China's move up the value chain: Implications for Canada

Abstract

With Canada's main trading partners under severe economic and political duress, the pre-crisis strategy of engaging globalization primarily intermediated by leading U.S. firms and production networks is ill suited for the next stage of globalization, in which emerging economies like China are playing a larger role. The materially different post-crisis global setting requires adaptation if Canada wishes to better harness and balance the gains from globalization. Such a strategy is not without risk and will not be accomplished in the short-term, but will ultimately prove to be a crucial factor in Canada's long-term prosperity, welfare and employment prospects in a less U.S.-centric world order.

Keywords:

• Canada
• China
• Economy
• Value chains

Acknowledgements

This paper was prepared for Canadian Foreign Policy Journal Workshop, “Canada and Asia: Building a New Policy Agenda”, 20–21 February 2012, Norman Paterson School of International Affairs (NPSIA), Carleton University, Ottawa.

Notes

The observed discrepancies in trade figures reported respectively by Canadian and Chinese governments are generally explained by the use of Hong Kong as a major conduit for China's imports. Canadian customs officials will record these as exports to Hong Kong, whereas Chinese officials will allocate this trade to Canada since trade data are compiled on a country-of-origin basis. While differences in reporting procedures are believed to explain much of the observed discrepancy in bilateral trade data, other factors may contribute to discrepancies as well. For instance, Canadian imports and exports are collected and published on a free on board (FOB) basis, while China publishes its imports on a cost, insurance and freight (CIF) basis and its exports on a FOB basis (Tiagi and Zhou 2009).

Additional information

Notes on contributors

Daniel Poon

Daniel Poon was as a visiting scholar with the Institute of World Economics and Politics (IWEP) at the Chinese Academy of Social Sciences, and held a similar position with Trade and Industrial Policy Strategies (TIPS) in South Africa. In 2007–2008, he worked at the Embassy of Canada in Beijing. He has consulted for the Ontario Manufacturing Council (OMC), the Centre for Trade Policy and Law (CTPL), the Canadian Autoworkers Union (CAW), and the Canadian Foundation for the Americas (FOCAL). Email: [email protected]