Economic Realities

China is the latest "Asian tiger" to emerge as a global economic power, after Japan and Korea, and India is not far behind. What is different about China and India is their sheer size (artwork by Yin Yi-Qiu).

For much of its history, Canada, as a small trading nation, focused its attention on the economy of Europe. Later, its focus shifted to the United States. But with increasing globalization of both economic forces and of the movement of people, events far removed can reverberate at home. For example, the SARS outbreak that originated in China in 2003 came quickly to Canada with travellers, and had a similar dampening effect on our own economy.

Economic Juggernauts

Canada's attention is turning more and more towards Asia. The main reason is China. For many decades, the West wanted access to China, eyeing it as "a market of a billion people." What began tentatively in 1979 with China's "open door" policy to the West accelerated with China's rapid move away from state planning to embrace capitalism. To illustrate the impact, in 1980, China was the world's 10th largest economy. In 2002, it was second behind the United States and is now predicted to overtake the US to become the world’s largest economy at some time between 2020 and 2030. Japan has the third-largest economy in the world followed closely by India, which is also predicted to rise significantly and even overtake China as the world’s largest economy by 2050.

Investment is flowing from the West to China and India, costing Canada jobs and disrupting affected communities. Because China offers formidably low-cost manufacturing, so too are Canadian companies flocking there. To take advantage of India's low-cost educated workforce, many western companies "outsource" parts of their businesses there, including data management and technical support. Another way Canada is affected is by China's appetite for raw materials and energy. Chinese companies and government are buying into Canadian natural resource-based industries, including mining, oil sands, and forestry, which raises concern in the public about foreign control of Canadian companies by a foreign government.

Attitudes Toward Trading with Asia

Attitudes toward these changes are guarded. While Canadians recognize the economic strength of Asia and believe closer engagement with Asia is desirable for Canada’s future prosperity, Canadians are uncertain about embracing China. In fact, in 2010 some 48% of polled Canadians viewed China’s rising economic power as an opportunity for Canada, while 58% saw China’s growing military power as a threat.

India, as the other emerging Asian economic power is viewed by Canadians as a potential opportunity that presents less of a threat than China, both economically and militarily. Canadians in general do not see India being as significant to Canada’s prosperity as China, Japan or Southeast Asia.

East-West Relations

Trade and investment are only part of the equation of relations between countries. China faced a backlash from the West over its brutal crackdown on students demonstrating in Tiananmen Square in 1989. In 2004, China and Canada clashed over what to do with 44 North Koreans who sought political asylum at the Canadian embassy in Beijing. Ultimately, they were allowed to leave for an undisclosed third country.

The poor environmental records of both China and India have been called into question. They rely on coal to produce electricity, and with such large populations, the result is alarmingly high greenhouse gas emissions. In 2010, the United Nations announced plans to construct more modern, cleaner plants in both China and India under its Clean Development Mechanism. With trade and cultural exchange come a sharing of concerns, and both countries have implemented new environmental initiatives.

Learn more: Globalization