2022 Trade Affect on China Canada Shipping

China is considered one of Canada’s leading merchandise trading partners and is an important supplier for Canadian businesses. 

What led to Canada’s shipping decline?

As China picks up containerised trade volumes, according to an analysis published by Container xChange, prices have plummeted to more than half from what we had in August 2021, a year ago.

When compared to last year, Statistics Canada reported a 15.17% decrease in Canadian freight exports shipping to China from Canada

 

Canadian exporters ship numerous products to many destinations in China.

Canadian exports to China steadily went down from January to March. Opposite of the trend that had been going up, shows that the economic ties between the two countries is not improving.

U.S. exports to China went down by 1.2% each year, while exports from Germany, the UK, Japan, and Australia also went down in different ways.

Various internal and external variables also contributed to the dramatic decrease in exports shipping from Canada to China during the first three months of 2022.

Chinese New Year holiday, economic and commercial activity in the first quarter of the year is normally lower than in previous quarters. 

The new Zero-COVID policy in China worsened the weak demand from Chinese consumers, which was the principal reason for the first-quarter trade decrease.

Starting at the end of 2021, the current round of Zero-COVID restrictions froze China’s industrial output, retail sales, and international trade.

The National Bureau of Statistics (NBS) said that annual GDP growth for the first quarter of 2022 was 4.8%, well below the annual target of 5%.

During the first quarter, China’s foreign trade slowed, especially imports. In comparison to the same period in 2021, the increase in Chinese imports dropped to a single-digit rate in the first quarter.

Lockdowns in major cities, the closing of factories and shops, and problems with shipping and logistics caused a huge drop in the demand for goods and services that were imported.

When prices were taken into account because of rising inflation, the amount of goods sent to China was much lower.

The second thing that made it hard for Canada to sell goods in China was that the prices of its main products were going up.

In the first quarter, geopolitical issues, especially Russia’s invasion of Ukraine in February, had a big effect on supply chains and trade around the world.

The conflict between Russia and Ukraine, two major energy and grain exporters, disrupted and reduced grain and energy shipments in Europe, causing a shortage of these commodities in neighbouring countries; it then pushed up food and energy prices globally and exacerbated inflation, which had been rising since the pandemic’s outbreak. Read more below….

China Canada Shipping 

What is the economical effect of China Canadian trade shipping logistics?

The China Institute at the University of Alberta cites that in 2018, “GDP impact of new immigration, Canada-bound investment and China-exports balanced $42.6 billion, $6.1 billion, and $9.4 billion, respectively.”

The World Trade Organization predicts that global trade will increase by only 3% in 2022, compared to the previous prediction of a 4.7% expansion (WTO).

Trade and shipping between Canada and China was unavoidably damaged by this event, as both countries are major players in the global supply chain.

Canada’s primary export categories to China, including canola seeds, chemical wood pulp, and bituminous coal, all experienced price increases in the first three months of the year, which may be a significant reason for China’s decreased imports of Canadian goods.

Thirdly, global central banks, led by the United States, Canada, and the United Kingdom, are tightening monetary policies in an effort to battle inflation, resulting in a significant shift in exchange values.

Because Canada raised its interest rates quickly, the Chinese yuan kept going down, while the Canadian dollar went up.

Between the beginning of January and the beginning of June, the exchange rate between the Canadian dollar and the Chinese yuan increased by nearly 6%.

The strength of the Canadian dollar may be damaging to its exports to China. The recent emphasis on Canada-China trade influences.

The bad results should not be seen as a sign that trade and freight shipping between Canada and China is getting worse.

 

As China picks up containerised trade volumes, according to an analysis published by Container xChange, prices have plummeted to more than half from what we had in August 2021, a year ago.

When compared to last year, Statistics Canada reported a 15.17% decrease in Canadian freight exports shipping to China from Canada

Canadian exporters ship numerous products to many destinations in China.

Canadian exports to China steadily went down from January to March. Opposite of the trend that had been going up, shows that the economic ties between the two countries is not improving.

