such as clothing for the first time early in 2004. By the first quarter of 2005, imports of machinery and equipment were 20% higher. More than half of last year’s growth was in computers and telecommunications equipment.

Imports of industrial goods also rose sharply last year. The $1-billion rise was led by petrochemicals and plastics, as well as iron and steel and aluminum.

Automobiles, mostly parts, constituted the fourth largest and fastest growing group of imports last year. These imports have risen sharply from nearly nothing 10 years ago, especially motors and parts.

With respect to exports, Canada and Australia were the only major OECD nations to post above-average growth last year, which reflected their large resource content.

Exports of industrial goods rose 66% last year, their largest increase in the past decade, before which shipments were negligible. They were up again 57% in the first quarter of 2005 from a year earlier.

Organic chemicals, and metals and minerals, led industrial goods, contributing nearly one-third of all Canadian goods exported to China in 2004. Ethylene glycol experienced remarkable growth, as it is used by China’s textile and clothing industries.

The rapid growth of China’s economy has also led to a sharp increase in demand for the handling of goods and transport, as well as energy. These sectors account for at least one-quarter of investment spending in China.

Canada’s energy exports to China doubled last year, all the result of coal, which represented two-thirds of China’s energy consumption. Coal consumption rose 12% in 2004 alone.

This growth should continue at a torrid pace in 2005, as coal remains in short supply pending a number of new projects coming on line over the next few years.

The study also found that direct investment in either direction remains minimal, with Canadian enterprises more active in China than their Chinese counterparts in Canada.

Investment by Canadian firms in China is led by our traditional areas of expertise in resources and finance. This is in marked contrast with US and Asian companies, which are moving manufacturing plants to China.

The study, ‘Canada’s trade and investment with China’, is now available for free online at www.statcan.ca. The study is also included in the June 2005 Internet edition of Canadian Economic Observer, Volume 18, no. 6 (11-010-XIB, $19/$182), which is now available. The monthly paper version of Canadian Economic Observer, Volume 18, no. 6 (11-010-XPB, $25/$243) will be available on June 23.

For more information about the Canadian Economic Observer, from the Canadian Statistics page, choose National Accounts, then click on the banner ad for Canadian Economic Observer.