The Canadian trade mission to China last week paid good dividends: increased exports of canola meal and beef tallow.
There also could be future benefits in increased sales of pulses and perhaps a resolution of the canola seed trade restrictions.
China’s position as a food importer will grow, and Canada needs to ensure it is seen as a favoured source.
But as the trade mission wrapped up, China released data that showed 2012 might be a troubled year for it.
That is worrisome because its growth has helped offset the slow growth in Europe and the United States in recent years.
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China’s imports in January fell 15.3 percent compared with January 2011, the lowest reading since August 2009. Exports fell 0.5 percent over the same period, the worst showing since November 2009. Also, new lending was less than 75 percent of the level that had been expected.
This slow down can be partly explained by the week-long New Year holiday, when many factories slow production, falling in January this year but in February last year. But there could also be a policy element.
In recent years, China’s overheated economy led to soaring inflation and a housing price bubble.
The government tapped on the brakes several times, reducing the availability of credit and imposing measures to calm property prices.
The goal is a “soft landing” in which inflation is controlled but the economy keeps growing, but with western economies so weak, China’s exports are slow. It will require a deft hand to keep its economy growing without returning to inflation.
A wrong move that throws the world’s second largest economy into turmoil would be bad news for the world economy and weaken commodity prices.
