Stockwatch reporting that Canada should be looking at expanding trading opportunities with China as they seem to be "falling behind the rest of the world in trade with China." Seems Canada doesn't want to be second banana to Australia either.

A few quotes in the article about Canada/China trade remind me of the current situation re the USA and China:

.......that imports from China (into Canada) have grown faster than exports, resulting in habitual trade deficits ($29 billion in 2007) with China, and.....from 1999 to 2007, Canada's trade deficit with China grew by over 400%.

-------------------------

Canada gravitates to stronger trade ties with China

2009-04-21 12:19 ET - Street Wire

by Jim Matkin

The Fraser Institute sponsored a presentation on China April 21, 2009, by David Emerson, former federal Minister of International Trade and Dr. Mark Mullin new executive director of the Institute. The message was Canada has "underperformed" in taking advantage of the trade lolly available now in China. Mr. Emerson urged the well-heeled, packed and attentive crowd enjoying grilled salmon at Bridges -- better bridges, get it? -- Restaurant to see the recent surge of protectionism in the U.S. as a call to action for a Plan B, third alternative trading relationship. "The thickening of the U.S. border threatens a major Canadian objective to be a gateway for trade in North America with over 400 million consumers" says Mr. Emerson. His first hand experience is that Canada (both government and business) is not paying enough attention to trade relations with Asia.

The China option

"Despite years of wooing the Chinese market, Canada is falling behind the rest of the world in trade with China," according to the Fraser Institute. As a result the Institute just published a major research report on Canada's economic relations with China under the direction of Dr. Mullin, and the report's findings were summarized for the meeting. The report analyses trade in merchandise, services, and two-way flows of investment. It also examines comparable data on the performance of countries that have done better than Canada.

The report shows missed opportunities, but documents the increasing importance of the trade relationship: "China is now Canada's third largest export market and our second largest source of imports. Note however that imports from China have grown faster than exports, resulting in habitual trade deficits ($29 billion in 2007) with China. For example, looking at the period from 1998 to 2007, Canada's exports to China increased by 272% while imports from China over the same period increased by 400%. Trade in foreign direct investment with China has increased over time as well. For example, Canada's investments in China, although small in magnitude, have increased by approximately 300% from 1998 to 2007. Compared to this, China's investments in Canada have increased by approximately 170% over the same period. Canada's services trade with China has also grown, although by a much smaller proportion... Canada's competitors have an edge over Canada in their economic relations with China. Although Canada has strengthened its economic ties with China in the last decade, countries such as Australia, which have a similar resource and economic base, have established stronger ties with the Asian superpower... Canada's trade deficit with China has also grown faster than has Australia's: from 1999 to 2007, Canada's trade deficit with China grew by over 400% while Australia's trade deficit with China grew by only a little over 200%. A similar picture emerges for total trade. China imported more from Australia (2.7% of its overall imports in 2007) and Japan (14%) than from Canada (1.1%) or the United Kingdom (at 0.8%)."

Canadian protectionists

"Australia is kicking Canada's butt," says Dr. Mullin. One reason for our less than stellar trade success in Asia says Mr. Emerson is the fact Canada has too much home grown protectionism. The uneconomic supply management laws for just about everything are seen around the world as shameful. "We came very close to a free trade deal with South Korea but it went down because of protectionism from the Canadian auto industry." Somehow the auto lobby convinced politicians that letting in Korean autos would be the ruination of the Canadian industry but the Koreans get around this blatant protectionism anyway.

China politics

During question period one tough inquiry was why had Prime Minister Harper been so slow in warming to China relations. Minister Stockwell Day has just returned from a very successful visit to China, but some in the audience wanted to know why it took so long. One questioner even asked "was Mr. Harper stupid enough to believe China is still a communist country?" Mr. Emerson replied that Mr. Harper is not stupid and in fact he is very smart. His party was in opposition for a long time and studied the downside of China, particularly the issues around Taiwan and Falun Gong. Some of his party had very ideological fixed views making it difficult to find consensus. Also Mr. Emerson believes the Prime Minister has been somewhat buffeted by the "chaotic nature of the media" on China and human rights violations.

China has replaced Japan becoming Canada's third largest export market and the second largest source of imports. The Fraser Institute report concludes, "As Canada's traditional partners such as the United States and United Kingdom face recessionary pressures, it is critical for Canada to continue diversifying its trade by fostering better economic relations with China, a strong engine of growth today."

http://www.stockwatch.com/newsit/new...