Benchmarking Canada-China Economic Relations

Abstract:

This paper benchmarks Canada’s bilateral economic ties with China and compares them with those of other G7 member countries, plus Australia.  It uses a gravity model of economic flows to compare actual import, export and investment levels to those predicted by the model. This shows that, in the period 2003-2006, Canada was under-performing in terms of all bilateral economic flows except its outward foreign direct investment to China.  In comparison with other G7 countries and Australia, Canada has under-weighed China as an international partner except in its imports from that country.  The predicted values for all economic variables suggest that China should be Canada’s second most important partner in terms of all bilateral economic flows, except for those with the United States. The paper is published in cooperation with the Canadian International Council.