Chaper 1: What Is Trade?

International Business

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

 Article Title: Canada, China sign currency deal aimed at boosting trade  
  The Canadian Press Posted: Nov 08, 2014 5:23 AM ET

 This article focuses on allowing direct business between Canadian dollar and Chinese yuan, cutting exchange costs. Canada and China have signed a reciprocal currency deal that's expected to dramatically boost exports.

This then creates "The hub" that will foster far easier trade between the Canadian dollar and the Chinese yuan, also known as the "renminbi". It makes Canada the first country in the Americas to have a deal to trade in the renminbi.

This deal will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man — in most cases, the U.S. dollar. This now forces Canadian exporters to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.

Jason Henderson, head of global banking for HSBC Canada, calls the deal great news for Canada, given that China is the second largest economy in the world after the U.S. If Canada is to maintain the standard of living that it enjoys today, he adds, it needs to tap into the Chinese market. The currency deal is the first step on that path, and it's said trade between Canada and China supports more than 470,000 jobs in Canada a year, which was about 2.67 per cent of total Canadian jobs in 2013.


As read in this article, there seems to be minor ups and downs with this deal. How might this deal affect us in the long run? What are the pros and cons?