Escalating diplomatic tensions with Beijing have at least temporarily poured cold water on Ottawa’s long-held desire to deepen trade ties with China.
But a new report says that may not be as big a setback as it seems.
As automation curbs the hunt for cheap labour, Asian countries consume more of what they produce and manufacturers locate closer to their customers, Canada’s best trade opportunities are likely to be found outside China’s vast economy — and in some instances, much closer to home, according to researchers at the McKinsey Global Institute.
Ottawa’s ongoing attempts to broaden trade with China have been derailed by a series of incidents — the most recent being the arrest of senior Huawei executive Meng Wanzhou in Vancouver at the behest of the United States, which is seeking her extradition. The move infuriated China, which has since detained two Canadians and sentenced a third to death in apparent retaliation.
While Canada can’t ignore the world’s second-largest economy, which will remain an important export market for agricultural products and resources, broader shifts in global trade suggest the best chances to broaden exports may be elsewhere.
Indeed, as companies shift their priorities away from cheap labour and toward automation, research and development and maximizing the speed at which their products reach consumers, goods value chains that once sprawled out globally are "regionalizing," the report finds.
Such shifts favour advanced countries such as Canada, where an educated workforce, free trade deals with other nations and a location on the doorstep of the world’s largest consumer economy are all advantages
