In Depth: Thaw in China Relations Brings Good Vibes to Canada’s Energy, Agri-Food Businesses

The recent thaw in diplomatic relations between China and Canada has ushered in a wave of optimism for renewed business engagement, particularly in the trade and investment sectors. Key leaders from both countries and industry representatives expressed hope for accelerated growth in agri-food and energy trade, with Canada poised to be a significant partner for China, especially in oil, hydrogen, and agriculture [para. 1][para. 2][para. 3].

This renewed optimism was evident during a Canada China Business Council (CCBC) forum in Beijing on November 3, 2025. Bill Greuel, deputy minister of agriculture in Saskatchewan, highlighted a growing spirit of partnership and engagement with China. The forum followed a significant meeting between Chinese President Xi Jinping and Canadian Prime Minister Mark Carney at the Asia-Pacific Economic Cooperation summit in South Korea. Both leaders committed to restoring bilateral relations to a stable and sustainable trajectory and agreed to deepen cooperation in energy, manufacturing, agriculture, and finance. Carney accepted Xi’s invitation to visit China, signaling diplomatic progress [para. 3][para. 4][para. 5].

Ministerial-level meetings in the months prior, including those between Premier Li Qiang and Carney and between the respective foreign ministers, set the stage for this rapprochement. A sign of warming ties was Beijing’s decision, coinciding with the CCBC forum, to reinstate approval for Chinese group tours to Canada, ending a Covid-era freeze [para. 6].

However, trade tensions persist. In October 2024, Canada imposed steep tariffs on Chinese electric vehicles and select metals, prompting China in March 2025 to enact 100% tariffs on Canadian canola oil and several agri-food imports, severely hitting Canadian farmers [para. 7][para. 24]. Despite these barriers, companies from both countries see collaboration opportunities in energy, particularly in rare earths, oil, and hydrogen [para. 8][para. 9][para. 10][para. 11][para. 12][para. 13].

Rahim Suleman, CEO of Neo Performance Materials, emphasized the impracticality of decoupling from China in critical materials, as China dominates rare earths mining (60%) and magnet processing (93%). He proposed a shift from rhetoric of “independence” to seeking “equilibrium” and distributed supply chains, given China’s continued leadership in this space [para. 10][para. 11][para. 12][para. 13].

Canada’s oil exports to China have surged, with China becoming the top buyer of crude from the Trans Mountain Pipeline. Exports shot up from 25,040 barrels per day in May 2024 to a record 353,674 barrels per day in March 2025. If this trend continues, exports could surpass half a million barrels per day next year. This diversification benefits Canada by increasing leverage and pricing in its U.S. sales [para. 14][para. 15][para. 16]. Energy exports to China reached C$3.8 billion in the first half of 2025, up 81% from the previous year [para. 19]. Investment in hydrogen is also expanding, with Sungrow Hydrogen viewing Canada and North America as strategic markets [para. 21][para. 22].

Agriculture, the traditional bedrock of Canada-China trade, has suffered from the tariff-driven slump, with agri-food exports plunging 25% year-on-year to C$3.4 billion in the first half of 2025. Canola oil exports were particularly affected, falling to zero in March after high tariffs. Nonetheless, collaboration endures, as evidenced by joint innovation in pulses and continued ties in seafood and meat, despite tariffs [para. 24][para. 25][para. 26][para. 28][para. 29][para. 30][para. 31][para. 32][para. 34][para. 35][para. 36].

Looking forward, the pace and magnitude of improvements in bilateral trade will depend on whether diplomatic goodwill translates into substantive policy actions. Business leaders remain cautiously optimistic, emphasizing the importance of transparent rules and mutual trust to spur real investment flows [para. 37][para. 38][para. 39].