Prime Minister Mark Carney will visit China next week to talk trade and energy, in the first meeting between a Canadian prime minister and President Xi Jinping in over eight years.

The visit comes as Carney’s government continues to push for a diversified trade strategy, with the goal of doubling non-U.S. exports, amid continued trade tensions with our neighbours south of the border.

“At current exchange rates, the U.S. is 26 per cent of the global economy, but China is 17 per cent,” said Pedro Antunes, chief economist at the Conference Board of Canada. “It’s a big market for us, an important market, especially for agri-food products.”

The diplomatic relationship between Canada and China has been strained since the arrest of Huawei Technologies executive

Meng Wanzhou in 2018 and the subsequent arrests of Canadians Michael Kovrig and Michael Spavor over allegations of espionage. China has also been accused of interfering in Canada’s federal elections.

In October, Carney met with Xi on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit and accepted Xi’s invitation for a state visit, signalling a thawing in relations.

“What Prime Minister Carney is doing is really focusing on the economics of things and slacking a little bit on the strong stance that we’ve had, certainly against China, obviously against India as well,” said Antunes.

China remains Canada’s second largest trade partner, with bilateral merchandise trade totalling $118.7 billion in 2024. China is also the number one buyer of crude oil shipped through Canada’s

Trans Mountain pipeline. Canada’s trade policy with China has also sparked tit-for-tat tariffs, with Ottawa imposing a 100 per cent tariff on Chinese electric vehicles in 2024, in a bid to protect the Canadian auto industry, and China in response imposing a 100 per cent levy on

canola oil and a 76 per cent tariff on canola seed imports. In a statement, the Canola Council of Canada said the only way to resolve the tariffs is through a political solution and it was encouraged by Carney’s upcoming trip to China.

“Reopening this market to smoother, more predictable canola trade between Canada and China is a priority and we continue to engage with the federal government to find a resolution to these issues as expeditiously as possible,” said Canola Council of Canada spokesperson Caroline Traweger.

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Last year, Carney also imposed a 25 per-cent surtax on products containing Chinese steel and announced a reduction in tariff-free steel imports. In response, China has filed a challenge at the

World Trade Organization (WTO). In hearings in the lead-up to the Canada-United-States-Mexico Agreement (CUSMA) review, American industries have expressed concerns that Canada and Mexico are exploiting their preferential trade access by exporting goods with heavy Chinese content to the U.S.

Antunes said while a shift in stronger trade ties with China is welcome, Canada will have to walk a fine line, as it will remain dependent on U.S. trade.

“We’ll still be very dependent on the U.S., there’s no doubt about it, we absolutely need that trade deal and a renegotiated CUSMA,” he said. “But if we can lessen the pain that we’re currently feeling by expanding our trade to the rest of the world, I think that’s certainly positive.”