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Executive summery
As per the 2010 agreement between president of china Hu Jintao and Canadian Prime Minister Stephen Harper, expert officials from both china and Canada carried out a study to give an analytical foundation to evaluate possible bilateral economic complementarities in some specific sectors (Metz, 2001). Each and every state globally has specific interest in various sectors of economy that promotes trade with the other country of interest depending with its capacity to supply to that country.
The research completion assists to set the base for the two countries to start investigative discussions on matters of trade and economic promotion, as discussed by the leaders in the 2012 presidential meeting between the president of Canada and china.
Both china and Canada are big trading countries. Both countries have a past history of integral trade as well as future potential economic growth. Research indicates that china is currently Canada’s second largest trading partner, whereas on the other hand, Canada is placed thirteenth among china’s top trading partners globally (Zhang, 2009). As a matter of fact from research, there is increase in two-way trade in goods, services and investments among the two countries. However, people to people relationship between the two countries have never been strong though there is an indication that there are students who visit to each other’s country. Government to government cooperation is also reflected in this study on priority areas.
Although this study is not exhaustive in scope, it provides an extensive analysis on bilateral economic complementarities. The trade between china and Canada can be enhanced just like carrying out comprehensive trading relationship (David, 2008). This study therefore, examines barriers and challenges to economic growth and development in these sectors.
Main areas of study in this essay include:
Agriculture and agri-food (seafood and fish)
Both Canada and china are essential producers and exporters of agri-food and agriculture products, the supply and demand profiles of these countries however, varies. Both countries expand their trade beyond supply of goods and investments (Metz, 2001). There is continuous support from governments and industries from both nations on technical and scientific exchanges to help china solve domestic tasks and to further open the market opportunities for both china and Canada. Regulatory measures and tariffs as well as rampant delays in resolving market challenges are the main constrains between these two countries.
Clean technology and environmental goods and services
Clean technology is what is advocated currently worldwide. Canada for instance is facing challenges on clean technology due to its small size and intellectual property rights stipulated by the constitution. China on the other hand has a five year plan to address these challenges to enhance clean technology to due to its growing domestic environmental issues (Zhang, 2009). The partnership between China and Canada on clean technology goods and services can help the global call on clean-tech solutions in that they are among the largest countries and economy in the world.
Machinery and equipment
Over the last decade, this sector which is a two-way trade has shown a robust growth. The Chinese production needs due to large population is complemented by the Canadian technology especially in the mining and agricultural equipment’s. The cooperation from both countries has offered Canada opportunities to increase its exports (Zhang, 2009). The growth in this sector is hindered by the tariffs, intellectual property rights and certification requirements.
Natural resources and derived products
China and Canada have profuse natural resources and hence are leading global traders in this sector. Due to china’s rapid growing economy, it faces supply pressure on some specific commodities. Canada is in a good position to supply china with the needed raw materials as well as innovative solutions (David, 2008). Both countries have interests on each other due to complementarities, thus continuous investments on clarity, efficiency and predictability of inward investment related regulations must be expanded.
Services
One of the Chinese and Canadian growing components on their economies is services. They are both growing worldwide and are competing with other developed countries with the best knowledge based world market. Though the scope of services trade between the two nations is essential, there is the possibility of the relationship to expand further due to economic growth. The growth of China’s economy will demand the Canadian services in that Canada has many experts that can provide the needed services to the china. China’s services segment is rapidly growing and Canada has enough number of experts that can be exported to china to offer the required services. The bilateral trade will further be posted by the people to people connections between these two countries that already exist.
Textiles and related products
For the Canadian textile and apparel manufacturers to remain viable in the market, it must look for external markets on high value added products in that it depends on sales. China on the other hand has advanced on textile and apparel industries and is currently ranked top in some subsectors (Metz, 2001). China and Canada though they both have good textile industries produces goods that requires different markets thus boosting trade due to exchange capacity. The china’s wide variety of textiles may be used to meet Canadian demand in specific sector that is currently lacking Canadian constructors.
Transportation infrastructure and aerospace
The economies of these two countries are influenced by this sector greatly. There are many opportunities that exist for Canada and China to work together on the development of the safer systems for Chinas growing transportation infrastructure networks. They can also work together to provide infrastructure to third world countries in that China have enough man power while Canada have enough expert with technology. This is a clear indication that their collaboration can enable them to provide infrastructure to the third world countries. The combination of this two countries can enable them develop world-class aerospace products.
Importance of investigating trade relationship between Canada and China
Canada is one of the developed countries in the world with a stable economy. China on the other hand is one of the leading growing economies in the world. Both of these countries have very large populations that require goods and services to run the populations (David, 2008). Canada and china compliment in many things as discussed above in various sectors of economy. Investigation trade relationship among these two countries is therefore, essential in that it gives a clear picture of extend in which the two countries have managed to carry out trade and hence reflect on further opportunities that must be expounded to enhance trade (Zhang, 2009). Investigating trade relationship will also enable the leaders to discuss cross-cutting economic and political priorities that must be put into considerations for the trade between these two countries to expand to the expected limits as the population’s increases and demands of domestic goods increases.
It is also important to investigate trade relationship between these two countries to enable the leaders to instruct expert officials to explore means of deepening the Canada-China economic relations by developing various working groups. There are stiff competitions globally to the markets in that balancing export and import is very complicated to many countries. It is through investigation that experts can expound potential markets between the two countries as well as the complementarities thus improving bilateral trade.
