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Economists worry growing conflict with China will make Canada and the world poorer
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Canadian domestic politics have helped magnify the most recent dispute between Beijing and Ottawa into a full blown tit-for-tat expulsion of diplomats.
While some experts who track relations between China and Canada play the spat down — one called it “pretty trivial” — it’s one more crack contributing to a far more dangerous long-term rupture.
Labelled “global fragmentation,” the issue was raised at a recent International Monetary Fund meeting in Washington, D.C. The current Canadian dispute may represent a further fracturing of the world into competing trade blocs that will not only make us all poorer, but impede crucial talks on shared global threats, including climate change and artificial intelligence.
Diplomacy’s economic impact
Critics of the Canadian government’s handling of threats against Conservative MP Michael Chong’s family in Hong Kong would not see the issue as trivial.
While far less significant than previous disputes with Beijing that in the past led to the long-term imprisonment of innocent Canadians and may have contributed to persistent trade sanctions, the latest Canada-China spat is only one sign of hostility between the world’s free-market democracies and what appears to be an emerging alternative bloc.
“Even as we need more international co-operation on multiple fronts, we are facing the spectre of a new Cold War that could see the world fragment into rival economic blocs,” warned IMF boss Kristalina Georgieva earlier this year. “This would be a collective policy mistake that would leave everyone poorer and less secure.”
Bank of Canada governor Tiff Macklem raised the issue in testimony to the Senate standing committee on banking, commerce and the economy last month after discussions in Washington.
‘Cost to global growth’
“The reality is we have all benefited tremendously from an increasingly integrated global trade and investment system and if that goes in reverse, that will certainly have a cost to global growth,” Macklem told senators.
“From Canada’s perspective, as a small open economy and a democracy, we always have had an interest in this rules-based multilateral international order, basically, and that’s kind of an imperative for us,” said Goldfarb in a phone conversation this week.
Cost of Living9:00Trading with the frenemy and how Canada-China trade relations move forward
Goldfarb, who is also a fellow with the Vancouver-based Asia Pacific Foundation, said that until a few years ago, Canadian policy on China by both the current governing Liberals and the Conservatives before them assumed that welcoming the growing giant into global networks would make rules-based trade stronger.
“But we’re seeing something different now,” said Goldfarb.
As Deputy Prime Minister Chrystia Freeland outlined in a Washington speech last year, the failure of autocracies like Russia and China to follow what western countries considered free and fair trade rules means democracies must reshape their strategies.
The danger of “decoupling”
“You can’t simply disengage from the second largest economy in the world,” she said, pointing out that China is already beginning to develop policy in the important area of generative artificial intelligence that others, including Canadian AI leader Geoffrey Hinton, say demands global co-operation.
Canada and its allies know it is essential to keep the door open on “global public goods” including AI policy, climate change and avoiding nuclear conflict, said economist Dane Rowlands at Carleton University’s Patterson School of International Affairs in Ottawa. But he said relations with China have never been so bad.
At the heart of the growing conflict is the expanding clout of China as an economic and military power that inevitably destabilizes the status quo as it challenges the dominance of the United States and its allies.
“It’s not that the United States has shrunk dramatically in terms of its share of the global economy,” said Rowlands. But the U.S. bloc is no longer able to dictate in world affairs, he added.
Feeling their growing power
“When they set a policy … they wouldn’t really have to care how much other countries bought into the idea,” he said of the U.S. But in their reaction to sanctions on Russia, he said that China and India have shown they can now frustrate U.S. and European policy. That is relatively new and a source of friction.
Goldfarb, Rowlands and many others have said that Canada’s ultimate goal must be to use any influence it has to prevent the conflict between China and the U.S. from escalating into war.
But as the IMF’s Georgieva has described, disruptions short of war could have a serious effect on the world economy.
“The IMF’s view is that globalization is great,” said Rowlands. “We should just let industries go to wherever they’re going to be more efficient.”
Responding to what some see as Chinese bullying in the Chong case may be one way of pushing back on the diplomatic front.
