Economic transition to consumption-led model will increase demand for many goods and services
VANCOUVER—Canadian manufacturing industries doing business in China will need to make technological upgrading a priority if they are to keep pace with Chinese and foreign companies which are rapidly enhancing their technology. The speed at which companies are able and willing to adjust their operations will be vital for keeping Canada competitive in an increasingly globalized marketplace, according to Shifting Chinese Demand: New Opportunities for Canadian Companies, the latest in a series of reports from the Conference Board of Canada (CBoC) commissioned by HSBC Bank Canada.
The report says while commodities are expected to remain a large share of Chinese imports, the ongoing structural transition of the economy to a consumption-led model to meet the needs of a growing middle class will increase demand for many goods and services. Canada holds a global competitive advantage in several of the sectors expected to see significant growth.
“China remains an engine of global growth, offering tremendous opportunities for Canadian companies,” said Linda Seymour, executive vice-president and head of commercial banking, HSBC Bank Canada. “China’s economic growth may have slowed in recent years, but it remains one of the largest and fastest-growing economies in the world and is forecast to grow at 6.5 percent compared to Canada’s 2 percent through 2017 and that’s a clear opportunity for Canadian companies.”
Demand for services rising
China’s plan to move from an export and investment-led growth model towards a service and consumption-based economy could generate opportunities for Canada’s service industries, with the market for professional services less mature in China than in some other countries, including Canada.
The report found that Canada has global strengths in a number of services sectors that are projected to face rising Chinese demand. They include:
Computer and information services
Services such as engineering and architecture, for example, are in a very good position to take advantage of rising Chinese demand. The architectural, engineering, and other technical services sector has increased investment in physical and human capital. Firms in this sector have seen big increases in their profit margins and have the capacity needed to meet Chinese demand.