The Indo-Pacific: A new horizon of opportunity
Global importance of the Indo-Pacific region
The Indo-Pacific region will play a critical role in shaping Canada’s future over the next half-century. Encompassing 40 economies, over four billion people and $47.19 trillion in economic activity, it is the world’s fastest growing-region and home to six of Canada’s top 13 trading partners. The Indo-Pacific region represents significant opportunities for growing the economy here at home, as well as opportunities for Canadian workers and businesses for decades to come.
The Indo-Pacific comprises 40 countries and economies: Australia, Bangladesh, Bhutan, Brunei, Cambodia, Democratic People’s Republic of Korea (DPRK), India, Indonesia, Japan, Laos, Malaysia, Maldives, Mongolia, Myanmar, Nepal, New Zealand, the Pacific Island Countries (14), Pakistan, People’s Republic of China (PRC), the Philippines, Republic of Korea (ROK), Singapore, Sri Lanka, Taiwan, Thailand, Timor Leste, and Vietnam.
- 50% of world GDP by 2040
- 50% of global greenhouse gas emissions
- 65% of world’s population
- 67% of world’s Indigenous peoples
- 37% of the world’s poor
- 1 in 5 Canadians have family ties to the region
- PRC, Japan, India, ROK, Australia: 5 of the region's largest economies
- US$29.3T combined GDP of top 5 compared to US$17.2T for whole EU-27
The Indo-Pacific is rapidly becoming the global centre of economic dynamism and strategic challenge. Every issue that matters to Canadians—including our national security, economic prosperity, respect for international law, democratic values, public health, protecting our environment, the rights of women and girls and human rights—will be shaped by the relationships Canada and its allies and partners have with Indo-Pacific countries. Our ability to maintain open skies, open trading systems and open societies, as well as to effectively address climate change, will depend in part on what happens over the next several decades in the Indo-Pacific region.
Today, the Indo-Pacific makes up more than one-third of all global economic activity. Three of the world’s largest economies—the People’s Republic of China (China), India and Japan—are in this part of the world. By 2040—less than two decades from now—the region will account for more than half of the global economy, or more than twice the share of the United States. By 2030, it will be home to two-thirds of the global middle class, having lifted millions out of poverty through economic growth.
The region’s economic dynamism and population growth are driving demand for education, health services, food, agriculture and fisheries, natural resources and critical minerals, energy, financial services, advanced manufacturing and green infrastructure. These are all sectors of Canadian strength, in which Canada has a global reputation for excellence. In the infrastructure sector alone, there is an estimated $2.1 trillion opportunity for strategic investments and partnerships in the Indo-Pacific. Seizing these and other strategic opportunities will help safeguard Canada’s economic security, build our future prosperity and help create good, well-paying jobs.
Our people-to-people ties are a vital part of this opportunity. Canada attracts talented people from the Indo-Pacific to study in our schools and universities, to work in our communities and to live in and contribute to our society. In fact, Canada welcomes more international students from India than from any other country in the world. These ties enrich our social and economic fabric and make us stronger. Simply put: the rise of the Indo-Pacific can create extraordinary local benefits, as well as increase prosperity and drive economic growth across Canada.
Trade Connections with the Indo-Pacific
- Canada’s second-largest regional export market and trading partners after U.S.
- $226B Annual 2-way merchandise trade between Canada and Indo-Pacific Region
- $64.4B Value of 2-way capital investment from 2020 to 2022
- 11.1% of Canada’s total merchandise exports in 2021
- Indo-Pacific includes 6 of Canada’s top 13 trading partners (India, Japan, PRC, ROK, Taiwan, Vietnam)
- Two-way service trade has grown by 80% since 2010
- FDI has more than doubled in both directions since 2010
As great power competition deepens in the region, inter-state tensions are on the rise, many with historical roots. Regional peace and prosperity are threatened by instability on the Korean Peninsula as a result of North Korean provocations; rising violence in Myanmar following the recent military coup d’état; clashes on the India-China and India-Pakistan borders; escalating tensions in the South and East China Seas and across the Taiwan Strait; and severe poverty and inequality. The Indo-Pacific is home to four states that possess nuclear nuclear weapons (China, India, North Korea and Pakistan).
At the heart of this dynamic economic region, China’s rise as a global actor is reshaping the strategic outlook of every state in the region, including Canada. China has benefitted from the rules-based international order to grow and prosper, but it is now actively seeking to reinterpret these rules to gain greater advantage. China’s assertive pursuit of its economic and security interests, advancement of unilateral claims, foreign interference and increasingly coercive treatment of other countries and economies have significant implications in the region, in Canada and around the world. Respect for the sovereignty of other states is a cornerstone of the rules-based international order and of governments’ ability to work together to solve shared problems.