But Rowlands said that as security concerns grow and China threatens to block essential goods such as rare earth minerals, which it has done, it becomes imperative for Canada and its allies to become more self-sufficient, even if that makes us a little poorer in the short run.
“I think it’s a fair argument to make that by importing goods from overseas and letting them do all the production, that we are losing certain advantages economically, as well as as I mentioned, strategically in terms of security.”
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Alberta's population surges by record-setting 202,000 people: Here's where they all came from – CBC.ca
Alberta smashed population-growth records in the past year, mainly due to people moving to the province from across Canada and around the world.
The province’s population surged to just over 4.8 million as of Jan. 1, according to new estimates released Wednesday by Statistics Canada.
That’s an increase of 202,324 residents compared with a year earlier, which marks — by far — the largest annual increase on record.
Alberta also broke a national record in 2023 for interprovincial migration, with a net gain of 55,107 people.
“This was the largest gain in interprovincial migration nationally since comparable data became available in 1972,” Statistics Canada said in a release.
Most of the interprovincial migrants came from Ontario and British Columbia.
Statistics Canada estimates that 38,236 Ontarians moved to Alberta last year, versus 14,860 Albertans who moved to Ontario, for a net gain of 23,376 people.
Similarly, an estimated 37,650 British Columbians moved to Alberta, compared to 22,400 Albertans who moved to B.C., for a net gain of 15,250.
All told, interprovincial migration accounted for 27 per cent of Alberta’s population growth over the past year.
That put it just ahead of permanent immigration, which accounted for 26 per cent, and well ahead of natural population increase (more births than deaths), which accounted for eight per cent.
The largest component, however, was temporary international migration.
Non-permanent residents from other countries accounted for 39 per cent of the province’s population growth in the past year, reflecting a national trend.
Canada’s population reached 40,769,890 on Jan. 1, according to Statistics Canada estimates, which is up 3.2 per cent from a year ago.
“Most of Canada’s 3.2-per-cent population growth rate stemmed from temporary immigration in 2023,” Statistics Canada noted.
“Without temporary immigration, that is, relying solely on permanent immigration and natural increase (births minus deaths), Canada’s population growth would have been almost three times less (1.2 per cent).”
Alberta’s population, meanwhile, grew by 4.4 per cent year-over-year.
Alberta now represents 11.8 per cent of the country’s population, its largest proportion on record.
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Why Canada's record population growth is helping – and hurting – the economy – CTV News
Canada has recorded the fastest population growth in 66 years, increasing by 1.3 million people, or 3.2 per cent, in 2023, according to a new report from Statistics Canada.
The country has not seen such growth since 1957, when the spike was attributed to the baby boom and an influx of immigrants fleeing Hungary.
The vast majority of Canada’s growth last year was due to immigration, with temporary residents — which includes foreign workers and international students — making up the largest proportion of newcomers.
“We need people coming to Canada to help with our economy,” says Matti Siemiatycki, a professor of planning at the University of Toronto. “There are many jobs and professions where there are vacancies, and that is having an impact, whether in the healthcare sector or trades and construction sector.”
Siemiatycki adds immigrants also bring “ingenuity… resources… and culture” to Canada.
Newcomers are relied on to help keep pace with Canada’s aging population and declining fertility rates, but the influx also presents a challenge for a country struggling to build the homes and infrastructure needed for immigrants.
“It’s an incredibly large shock for the economic system to absorb because of just the sheer number of people coming into the country in a short period of time,” says Robert Kavcic. a senior economist and director with BMO Capital Markets.
“The reality is population can grow extremely fast, but the supply side of the economy like housing and service infrastructure, think health care and schools, can only catch up at a really gradual pace,” Kavcic says. “So there is a mismatch right now.”
The impact of that mismatch can most acutely be seen in the cost of rent, services and housing.
In December, Kavcic wrote in a note that Canada needs to build 170,000 new housing units every three months to keep up with population growth, noting the industry is struggling to complete 220,000 units in a full year.
To address this, Ottawa has announced plans to cap the number of new temporary residents while also reducing the number of international student visas, a move economists say could offer some relief when it comes to housing and the cost of living.
