April 23, 2024

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Geopolitics poses risk to Canada, China trade

2 min read


Geopolitical and bilateral concerns have taken center stage in Canada-China business relations, overshadowing conventional business challenges that usually impede such trade, according to a survey by the Canada China Business Council.

Conducted in partnership with the Rotman Institute for International Business, the survey examined the most relevant issues for Canadian companies’ business with China and for Chinese companies operating in Canada over the last year.

The survey revealed a consistent decline in metrics related to performance and attitudes concerning business relations, and trends of deteriorating sentiment and performance have been consistently observed in past surveys.

“It’s all about politics,” said Sarah Kutulakos, executive director and chief operating officer of the Canada China Business Council, which hosted a media webinar last week.

Geopolitical tensions have taken a central role, she said, dominating the traditional business challenges that also continue to impede operations.

The Canadian business community has called for improving Canada-China ties for strategic economic growth.

Top challenges faced by Canadian businesses include bilateral relations, geopolitical risks and China-US relations, according to the report. Policy-related obstacles scored the highest on a weighted-average scale and were most frequently cited.

“It’s bad for all, but worse for Canada,” Kutulakos said.

The survey found that government policies significantly influence travel, with nearly 70 percent identifying direct flight availability and increased travel time as the top travel barriers.

Despite China’s post-COVID recovery early last year, survey results showed “a lasting impact” of the pandemic on Canada-China business. Approximately 50 percent of respondents noted a contraction or reduction in activities, with 19 percent placing business on hold due to travel restrictions.

Experts suggest that actively participating in the Chinese market is crucial for gaining insight and competing effectively at the pace of the Chinese market.

When considering China’s role in global business, the survey found that 36 percent of Canadian companies view it as a market for export or sales, and 30 percent are in China because their clients or customers necessitate their presence. Despite challenges, 43 percent plan to expand their business in China over the next five years.

Unlike Canada, competitor countries like the United States and Australia maintain high-level visits to China, which has contributed to the improvement in diplomatic relations.

“As we reflect on 45 years of fostering Canada-China business ties, we have consistently anticipated positive strides in the bilateral environment,” Kutulakos said.



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