U.S. exports to China went down by 1.2% each year, while exports from Germany, the UK, Japan, and Australia also went down in different ways.

Various internal and external variables also contributed to the dramatic decrease in exports shipping from Canada to China during the first three months of 2022.

Chinese New Year holiday, economic and commercial activity in the first quarter of the year is normally lower than in previous quarters. 

The new Zero-COVID policy in China worsened the weak demand from Chinese consumers, which was the principal reason for the first-quarter trade decrease.

Starting at the end of 2021, the current round of Zero-COVID restrictions froze China’s industrial output, retail sales, and international trade.

The National Bureau of Statistics (NBS) said that annual GDP growth for the first quarter of 2022 was 4.8%, well below the annual target of 5%.

During the first quarter, China’s foreign trade slowed, especially imports. In comparison to the same period in 2021, the increase in Chinese imports dropped to a single-digit rate in the first quarter.

Lockdowns in major cities, the closing of factories and shops, and problems with shipping and logistics caused a huge drop in the demand for goods and services that were imported.

When prices were taken into account because of rising inflation, the amount of goods sent to China was much lower.

The second thing that made it hard for Canada to sell goods in China was that the prices of its main products were going up.

In the first quarter, geopolitical issues, especially Russia’s invasion of Ukraine in February, had a big effect on supply chains and trade around the world.

The conflict between Russia and Ukraine, two major energy and grain exporters, disrupted and reduced grain and energy shipments in Europe, causing a shortage of these commodities in neighbouring countries; it then pushed up food and energy prices globally and exacerbated inflation, which had been rising since the pandemic’s outbreak. Read more below….

China Canada Shipping 

What is the economical effect of China Canadian trade shipping logistics?

The China Institute at the University of Alberta cites that in 2018, “GDP impact of new immigration, Canada-bound investment and China-exports balanced $42.6 billion, $6.1 billion, and $9.4 billion, respectively.”

The World Trade Organization predicts that global trade will increase by only 3% in 2022, compared to the previous prediction of a 4.7% expansion (WTO).

Trade and shipping between Canada and China was unavoidably damaged by this event, as both countries are major players in the global supply chain.

Canada’s primary export categories to China, including canola seeds, chemical wood pulp, and bituminous coal, all experienced price increases in the first three months of the year, which may be a significant reason for China’s decreased imports of Canadian goods.

Thirdly, global central banks, led by the United States, Canada, and the United Kingdom, are tightening monetary policies in an effort to battle inflation, resulting in a significant shift in exchange values.

Because Canada raised its interest rates quickly, the Chinese yuan kept going down, while the Canadian dollar went up.

Between the beginning of January and the beginning of June, the exchange rate between the Canadian dollar and the Chinese yuan increased by nearly 6%.

The strength of the Canadian dollar may be damaging to its exports to China. The recent emphasis on Canada-China trade influences.

The bad results should not be seen as a sign that trade and freight shipping between Canada and China is getting worse.

 

As China picks up containerised trade volumes, according to an analysis published by Container xChange, prices have plummeted to more than half from what we had in August 2021, a year ago.

When compared to last year, Statistics Canada reported a 15.17% decrease in Canadian freight exports shipping to China from Canada

Canadian exporters ship numerous products to many destinations in China.

Canadian exports to China steadily went down from January to March. Opposite of the trend that had been going up, shows that the economic ties between the two countries is not improving.

U.S. exports to China went down by 1.2% each year, while exports from Germany, the UK, Japan, and Australia also went down in different ways.

Various internal and external variables also contributed to the dramatic decrease in exports shipping from Canada to China during the first three months of 2022.

Chinese New Year holiday, economic and commercial activity in the first quarter of the year is normally lower than in previous quarters. 

The new Zero-COVID policy in China worsened the weak demand from Chinese consumers, which was the principal reason for the first-quarter trade decrease.

Starting at the end of 2021, the current round of Zero-COVID restrictions froze China’s industrial output, retail sales, and international trade.

