Canada-China Trade: 2020 Year in Review

This report outlines the Canada-China trade over the course of 2020, a tumultuous year characterized by COVID-19-related disruption of trade flows, investment, and global travel.

It also notes topics and trends in global trade in order to contextualize the Canadian trade picture.

Data is gathered from Statistics Canada for goods (merchandise) trade with China, presented on an unadjusted customs basis in Canadian dollars. The relevant HS 6-digit identification code is used to identify individual products.

2020 Canada-China Trade
Source: Trade Data Online (Statistics Canada – Customs Data)

The baseline figures of the Canada-China trade relations are, perhaps surprisingly, a bright spot in the broader Canadian trade relationship. The value of exports to China grew by 8.1%, while declining globally by 11.9%. Imports grew by 1.9%, compared with a near 10% decline globally.

2020 Canada-China Trade: Monthly
Source: Trade Data Online (Statistics Canada – Customs Data)

Non-agglomerated iron ore ($2.56 billion) continued to be the top export category to China and saw a 103.1% jump in value when comparing 2019 with 2020. Chemical wood pulp ($1.69 billion, down 21.8%), canola seed ($1.45 billion, up 75.8%), swine ($1.11 billion, up 165%) and canola oil ($1.07 billion, up 29.6%) rounded out the top five. This order is identical to that of Q3 2020 apart from the inclusion of canola oil, which overtook the copper ores and concentrates category to claim the fifth spot.

The top Canadian import categories to China in 2020 did not change from Q3. Laptops ($6.2 billion, up 18.7%) were again the top category for imports when categorized by value. Cell phones ($5.05 billion, down 15.9%), made up articles of textile materials (a category including facemasks, $2.73 billion, up 1,289%), switching machines ($2.15 billion, down 5.7%), and toys ($1.24 billion, down 6.6%) rounded out the top five.

Canada-China Trade: 2011-2020
Source: Trade Data Online (Statistics Canada – Customs Data)

2020 Canada-China Trade: By Province/Territory
Source: Trade Data Online (Statistics Canada – Customs Data)

Trends and Topics in Canada/Global Trade

Canadian Producers Benefit from Global Increase in Canola Demand

2020 was a strong year for Canola trade in Canada, with considerable global demand driving prices and export tonnage upwards. Reuters reports that buyers, including China, have been “hoard[ing] food supplies during the COVID-19 pandemic.” This has been a windfall for Canadian farmers, many of whom have “watched in surprise and delight” as prices steadily increased in the final months of 2020 and reached $16/bushel by early 2021 (compared with $10 one year ago).

China was the second largest market for Canadian canola in 2020 in terms of value. The combined value of canola seed, meal, and oil exports to China reached $3.1 billion, sitting slightly behind the United States ($3.7 billion). As mentioned earlier in this report canola seed ($1.45 billion, up 75.8% vs. 2019) and canola oil ($1.07 billion, up 29.6% vs. 2019) ranked as the third and fifth China export categories, respectively.

Interestingly, and despite the continued suspension of canola seed export licenses for Richardson and Viterra, China was actually the top export destination for canola seed in 2020, with 22% of the total tonnage ending up in the country according to the Canola Council of Canada. The complicated ban on Canadian canola (outlined in detail in this October 2020 China Institute occasional paper) appears to be essentially moot, with COVID-19-driven demand for oilseeds outstripping the bilateral conflict between the two nations. 

The U.S.-China Phase One Trade Deal – One Year Later

The highly publicized/touted U.S.-China Phase One Trade Agreement came into effect almost exactly one year ago on February 14, 2020. Article 6.2 of the agreement outlines a set of Chinese purchase commitments for American manufactured, agricultural, energy goods, plus a specific list of services, over a two-year period (beginning on January 1, 2020). A year removed, do the trade stats align with the ambitious purchase promises of the agreement?

Analysis from the Peterson Institute for International Economics (PIIE) indicates that the answer is no. In fact, China’s purchases of American goods only reached 59% (using U.S. export statistics) of the yearly total outlined in the agreement. Each component category of the agreement – agricultural (82% of target), manufactured (57% of target), and energy (37% of target) – also failed to reach the target level.

Whether or not China will meet the prescribed purchase commitments over the full 24-month period is obviously yet to be seen. The Phase One agreement was signed just as COVID-19 swept across much of the world, diverting public attention away and creating a readymade excuse for underwhelming purchase numbers. But, moving forward, the agreement (and U.S.-China trade issues more broadly) will undoubtedly garner increased attention as the Biden Administration moves to review it and other Trump-era policies.  

China Overtakes U.S. as Top EU Trading Partner

New data released by Eurostat – the European Union’s statistical service – shows that China overtook the United States as the top overall trading partner of the EU in 2020.

The overall value of merchandise trade with the United States (combined value of both exports and imports) tallied €555 billion, compared with €586 billion for China. European exports to (-8.2%) and imports from (-13.2%) the U.S. both fell. On the flip side, exports to and imports from China grew by 2.2% and 5.6%, respectively.

That said, a CNN Business report quotes Daniel Gros, a fellow at the Center for European Policy Studies, as saying that “The overall transatlantic relationship remains much, much stronger than the one between Europe and China.” Mr. Gros emphasizes that the U.S. still far outpaces China as a destination for European exports, and notes that “The data also doesn't take transatlantic trade in services into account, which is worth about €494 billion ([US]$595 billion) a year.”

So, while the numbers may not indicate a major shift in global trade flows, there is perhaps a symbolic importance to the 2020 data. China was the only major world economy to record growth on the year and became the source for much-needed imports (such as masks and other PPE products). Marginal expansion of trade between China and the EU will parallel that of other global regions (such as Canada). The economic power of China continues to grow as the global economy continues to stagnate.

Tom Alton Policy Research Assistant
Tom Alton is a Policy Research Assistant at the China Institute at the University of Alberta and a BCom graduate from the Alberta School of Business.