January 22, 2016
According to a study by Ontario-based Dawson Strategic and Ciuriak Consulting, titled, Chasing China: Why an economic agreement with China is necessary for Canada's continued prosperity, C$7.8 billion in increased GDP would result from a free trade agreement between Canada and China, in part due to FDI flows increasing. The study, which looked at the effects by 2030 of a hypothetical free trade agreement set in place today, anticipates FDI in Canada increasing to the point where foreign-owned capital stock increases by C$982 million, or 0.11%, in 2030.
New jobs would total some 25,000 over the next 14 years, tapping into a Chinese middle class expected to number 854 million by 2030. In real terms, the C$7.8 billion would be a GDP increase of around 0.14% for Canada, and 0.02% for China. The latter’s GDP would increase by C$5.6 billion by 2030, while the United States’ GDP would decline by C$2.7 billion due to the shift in trade. According to the study’s calculations, by 2030, Canadian household income would increase by C$5.7 billion under a Canada-China free trade agreement, with C$10.4 billion in total shipments to China that year.
The report highlights opportunities for certain Canadian sectors: seafood exporters to China, which saw exports between 2012 and 2013 increase by 16.2%; dairy companies interested in trade with China; the aerospace and pilot-training industries, which could capitalize on predictions that China will need 5,300 more aircraft over the next twenty years; construction and engineering firms; railcar manufacturers and rail equipment suppliers; financial services; extractive sector services; and Canada’s education services, which already has China, Canada’s largest export market for education, as a C$1.8 billion market.