On Tuesday, China announced that it would launch an investigation into canola imports from Canada. This decision came after Ottawa imposed tariffs on Chinese electric vehicles, causing prices of domestic rapeseed oil futures to reach a one-month peak.
China strongly opposes the discriminatory tariffs imposed by Canada on its imports, despite objections from various parties. In response, China will also conduct an anti-dumping investigation on certain Canadian chemical products.
The world’s largest oilseed importer, China receives over half of the canola produced in Canada. Canola, which is used for cooking oil and in various products including renewable fuels, plays a significant role in trade between the two countries.
Following the announcement of the anti-dumping investigation, China’s rapeseed meal prices rose sharply on the Zhengzhou Commodity Exchange. Conversely, the ICE canola contract for November delivery plummeted to its daily limit.
In addition to canola imports, China also sources canola from Russia and Mongolia. The country is a major importer of canola, with a significant portion coming from Canada. In contrast, Chinese exports of electric vehicles to Canada mainly originate from Tesla’s Shanghai factory.
China plans to utilize the World Trade Organization dispute settlement mechanism to address Canada’s actions. Meanwhile, the Canadian embassy in Beijing has not yet provided a response. Additionally, China has initiated trade investigations into European Union imports, including pork, brandy, and dairy products, in response to restrictions on its electric vehicle exports.
In the past, China has targeted Canadian canola during trade disputes. Analysts suggest that China may seek alternative canola supplies from Australia and Ukraine due to trade tensions with Canada. Australia’s ample canola production makes it an attractive option, while concerns about blackleg disease have limited China’s imports of Australian canola.
Overall, China’s actions and investigations have significant implications for trade relations between the country and its global partners, including Canada.
More Stories
Why CHF remains strong: BoA Securities analysis