The National Bureau of Statistics (NBS) said that annual GDP growth for the first quarter of 2022 was 4.8%, well below the annual target of 5%.

During the first quarter, China’s foreign trade slowed, especially imports. In comparison to the same period in 2021, the increase in Chinese imports dropped to a single-digit rate in the first quarter.

Lockdowns in major cities, the closing of factories and shops, and problems with shipping and logistics caused a huge drop in the demand for goods and services that were imported.

When prices were taken into account because of rising inflation, the amount of goods sent to China was much lower.

The second thing that made it hard for Canada to sell goods in China was that the prices of its main products were going up.

In the first quarter, geopolitical issues, especially Russia’s invasion of Ukraine in February, had a big effect on supply chains and trade around the world.

The conflict between Russia and Ukraine, two major energy and grain exporters, disrupted and reduced grain and energy shipments in Europe, causing a shortage of these commodities in neighbouring countries; it then pushed up food and energy prices globally and exacerbated inflation, which had been rising since the pandemic’s outbreak. Read more below….

China Canada Shipping 

What is the economical effect of China Canadian trade shipping logistics?

The China Institute at the University of Alberta cites that in 2018, “GDP impact of new immigration, Canada-bound investment and China-exports balanced $42.6 billion, $6.1 billion, and $9.4 billion, respectively.”

The World Trade Organization predicts that global trade will increase by only 3% in 2022, compared to the previous prediction of a 4.7% expansion (WTO).

Trade and shipping between Canada and China was unavoidably damaged by this event, as both countries are major players in the global supply chain.

Canada’s primary export categories to China, including canola seeds, chemical wood pulp, and bituminous coal, all experienced price increases in the first three months of the year, which may be a significant reason for China’s decreased imports of Canadian goods.

Thirdly, global central banks, led by the United States, Canada, and the United Kingdom, are tightening monetary policies in an effort to battle inflation, resulting in a significant shift in exchange values.

Because Canada raised its interest rates quickly, the Chinese yuan kept going down, while the Canadian dollar went up.

Between the beginning of January and the beginning of June, the exchange rate between the Canadian dollar and the Chinese yuan increased by nearly 6%.

The strength of the Canadian dollar may be damaging to its exports to China. The recent emphasis on Canada-China trade influences.

The bad results should not be seen as a sign that trade and freight shipping between Canada and China is getting worse.

 

As China picks up containerised trade volumes, according to an analysis published by Container xChange, prices have plummeted to more than half from what we had in August 2021, a year ago.

When compared to last year, Statistics Canada reported a 15.17% decrease in Canadian freight exports shipping to China from Canada

Canadian exporters ship numerous products to many destinations in China.

Canadian exports to China steadily went down from January to March. Opposite of the trend that had been going up, shows that the economic ties between the two countries is not improving.

U.S. exports to China went down by 1.2% each year, while exports from Germany, the UK, Japan, and Australia also went down in different ways.

Various internal and external variables also contributed to the dramatic decrease in exports shipping from Canada to China during the first three months of 2022.

Chinese New Year holiday, economic and commercial activity in the first quarter of the year is normally lower than in previous quarters. 

The new Zero-COVID policy in China worsened the weak demand from Chinese consumers, which was the principal reason for the first-quarter trade decrease.

Starting at the end of 2021, the current round of Zero-COVID restrictions froze China’s industrial output, retail sales, and international trade.

The National Bureau of Statistics (NBS) said that annual GDP growth for the first quarter of 2022 was 4.8%, well below the annual target of 5%.

During the first quarter, China’s foreign trade slowed, especially imports. In comparison to the same period in 2021, the increase in Chinese imports dropped to a single-digit rate in the first quarter.

Lockdowns in major cities, the closing of factories and shops, and problems with shipping and logistics caused a huge drop in the demand for goods and services that were imported.

When prices were taken into account because of rising inflation, the amount of goods sent to China was much lower.

The second thing that made it hard for Canada to sell goods in China was that the prices of its main products were going up.

