Canada’s trade relationship with China built on wheat

Canada played a major role in helping overcome the famines that stalked the Chinese people through the late 1950s and early 1960s.

It sold wheat to the People’s Republic of China at a time when other countries refused to deal with the Communist regime of Mao Zedong, which had seized control in 1949 after a short but violent civil war.

“Most countries initially refused to recognize the authority of the Communist government; for its part, China imposed severe restrictions on foreign trade and investment,” a briefing report by International Affairs prepared for Canadian Parliament in 2008 says.

At the time, Canada had no formal trade relationship with what many referred to as “Red China” either.

“While there was some support for the promotion of trade with China, the issue of Canada’s trade policy was closely tied to a long internal debate through the 1950s and 1960s over whether to grant official recognition to Chairman Mao Zedong’s government,” the document says.

While Canadian officials recognized there were opportunities to trade with China, many feared alienating Canada’s closest ally and neighbour, the U.S. by doing business with a communist government.

More on the Manitoba Co-operator: Chinese imports headed higher, opportunity for Canadian farmers

As well, the People’s Republic had few foreign currency reserves with which to buy foreign goods.

But that all started to change in the early 1960s when the Canadian Wheat Board began actively seeking out new markets for wheat and other grains to help “the embattled Canadian farmer.”

“Recalling that in 1958 China had purchased a small amount of wheat from Canada, the Department of Trade and Commerce sent representatives to China in 1960 to see if there was any interest in additional sales,” the briefing document says.

“As it turned out, two successive years of poor harvests in China — related to the policies of the Great Leap Forward — had created a profound food shortage in that country. By early the following year, Canada officially announced the sale of about $60 million in wheat and barley to China.

“As the food shortage became more apparent, China was forced to become more active on international grain markets. Due almost exclusively to increased sales of wheat and barley, Canadian exports to China grew from about $9 million in 1960 to over $147 million only two years later.

“Until the end of the 1960s, Canada’s total exports to China were volatile, but generally remained between $100 million and $185 million annually. These shipments consisted almost entirely of wheat.