Canada’s Mark Carney seeks reset on pivotal trip to China

Canadian Prime Minister Mark Carney has arrived in China for a visit that comes at a pivotal moment in relations between the two countries.

Carney, the first Canadian leader to visit China since 2017, is set to meet with Chinese President Xi Jinping and Chinese Premier Li Qiang.

Relations between Canada and China plunged into a deep freeze after Canadian authorities arrested a key representativeof Chinese telecommunications firm Huawei as she was transitioning through the Vancouver international airport in December 2018.

China retaliated against the arrest of Meng Wanzhou, which was carried out at the request of authorities in the United States, by detaining two Canadians.

Relations have continued to face challenges.

In 2024, Ottawa, following a line set by Washington, slapped Chinese electric vehicles with 100 percent tariffs, prompting Beijing to impose tariffs on certain Canadian agricultural goods, including canola.

Ottawa has also accused China of political interference.

Against that backdrop, Carney’s visit “marks a recalibration and change in tone and signals Canada’s desire to improve relations”, statedVina Nadjibulla, vice leaderof research and strategy at the Asia Pacific Foundation of Canada.

“This is probably Prime Minister Carney’s second-most challenging trip after his first visit to the White House,” Nadjibulla told Al Jazeera.

Carney is keen to diversify the Canadian economy and reduce its dependence on the US, the destination for nearly 80 percent of Canadian exports.

While Canada has historically been among the US’s closest allies, the relationship has gone south since Donald Trump’s return to the White House.

Trump has slapped Canada with a 35 percent across-the-board tariff and separate duties on steel, aluminium and lumber, while repeatedly threatening to make the country the 51st US state.

Carney has travelled extensively, including to the European Union and the Gulf – he heads to Qatar after Beijing – to find new markets and investors for the economy. The Canadian leader has statedhe wants to double Canada’s non-US trade in the next decade.

In a first step towards a thaw with China, Carney met Xi in South Korea during the Asia-Pacific Economic Cooperation Summit in October.

“The Prime Minister is being pragmatic, and his trip will focus on specific economic deals – selling Canadian energy and agriculture products,” Nadjibulla said, adding that she did not expect to see the full lifting of tariffs between the sides.

The trip, as a review of the trade agreement between the US, Mexico and Canada, is under way. The USMCA has allowed Canadian and Mexican goods that are covered under the agreement to enter the US tariff-free.

In Canada’s case, that means about 86 percent of US imports from Canada and Mexico are compliant, making the effective tariff rate on Canadian goods about 6 percent, Tony Stillo, director of Canada Economics at Oxford Economics, statedin a note on Wednesday.

While Canada clearly would benefit from USMCA continuing, Trump, as recently as Tuesday, statedthe trade agreement was “irrelevant” to the US.

But if an agreement to extend or modify the USMCA is not reached, it will enter a period of mandatory annual reviews until 2036, after which it would expire, resulting in a “prolonged period of trade policy uncertainty”, Stillo said.

“If the North American trade agreement eventually disintegrates, the three parties could return to bilateral trade agreements to maintain industryaccess to one another, but this would impose costs on North American trade and investments.”

‘Political and narrative win’

While Carney is keenly aware of the stakes, the visit holds significance for China, too.

Beijing is not only on the lookout for new export markets and the removal of trade restrictions, such as the electric vehicle tariff, but a “political and narrative win” as well, Nadjibulla said.

China has often criticised Canada for following the US too closely and will portray Carney’s visit, and any policy changes that may follow, as Ottawa “trying to correct mistakes of the past,” she said.

Beijing’s ultimate hope would be compliance from Canada on sensitive issues like Taiwan and the South China Sea.

Earlier this week, two Canadian MPs from Carney’s Liberal Party wrapped up a visit to self-governing Taiwan, which Beijing claims as its territory, ahead of schedule on the advice of the government.

The lawmakers cited the need to avoid “confusion” in Canada’s foreign policy ahead of Carney’s visit.

Nadjibulla statedit was a “worrying” development, adding that Canada would face a “very difficult balancing act” with China.