The spread of COVID-19 exacerbated the impact of the trade war with China. Doing business with the Chinese can be a frustrating experience, according to American as well as Canadian trade officials. The Chinese like to make deals. But the Chinese don’t always honor those deals.
Chinese officials say technical issues and weak economic growth disrupt trade agreements. But the main reason China kicked Canada’s agricultural exports to the Beijing curb was the arrest of Huawei executive Meng Wanzhou by the Canadian Royal Mounted Police at the Vancouver airport in December 2018.
Meng Wanzhou Is Huawei’s Chief Financial Officer
Donald Trump supporters celebrated the President’s decision to start a trade war with China. Canada didn’t realize it at the time, but Mr. Trump dragged Canada into his quest to bring Huawei to its tech knees. Mr. Trump admitted he might use Wanzhou as a negotiating tool in his trade talks.
That statement gave Meng’s attorneys some arguing power in court. There is also a plea deal in the works, but according to several news reports, Meng does not want to admit she committed a crime. Meng allegedly brokered financial payments between a South American company and an Irian company through a subsidiary controlled by Wanzhou.
The Chinese Arrested Two Canadians And Cut Canola Oil Imports From Canada After Meng’s Arrest
It didn’t take the Chinese long to find two Canadian diplomats and arrest them on bogus charges after Canada put the cuffs on Wanzhou. China also cut its Canadian agriculture imports after Meng’s arrest. Both men are in good physical and mental condition, according to a recent report from a Chinese news agency.
The election of Joe Biden may help solve this political standoff. But Biden didn’t address how he will handle the tariff fiasco and trade war Mr. Trump created in Canada and around the world, according to the New York Times.
After Wanzhou’s arrest, Canada became the brunt of jokes like the country was the meat between a Trump and China trade sandwich. Most trade experts don’t expect the trade deficit with China to improve in 2021.
Canada’s Export Deficit With China Will Continue
The export deficit with China hovers around $32 billion. Canada imports two times the amount of goods and services from China than it exports to the second-largest economy on the planet. The total balance of trade deficit when imports are part of the total was $7.2 billion in 2013.
China likes to buy Canadian canola oil, pork, and other products. But Canada’s natural resources tops China’s buying list. And most of those resources only come from certain regions of the country.
Canadian Natural Resources LTD told the press the plan is to raise production in 2021. They also plan to cut spending in the process. The company believes a rebound is in the wind, both domestically and internationally, when the pandemic runs its course.
That’s good news for the Canadian economy. But it’s unclear if China will increase the amount of natural resources it buys unless Canada sends Wanzhou back to China, and the country’s GDP growth rate increases.