In the first quarter, geopolitical issues, especially Russia’s invasion of Ukraine in February, had a big effect on supply chains and trade around the world.

The conflict between Russia and Ukraine, two major energy and grain exporters, disrupted and reduced grain and energy shipments in Europe, causing a shortage of these commodities in neighbouring countries; it then pushed up food and energy prices globally and exacerbated inflation, which had been rising since the pandemic’s outbreak. Read more below….

China Canada Shipping 

What is the economical effect of China Canadian trade shipping logistics?

The China Institute at the University of Alberta cites that in 2018, “GDP impact of new immigration, Canada-bound investment and China-exports balanced $42.6 billion, $6.1 billion, and $9.4 billion, respectively.”

The World Trade Organization predicts that global trade will increase by only 3% in 2022, compared to the previous prediction of a 4.7% expansion (WTO).

Trade and shipping between Canada and China was unavoidably damaged by this event, as both countries are major players in the global supply chain.

Canada’s primary export categories to China, including canola seeds, chemical wood pulp, and bituminous coal, all experienced price increases in the first three months of the year, which may be a significant reason for China’s decreased imports of Canadian goods.

Thirdly, global central banks, led by the United States, Canada, and the United Kingdom, are tightening monetary policies in an effort to battle inflation, resulting in a significant shift in exchange values.

Because Canada raised its interest rates quickly, the Chinese yuan kept going down, while the Canadian dollar went up.

Between the beginning of January and the beginning of June, the exchange rate between the Canadian dollar and the Chinese yuan increased by nearly 6%.

The strength of the Canadian dollar may be damaging to its exports to China. The recent emphasis on Canada-China trade influences.

The bad results should not be seen as a sign that trade and freight shipping between Canada and China is getting worse.

 

Highly concentrated Canola exports Shipped to China

When the Canola Prohibition was lifted, China has agreed to start buying canola from Richardson and Viterra again after a three-year ban. Richardson and Viterra are two of the largest canola exporters in the world.

China was the main importer of Canadian canola seeds in 2018, the year before the Huawei conflict, due to the country’s high demand for vegetable oil and limited domestic supply of oil seeds; imports declined in 2019 as a result of the political dispute.

In 2020 and 2021, bolstered by China’s increasing demand for vegetable oil, the U.S. and Canadian canola trade began to recover. In 2021, however, Canadian exports of canola seed to China were around half of what they were in 2018.

With a self-sufficiency rate between 60 and 70 percent, China’s demand for vegetable oil continues to climb, and demand for canola oil remained solid even during the pandemic. 

As a result of the conflict in Ukraine, Russia temporarily banned rapeseed exports, which further reduced rapeseed availability. 

Despite a good development in the Canada-China canola trade, there may not be a major increase in canola seed exports to China in 2022 due to weather, U.S. and European Union demand, and Canada’s improved domestic crushing capacity.

In the long term, both Canadian shipping logistics companies and canola growers will benefit from China’s rising demand for canola seeds and oil.

How important is China to Canada's Economy?

The Huawei Ban

Canada plans to prohibit Huawei from its 5G network in May 2022, making it the fifth Five-Eye nation to do so after the United States, the United Kingdom, Australia, and New Zealand. The conclusion is not unexpected and is considered long overdue by critics.

Huawei and its partners have taken precautionary measures to offset the looming ban’s associated costs. Huawei has also made moves in Canada to shift its commercial focus away from 5G and toward R&D and consumer goods, such as smartphones and laptops.

Canadian firms such as telecom titans Bell and Telus, which reportedly spent millions of dollars on Huawei communications equipment, may be required to pay the price. 

But Canadian telecom operators have already stopped using Huawei equipment and formed partnerships with other 5G telecom equipment makers. This suggests that the country’s losses may have been lessened.

Given that Canada and China’s political relations have been frosty for the past three years, the Huawei ban sends a negative signal for future trade and economic relations.

But it seems like the incident didn’t have much of an effect on business between the two countries, in part because their economies are so similar.

Despite growing calls for diversification, Canada continues to consider China an essential market for agricultural and agri-food products, metals and minerals, and energy. 

