Canada and China reached an agreement that will allow a direct exchange of goods for either Canadian dollars or Chinese yuan. This deal will allow for business from both countries to cut off the “middle-man” which was in most cases the American dollar. Without having to do business with a third currency both countries’ businesses of all sizes will have a faster negotiation and lower costs.

In my opinion, this deal is one that all of the Canadians need to celebrate. Given that China is the second largest economy of the world, only behind the US, there is a lot of money in that market. Therefore, for small business owners, trade has been facilitated and made cheaper because before, many small business were not able to enter the Chinese market because they had to exchange to American dollars and only then to Chinese yuan, creating higher costs and wasting time.

Also, the general Canadian population can celebrate this deal because with no third party currency involved in transactions between Canada and China, the costs of imported goods will be much cheaper. Not only because of the lower costs of importation and exportation between the two countries but also because of the consequence on supply levels it will have. Since the costs to sell Chinese goods in Canada will be lowered, there will be an increase in volume of imported goods from China; therefore, prices will be lowered due to lower costs of operations and because of a higher supply.

Not only that but this will increase the amount of money being circulated in the Canadian economy, thus, increasing it. Therefore, there is a reason for every Canadian citizen to rejoice from this new deal that allows direct trade with China.

Source:

http://www.cbc.ca/news/politics/canada-china-sign-currency-deal-aimed-at-boosting-trade-1.2828707