Energy cooperation emerged as the cornerstone of Prime Minister Mark Carney’s visit to China this week, with the two countries signing a new memorandum of understanding (MOU) on Thursday aimed at significantly expanding trade in both conventional and clean energy.
The agreement, signed at Beijing’s Great Hall of the People by Canada’s Minister of Energy and Natural Resources, Tim Hodgson, and his Chinese counterpart, frames Canada as “an important potential partner” for China in oil, liquefied natural gas (LNG), and petroleum imports “based on market principles.”
For Canada, the pact represents a strategic push to diversify its energy exports away from near-total reliance on the United States. For China, it underscores a quest for reliable, responsibly produced energy from a partner seen as less likely to wield resources as a geopolitical tool. “What we heard loud and clear is that China is looking for reliable trading partners … that don’t use energy for coercion,” Hodgson told reporters after the signing ceremony, paraphrasing the Chinese position.
Facing complex challenges in balancing economic growth, a property-sector downturn, and ambitious climate targets, China’s priorities are twofold. First, it seeks to diversify its energy imports to enhance security and reduce dependency on any single region. The new MOU’s emphasis on “responsibly produced and reliable” supply from Canada aligns directly with this goal.
Second, China’s “dual-carbon” climate goals require external technology and resources. The agreement specifically highlights cooperation in offshore wind, solar power, and CANDU nuclear reactor technology, pointing to Beijing’s need to accelerate its green transition while maintaining baseline energy stability.
Canada’s motivation is equally clear. Historical trade data reveals a stark imbalance: in 2024, 96% of Canadian crude oil exports went to the U.S., with only 2% reaching China. Virtually all its natural gas is also piped south.
The Carney government’s “non-U.S. export doubling plan” identifies China’s vast market as critical. With new infrastructure like the Trans Mountain Pipeline (operational since 2024) and the LNG Canada project coming online, Canada’s capacity to ship resources to Asia is growing. This MOU is viewed as opening a strategic window for those exports.
However, Ottawa is walking a delicate line. The broader “economic and trade co-operation road map” released alongside the energy MOU welcomes Canadian investment in China’s aerospace and advanced manufacturing sectors but does not encourage reciprocal Chinese investment in those sensitive sectors in Canada—a nod to both domestic security concerns and pressure from allies like the United States.
The energy MOU establishes a formal ministerial dialogue, with meetings slated every 12 to 18 months for the next five years. Cooperation is structured along two tracks:
Hodgson confirmed that Chinese firms are already investors in Canada’s first major LNG project and are expected to participate in subsequent ventures. The agreement may also pave the way for the first significant Chinese investment in Canada’s oilsands in decades.
The energy pact was one of eight agreements signed Thursday, signalling a broader effort to revitalize a relationship that had grown dormant. Other MOUs covered:
Despite the progress, a significant cloud remains: the unresolved tariff war. Canada’s tariffs on Chinese electric vehicles, and China’s retaliatory duties on Canadian canola and other agricultural products, were not settled during this visit.
“All of this can be derailed if the political environment changes,” warned Vina Nadjibulla, vice-president of the Asia Pacific Foundation of Canada. She noted that the newly revived institutional mechanisms, like the Joint Economic and Trade Commission set to meet later this year, will be the likely forums for tackling these thorny issues.
Furthermore, Canada must continually calibrate its outreach to China with its foundational alliance with the United States. “Those details will have to be … negotiated by Canada with an eye on how they would impact discussions with the U.S.,” Nadjibulla said.
Prime Minister Carney’s visit has resulted in a tangible, if tentative, framework for deeper Canada-China economic engagement, with energy at its core. The partnership is built on a clear mutual need: China’s search for secure energy and green technology, and Canada’s drive for market diversification.
Whether this “headliner” deal evolves into a lasting, win-win partnership will depend not just on market forces, but on the two nations’ ability to navigate persistent trade disputes and the ever-present complexities of great-power politics. The promise of a “reliable partner” relationship, as stated in the memorandum, now awaits the test of concrete action and sustained political will.