China is very dependent on Canadian freight of wood products, minerals, grains, oilseeds, and fisheries. So, trade in traditional sectors are expected to remain stable.

However, there is an ongoing issue with platform technology surrounding national security and data privacy.

The Russia Ukraine War on Canada's shipping Logistics

In 2022, the Ukraine crisis is the biggest threat to investment, trade, and economic growth around the world.

Despite the complexity of its geopolitical implications for major economies, its global trade and investment effects are noteworthy.

The conflict has disrupted the China Canada shipping logistics networks for oil, agricultural, and metal products, resulting in unprecedented price hikes over the past few months

Western sanctions against Russia have had an effect on China’s economy, which has experienced a significant slowdown since the second half of 2021.

In addition, the war in Ukraine will increase the price of the energy, food, and raw materials that fuel China’s economic growth. In the first quarter of 2022, the Producer Price Index (PPI), a measure of factory-gate inflation, increased by 8.8% over the same time in 2021, pushing up consumer prices and further limiting China’s consumption and imports.

In the first quarter of 2022, the Producer Price Index (PPI), a measure of factory-gate inflation, increased by 8.8% over the same time in 2021, pushing up consumer prices and further limiting China’s consumption and imports. 

Despite Canada’s extraordinary increase in earnings due to a matching rise in exports, the decline in demand for Canadian goods may exceed the profit increase. 

One example is the reduction in Canadian exports to China. Canada, in contrast, does not directly compete with Russia and Ukraine for Chinese exports.

Oil, natural gas, coal, and agricultural products comprise the majority of Russia’s exports to China, which are fundamentally unique from Canadian goods. Ukraine is China’s primary supplier of rice, wheat, and corn, as opposed to canola seeds, wheat, wood pulp, coal, and iron ore.

China’s primary suppliers are Ukraine, China’s primary supplier of rice, wheat, and corn, as opposed to canola seeds, wheat, wood pulp, coal, and iron ore. 

Despite the fact that China’s imports of staple foods such as wheat and barley from Russia increased in 2022, Canada continues to dominate shipping to China with wheat exports due to its superior quality and competitive pricing.

The global economic slowdown and high inflation fuelled by the conflict are expected to restrain Chinese demand, which has already been reflected in the first quarter’s trade statistics. 

Overall, the Ukraine war has had a major influence on trade and shipping between Canada and China.

Covid19 Pandemic on Canada freight Shipping

Pandemic-related restrictions appear to have had a greater and more immediate impact on cargo from China to Canada than the Ukraine war.

China’s planned 2022 zero-COVID strategy is controversial. The new way to stop infections from spreading is different because it involves thorough mass testing, targeted containment, and shorter periods of quarantine.

Under the zero-COVID policy, domestic consumption, commercial operations, and industry activities in China are suspended or restricted. 

Notably, domestic consumption suffered the most as a result of stringent COVID measures like lockdowns, quarantine, and comprehensive testing.

According to recent NBS data, retail sales declined by 0.7% in the first half of 2022 compared to the same period the previous year. 

Shanghai, a city of 25 million inhabitants, was completely walled off. April retail sales were down 48.3% year-over-year, and May sales were down 36.5%. In contrast, Beijing’s retail sales decreased by 25.7% year-over-year in May, compared to a loss of 16.6% in April. 

Inevitably, Canadian exports shipped to China were harmed by the downturn in Chinese domestic spending.

Moreover, despite the fact that the Shanghai lockdown has been lifted, it will take time for production and shipping logistics to return to normal, especially as long as the dynamic zero-COVID plan continues in effect. 

China’s long-term COVID restrictions may make it harder for the global economy and trade to get back on track.

US-China Freight Shipping Trade

The U.S.-China trade relationship is essential to global business and investment and acts as a leading indicator of future trends in international trade.

During the first half of 2022, it looked like the US-China shipping trade dispute had mostly stopped. However, several trade-related issues occurred, and trucking delays albeit without further deterioration in US-China economic relations.