Characteristics of the trade between Canada and China
The investment flows of Canada and China in the study are in U.S. dollars, in that it is the most widely used currency globally especially for international payments. The data below shows Canada-China trade investment.

Source: peoples bank of china and bank of Canada.
As observed in the international trade statistics, it is common to note variances in the level of trade that each country reports. Some of the main factors that lead to these variations especially with the case of china and Canada include; differing customs, shipment of goods to the trading partner which in this case is china and Canada via third economies like United State (Metz, 2001). The Canada’s China bilateral trade is characterized using imports from each country.
Both Canada and China are the leading trading partners in the Asia-Pacific region. Research indicates that china is the second largest economy globally and the most populous country with 1.34 billion people. On the other hand, Canada is number ten largest economies, with 34.8 million people. The combine cross domestic product of these two countries is $9.0 trillion in the year 2011 (Maddala, 1983).
The growth stimulation of these two countries is propelled by the international trade in that both are open and dynamic economies. Both countries view trade expansion as the key to future success in that they have trade-to-GDP ratios of 70 % to 57 % Canada having the largest GDP (Metz, 2001). They have depended on each other over the last one decade with the expansion growing with an interesting rate reflecting a comparative economic strengths and an expanding investment relationship.
Both Canada and china have shown a steady economic growth in the last ten years. Canada’s economy for instance has been expanding at an average rate of 1.8 annually. Canadian economy was one of the economies that faced the most resilient during the recent economic crisis though fully recovered at the third quota of the year 2010. Canada has a strong financial systems and institutions that have made it to remain stable for a very long time. Canada’s economy also has heavy investment in knowledge and infrastructure with low inflation rates. Canada also has solid manufacturing foundations that represent 12.5 % of the GDP.
On the other hand, the China’s economy has expanded rapidly in the past ten years with an annual rate of 10.8% from 2001 to 2010. Manufacturing base and exports is what has boosted its growth in that it has resulted in rapid infrastructure, urbanization and rising per capita income level (Zhang, 2009). China economy will be driven in future with increasing domestic consumption due to its high population.
Canada and china have a growing economy though they have complimenting needs. It is this complimenting needs that enables them to be great trade partners in that china is committed to furthering the development of its services sector which Canada has stabilized long time ago. No country among these two countries depend on each other in that that they have different interests that enables them to exchange what they have.
The driving forces of the trade between Canada and China
Canada and China have a long-term and good bilateral relationship. The relationship started in 960’s with the sales of Canadian wheat to China. The relationship was strengthened when diplomatic relations was established in 1970; the trade between the two countries was made official in 1973 on signing of the trade agreement between the people’s republic of china and the Canadian government (Maddala, 1983). It was this agreement that made the two countries to have favor on each other on matters trade and hence this is one of the driving forces that have enhanced trade between the two countries.
The promising economic growth of China has also made many countries among them Canada to develop friendship by giving them special treatment on trade (Metz, 2001). The larger population of china has made Canada to stick to them so that they can supply the required technological expertise. Canada also needs manpower that is at plenty in China and hence this has also acted as the driving force for the trade between these two countries.
The ability of china to access the world trade organization in the year two thousand and one made the two countries to enhance commitment to a strong multilateral trading system being protected by their respective obligation rights has made the two countries to cement their commercial relationships. Being the founders of the Asia-Pacific economic cooperation has also propelled them to remain partners carrying out trade in that they are motivated to improve the operating environment for trade by reducing the cost of cross-border trade making administrative process simple.
The impacts on overall welfare of Canada and the welfare of different group of people
The trade between Canada and Chin has many impacts to various groups of individuals. China for instance is Canada’s top source country for international students, whereby there are more than 70,000 Chinese students studying in Canada (Metz, 2001). The two way academic mobility among these two countries has assisted students to interact and exchange skills (Zhang, 2009). Socializing students from the two countries has also enabled them to learn new ideas in the foreign country and apply them at home thus improving education in both countries. Technology has also been boosted by the ability of the students to interact or get a chance to study in the foreign country in that they borrow new ideas from each other and apply bat home teaching those who do not have a chance to visit the other country.
Business men from both countries have also been given a chance to do business with minimum barriers and tariffs due to the trade agreements. This has boosted the welfare of the business people in that they have been given an opportunity to import and export goods and services. For instance, travel services are china’s leading service imports from Canada (David, 2008). Various professionals from various sectors of economy like engineering, telecommunication and management have also benefited from the trade between the two states.
Conclusion
This study helps to set the stage for the two countries to take the next cause of action that may assist both countries to further expand their trade in the competitive market. This study also shows that international trade is the main contributor to the success of the Canadian and Chinese economies. There is also a clear indication that there are untapped sectors that can help to improve the economy of the two countries and hence should be explored to benefit the traders. This essay also shows that the trade between the two countries have positive impacts to the citizens of both countries especially students and business people.

References
David, B. (2008). The World in Canada: Diaspora, Demography, and Domestic Politics. University of Toronto
Maddala, G.S. (1983) Limited Dependent and Qualitative Variables in Econometrics (New York: Cambridge University Press)
Metz B.(2001). Asia Pacific Foundation of Canada, China Goes Global. New York: New york university press.
Ito, T. (1996).Exchange rate movement and their impact on trade. Philadelphia: WetFeet.
Zhang, B.(2009). Statistics Canada, Survey of Innovation and Business Strategy. New York: Cambridge University Press