Canada’s China Turn

You do what you have to do.

One strategy for the United States. One for China. Another for the rest of the world’s top ten economies. That is what serious diversification looks like. Anything less leaves a country exposed.

Germany knows that better than most. In 2022, Putin came close to tipping Europe’s largest economy into a catastrophic recession when he cut off the gas flows and tried to weaponize Germany’s dependence on Russian energy. At the time, more than half of Germany’s gas imports came from Russia. The shock was brutal. Berlin had to scramble, improvise, and absorb real economic pain to break out of that trap. It took more than a year of relentless work, but Germany did it. It no longer imports gas from Putin’s Russia.

No major economy should leave more than 70% of its trade exposed to a single market. That is not resilience. That is dependence.

Canada now appears to be moving with that reality in mind. It is in the middle of a deliberate economic re-engagement with China, driven by the need to reduce its dependence on the United States. Prime Minister Mark Carney’s government has set a goal of increasing Canadian exports to China by 50% by 2030, and Finance Minister François-Philippe Champagne’s April 1–4 trip to China has made the outlines of that strategy much clearer.

Yesterday, Canada announced that the Canada-China Financial Working Group (FWG) has been established.

The direction is not hard to see. Canada is trying to expand the operating room for its financial firms inside China, pushing for more licenses for Canadian banks and broader access to Chinese bond markets. That is not a side issue. It is part of the infrastructure required to move more trade, more capital, and more business through a market Ottawa can no longer afford to treat as peripheral.

Why?

Because stronger financial-services access helps support wider export growth.

The Financial Working Group is useful for Canada because it gives Ottawa a formal regulator-to-regulator channel with China to reduce friction in finance, improve predictability for Canadian banks and firms, and make it easier to support two-way trade and investment.

In practical terms, it creates a structured mechanism to discuss monetary policy, regulation, capital flows, market access, and financial stability, while bringing together Canadian institutions such as the Bank of Canada, OSFI, and the Department of Finance with their Chinese counterparts.

That matters because trade expansion becomes easier when the financial plumbing behind it is more stable, more direct, and less politically improvised. In other words, it helps move things slightly beyond a model where the government has to stay involved at every step. The goal is to build structures that can carry trade forward on their own, instead of forcing Ottawa to push for every additional billion.

This is not a random one-off. It follows Carney’s January trip to China and fits into a broader Canadian effort to build a trade structure that is less dependent on the United States. Both sides are now trying to deepen trade ties while operating under growing pressure from U.S. tariffs.

Canada is not “pivoting to China” in the sense of trying to drive U.S. trade to zero. That is neither feasible nor necessary. What Ottawa is trying to do is create leverage and breathing room by widening access to China for Canadian exporters, investors, and banks. The banking piece matters because trade expansion is easier when Canadian financial institutions have more room to finance deals, move capital, provide market access, and support clients on the ground.

One more point matters here. The trade numbers explain why this is worth doing in the first place. China is Canada’s second-largest single-country trading partner, with two-way merchandise trade reaching roughly C$118.9 billion in 2024, according to Canada’s finance ministry.

What you really want to see Canada doing is this:

• Reduce the U.S. share of Canada’s total trade

• Increase China’s share

• Increase the share held by the world’s other top ten economies