Chinese foreign investment in Canada has boomed over the last decade but trade lags, according to a study by both governments that was released on Wednesday and outlined "room for much growth." The joint study to evaluate the potential for deeper trade ties was undertaken following a June 2010 meeting between Canadian Prime Minister Stephen Harper and Chinese President Hu Jintao in Canada.
Concluding that "growth opportunities appear to be strong," it sets the stage for discussions on a possible free trade pact sought by Beijing. Investment in Canada from China increased 36-fold in 10 years, reaching 10.7 billion US dollars at the end of 2011, while Canadian investment in China topped $8.3 billion, according to government figures.
"Notwithstanding these impressive gains, bilateral trade and investment represent a surprisingly small proportion of each country's total international activity," the study said. "There is room for much growth." China is currently Canada's second-largest trading partner while Canada ranks 13th among China's trading partners.
The study outlined tariff and regulatory challenges, as well as few areas of their economies that are complementary. In many, the two nations actually compete for third-market sales but the study suggests they could partner up. Chinese domestic demand for clean technologies could give a boost to small Canadian firms and even help these sell to third markets.