Beijing escalated its trade dispute with Ottawa on Tuesday, announcing a preliminary anti-dumping duty on Canadian canola imports.
This move marks a significant development in a year-long economic disagreement that originated last August when Canada implemented tariffs on Chinese electric vehicle imports.
The imposition of duties on canola, a major Canadian agricultural export, signals a hardening stance from China and is expected to have considerable implications for Canadian farmers and the global agricultural market.
This action could be a retaliatory measure, further intensifying the already strained diplomatic and economic ties between the two nations, Reuters said in a report.
The statement from China indicated that the provisional rate will be 75.8%, starting Thursday, according to the report.
Importance of canola for China
China stands as the preeminent global importer of canola, a versatile crop also widely recognised as rapeseed.
Canola plays a significant role in China’s economy, primarily for its use in edible oils, animal feed, and various industrial applications.
Remarkably, the vast majority—nearly all—of China’s canola supply is sourced from Canada. The Canadian prairies, with their fertile lands and ideal climatic conditions, are particularly conducive to cultivating high-quality canola, allowing Canada to meet China’s substantial demand.
The robust trade in canola between these two nations underscores a complex interplay of agricultural production capabilities, economic demands, and international trade dynamics.
One Singapore-based oilseed trader was quoted as saying in the report:
This is huge. Who will pay a 75% deposit to bring Canadian canola to China? It is like telling Canada that we don’t need your canola, thank you very much.
Zhengzhou’s rapeseed meal futures, China’s most active, experienced their largest daily decline since June 26, sliding 3%.
Shift in policy stance
The shift in policy indicates a change in China’s approach towards Canada.
This contrasts sharply with the earlier conciliatory stance taken by Premier Li Qiang, who, in a phone call with Prime Minister Mark Carney, downplayed any significant conflicts of interest.
The new policy suggests a more assertive or less compromising position from China, moving away from previous efforts to ease tensions.
“This move…will put additional pressure on Canada’s government to sort through trade frictions with China,” Trivium China agriculture analyst Even Rogers Pay told Reuters.
Meanwhile, Australia stands to benefit significantly as it appears poised to regain access to the Chinese market.
After a multi-year freeze in trade relations, the prospect of test cargoes this year signals a thawing. This presents a crucial opportunity for Australia to revitalise its exports to China, potentially boosting its economy and strengthening bilateral ties, according to Pay.
In 2023, the year before the investigation commenced, Canadian canola exports to China reached a total of C$5.0 billion (US$3.63 billion).
In a separate development, China initiated an anti-dumping investigation concerning pea starch imported from Canada. This investigation is projected to span one year, with a possibility of a six-month extension, according to an official statement.
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