China pledged to purchase US$200 billion worth of goods and services in 2020 and 2021 as part of the Phase One trade agreement, which brought an end to the trade war.

However, the COVID-19 epidemic and other factors delayed China’s compliance with the agreement between 2020 and 2021, and China only acquired 57% of the agreed-upon quantity of US goods and services. This complicates already tenuous US-China trade relations.

This complicates already tenuous US-China trade relations. According to available data, trade between the United States and China slowed in the first quarter of 2022.

According to available data, trade between the United States and China slowed in the first quarter of 2022. Canada is now the United States’ top trading partner, surpassing China. 

In its 2022 Trade Policy Agenda and 2021 Annual Report, which came out in March, the United States Trade Representative (USTR) stepped up competition with China in response to these bad news.

The research highlighted a variety of well-known issues, but none of them were addressed with viable solutions. 

But it was said that the United States would probably get rid of tariffs on some Chinese imports to fight rising inflation at home.

As a longtime ally of the United States, Canada’s commercial relations with China are highly influenced by US-China trade ties. 

Following Prime Minister Justin Trudeau’s inauguration in 2015, Canada-China commerce was expected to enter a “golden age,” but the bilateral economic relationship appears to have reversed due to the breakdown of Canada-China free trade talks in late 2017.

In 2018, the trade war between the United States and China and the Huawei dispute contributed to the ensuing economic slump. 

The United States has pledged to increase its competitiveness vis-à-vis China and has used its power on the international stage to persuade other nations to do the same.

It is a hint that the US-China competition has entered the mainstream and may last for an extended period of time. 

The complexity of the situation makes it more difficult for middle-power nations like Canada to maintain business ties with China. 

It’s not clear how well Canada’s efforts to keep the balance between the US and China will work

Looking Ahead for China Canada Freight Shipping 

As economic and political differences between China and Western countries continue to grow, business relations between Canada and China will continue to be difficult.

When the new US Indo-Pacific strategy is launched in the first half of 2022, this trend will become even more obvious.

Similar to previous geoeconomic initiatives such as the Comprehensive and Progressive Agreement for B3W (Build Back a Better World) and Trans-Pacific Partnership (CPTPP), which seek to counter China’s influence on the global economy, it is difficult to assess the initiative’s substantive effects at this time. 

Still, this disengagement is likely to slow down economic growth, raise the cost of making things, and make prices go up for everyone.

Canada seems less assertive than the other Five-Eye nations because it broke away from China.

Despite a drop in public attitude regarding the growth of business relations with China, the total quantity of Canadian shipping exports to China in 2020 and 2021 will surpass the previous record set in 2018.

The reduction in exports during the first quarter of this year was mostly attributable to a decline in demand from China, driven by new supply chain lockdowns and price rises. 

However, according to the data, Canada’s shipping to China economy surged in June as manufacturing and commercial operations restarted.

But the data show that China had bought a lot more and shipped more freight from Canada in June after factories and businesses started up again.

As a result of the Huawei conflict, there is a possibility that Canada China shipping will return to normal in the future, as both countries appear more open to conversation on trade and other issues.

In response to the United States’ Indo-Pacific Economic Framework (IPEF), some have advocated for more constructive cooperation with China to mitigate global concerns such as climate change and advance the economic interests of Canadian stakeholders in Canada’s own Indo-Pacific strategy. 

In addition, China is under pressure to miss its growth target due to the dismal economic performance in the first half of 2022, and commodity prices continue to rise. This could mean that trade with its most important trading partners, especially Canada, will pick up quickly.

Even though the major political stalemate between Canada and China seems to be over, there are still problems with the two countries’ business relationships.

In the last months of the year 2022, trade tensions have been observed. The worsening attitude of the Canadian public toward China and the hardening attitude toward trade between Canada and China are even bigger problems.

The public and political and economic leaders may require some time to recover confidence. In the meantime, it would be in the best interests of both nations to find common ground in order to sustain or even expand our pacific shipping trade.

References: China Institute