China becomes Quebec’s second-largest export market
November 28, 2011 By Canadian Press
Nov. 28, 2011 – China will replace Britain as the second-largest foreign buyer of Quebec's products next year as the demand for base metals continues to feed the Asian economic giant's continued growth, says Export Development Canada. The province's exports are expected to grow for the third year in a row, with a seven per cent gain in 2012, according to the agency's global export focus released Nov. 22.
The pace of expansion would put Quebec behind British Columbia (13 per cent), Ontario (10 per cent) and Nova Scotia (nine per cent) in a three-way tie with Manitoba and the Territories, and equal to the national average.
Higher prices for gold and base metals such as aluminum and iron ore should mean another good year for this sector. Mining activity is booming, in large part because of the government-led Plan Nord initiative and development of Malartic and the Sleeping Giant.
"Iron ore shipments to China are … a huge part of it and that's not going away, it's not a flash in the pan, it's a trend over time,'' chief economist Peter Hall said in an interview.
China is using Quebec's iron ore to help it aggressively expand its steel-making capacity.
China accounted for 13.6 per cent of the world economy in 2010 when its economy grew by a little more than 10 per cent. Forecasts call for growth of 9.3 and 8.8 per cent in the following two years.
Quebec's aluminum exports should be boosted by stronger prices this year but production will be flat this year and next with the only notable increase occurring at Rio Tinto's Laterriere smelter, says Hall.
The aerospace sector should also be a "star performer'' in 2012 as airlines ramp up orders following a couple of years of weak economic conditions.
Hall said the industry will have the beginnings of a recovery as carriers take advantage of order deferrals next year to ensure they get order slots for their planes.
Among the winners will be Bombardier, which has won an order for 120 business jets from NetJets and engine manufacturer Pratt & Whitney Canada, both based in Montreal.
The transportation sector is expected to grow by 23 per cent, largely as a result of the aerospace sector, after declining by one per cent in 2011.
"Anybody who's in the supply chain is going to feel the updraft from that 23 per cent growth that we're forecasting for 2012,'' he said.
Quebec's exports are led by four areas _ industrial products which account for 39 per cent of total exports, machinery and equipment at 13 per cent, forestry 13 per cent and transportation at 12 per cent.
Quebec is the third-largest exporter in Canada after Ontario and Alberta. Its $57.8 billion of merchandise exports account for 15.4 per cent of the national total.
After growing by 2.6 per cent in 2010, Quebec's exports are expected to increase by four per cent in 2011 and seven per cent in 2012.
EDC expects Quebec's forestry sector exports will grow by nine per cent in 2012 after two years of zero gains.
Although the number of new U.S. households is growing by 1.4 million, housing starts are only increasing by 550,000 to 600,000.
Most of Quebec's lumber is shipped to traditional markets like the United States while western lumber is increasingly going to China.
Hall also expects opportunities in Quebec to increase shipments of agricultural food products like meat and dairy. The growing size of the middle class in emerging countries is increasing demand for quality food products.
Increasing exports won't have an immediate impact on job creation, which tends to lag recoveries by about six months, Hall said.
"Sadly jobs always lag the recovery so it's going to take awhile for this growth to actually turn into jobs.''
Export Development Canada
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