“The arithmetic on the caps actual works relatively well because it would take us back down to 1 per cent population growth which we have been used to over the last decade and which is more or less absorbable by the economy,” Kavcic says. “The question is whether or not we see policy makers follow through and hit those numbers.”
Economists believe these changes could help ease inflationary pressures and may make a Bank of Canada rate cut more likely, but could also lead to slower GDP growth.
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Canada’s population hits 41M months after breaking 40M threshold – Global News
Nine months after reaching a population of 40 million, Canada has cracked a new threshold.
As of Wednesday morning, it’s estimated 41 million people now call the country home, according to Statistics Canada’s live population tracker.
The speed at which Canada’s population is growing was also reflected in new data released Wednesday by the federal agency: between Jan. 1 2023 and Jan. 1 2024, Canada added 1,271,872 inhabitants, a 3.2 per cent growth rate — the highest since 1957.
Most of Canada’s 3.2 per cent population growth rate stemmed from temporary immigration. Without it, Canada’s population growth would have been 1.2 per cent, Statistics Canada said.
From Oct. 1 to Dec. 31, 2023, Canada’s population increased by 241,494 people (0.6 per cent), the highest rate of growth in a fourth quarter since 1956.
Usha George, a professor at the Toronto Metropolitan Centre for Immigration and Settlement at Toronto Metropolitan University, told Global News in June a booming population can benefit the economy.
“It is not the bodies we are bringing in; these are bodies that fill in the empty spaces in the labour market,” she said.
“They bring a very-high level of skills.”
However, Ottawa has recently sought to ease the flow of temporary immigration in a bid to ease cost-of-living woes.
Immigration Minister Marc Miller said on March 21 Ottawa would set targets for temporary residents allowed into Canada to ensure “sustainable” growth in the number of temporary residents entering the nation.
The next day, BMO economist Robert Kavcic in a note to clients the new limits will have a positive impact on Canada’s rental market and overall housing crisis.
“We’ve been firm in our argument that Canada has had an excess demand problem in housing, and this is maybe the clearest example,” Kavcic said.
“Non-permanent resident inflows, on net, have swelled to about 800K in the latest year, with few checks and balances in place, putting tremendous stress on housing supply and infrastructure.”
Alberta gains, Ontario loses: A look at Canadian migration in 2023
If Alberta is truly calling, then it appears more Canadians are choosing to answer.
Putting the pun on the provincial government’s attraction campaign aside, Canada’s wild rose country saw the largest net gain in interprovincial migration in 2023, Statistics Canada said in Wednesday’s report.
The agency said 55,107 Canadians moved to Alberta last year, which was the largest gain in interprovincial migration nationally since comparable data become available in 1972.
“Alberta has been recording gains in population from interprovincial migration since 2022, a reverse of the trend seen from 2016 to 2021, when more people left the province than arrived from other parts of Canada,” Statistics Canada said.
“Approximately 333,000 Canadians moved from one province or territory to another in 2023, the second-highest number recorded since the 1990s and the third straight year that interprovincial migration topped 300,000.”
Meanwhile, British Columbia had 8,624 more residents move out than in in 2023, meaning net interprovincial migration was negative for the first time since 2012, Statistics Canada said.
In general, the largest migration flows for British Columbia and Alberta are with each other, and most of the net loss from British Columbia in 2023 was to Alberta, it added.
It also seems that good things may no longer be growing in Ontario; Canada’s most populous province lost 36,197 people to other regions in 2023, the biggest regional loss in 2023, Statistics Canada said.
That followed a loss of 38,816 people in 2022; the only other times a province has lost more than 35,000 people due to migration to other parts of Canada occurred in Quebec in 1977 and 1978.
Alberta aside, net interprovincial migration was also up in Nova Scotia (+6,169 people), New Brunswick (+4,790) and Prince Edward Island (+818), although all three Maritime provinces gained fewer interprovincial migrants in 2023 than in the two previous years, Statistics Canada said.
— with files from Uday Rana and Sean Previl
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