Canada is engaging in the Indo-Pacific in coordination with our partners, which also recognize the rising importance of the region. Many of Canada’s closest allies, including the United States, the European Union, Germany, France and the United Kingdom, have increased or are considering increasing their presence in the region, guided by their own interests and strategies and based on significant investments in diplomacy, in their military presence, in trade promotion and in development assistance. Within this broader context, Canada has a unique contribution to make based on our particular history and relationships in the Indo-Pacific.
The active participation of Indo-Pacific countries is essential if we are to address global challenges head on. Progress in the fight against climate change and biodiversity loss can only be realized with the full participation of Indo-Pacific countries, which have some of the highest and fastest-growing greenhouse gas emissions in the world; the region accounts for over half of global carbon dioxide emissions. While Canada is also investing in reducing its own emissions, we must engage with Indo-Pacific nations to fight climate change together. The region also includes nearly two-thirds of the world’s oceans and is among the most vulnerable globally to the effects of climate change. South Asia’s glaciers are melting, and many of the smaller Pacific Island Countries are facing catastrophic rises in sea levels. And these challenges do not exist in isolation. For example, the South China Sea—one of the region’s key security hot spots—hosts more than half of the world’s fishing fleets, which compete for increasingly scarce marine resources. When security, biodiversity loss and climate challenges overlap, as they do in several cases in the Indo-Pacific, they aggravate and amplify each other.
Despite several decades of broad economic growth, many parts of the Indo-Pacific region face ongoing development challenges. Poverty and inequality remain realities for far too many people in the region. Canada is committed to advancing the Sustainable Development Goals in cooperation with partners across the region. The benefits of inclusive social, economic and environmental efforts will have a multiplier effect throughout the region and in Canada.
Canada: A Pacific country
Canada is a Pacific country. It shares 25,000 kilometres of Pacific coastline, robust trading relationships with economies across the region, deep people-to-people ties and a rich history of cultural exchange.
Indigenous Peoples in Canada have called Pacific coast lands and shorelines home for millennia, and they have shared Indigenous trade networks that have historically extended to Indigenous Peoples all around the Pacific.
Waves of people who have come from the region have contributed to Canada’s vitality and prosperity. Their legacy and descendants continue to enrich Canada from coast to coast to coast. Today, fully half of new Canadians come from the region, and Canada’s largest diasporas are of Indo-Pacific origin. The relationship goes both ways, with hundreds of thousands of Canadians living in the region.
Each year, large numbers of tourists travel from Indo-Pacific countries to experience Canada or visit loved ones. And hundreds of thousands of Canadians travel to the Indo-Pacific to study, experience its cultures or do business. At heart, our ties to the region are all about people and a shared history. Canadians and our Indo-Pacific neighbours share a deep appreciation of each other.
As an active, engaged and reliable partner in the Indo-Pacific, Canada will deepen relationships that have been built through decades of government, private sector, security and civil society cooperation. The rising influence of the Indo-Pacific region is a once-in-a-generation global shift that requires a generational Canadian response.
Canada’s Indo-Pacific Strategy
The rise of the Indo-Pacific and the profound impacts the region will have on the lives of all Canadians demand a comprehensive, whole-of-society strategy to guide Canada’s actions. Canada must invest resources and build knowledge and capacity to engage. How Canada engages in the region will set the pace for the future and prosperity of our economy, security and stability.
To seize opportunities in the national interest of Canadians, while defending the values they hold dear, Canada will invest in building capacity to engage with countries across the region, while paying particular attention to Australia, Association of Southeast Asian Nations (ASEAN) countries, China, India, Japan, Pacific Island Countries, the Republic of Korea and New Zealand.
The Strategy outlines five interconnected strategic objectives:
- Promote peace, resilience and security
- Expand trade, investment and supply chain resilience
- Invest in and connect people
- Build a sustainable and green future
- Canada as an active and engaged partner to the Indo-Pacific
Overall, Canada will defend its national interests. The first objective commits Canada to promoting peace, resilience and security (Objective 1) in the Indo-Pacific. Stability in this region directly impacts the safety, prosperity and security of Canadians. Canada will invest in an enhanced military presence, along with intelligence and cyber security, to promote security in the region and ensure the safety of Canadians. Canada will build on its Women, Peace and Security agenda and its established security partnerships to reinforce regional capabilities and promote stability.
Canada will also focus on trade, investment and supply chain resilience (Objective 2) to seize economic opportunities and strengthen and diversify our regional partnerships, building a stronger and more secure economy at home while strengthening our economic ties across the Indo-Pacific.
Canada will invest in its people-to-people ties with the region (Objective 3) through expanded education exchanges and bolstered visa-processing capacity and by empowering Canadian organizations and experts to engage in the region even more. Canada will also increase our feminist international assistance to address local development challenges, advance collective efforts toward the Sustainable Development Goals and continue actively engaging in defending human rights in the region, including women’s rights.
Canada is committed to fighting climate change and ensuring a sustainable and green future (Objective 4) for people from the Indo-Pacific and for Canadians. Canada will share expertise in clean technology, oceans management, energy transition and climate finance, and it will work collaboratively across the region to reduce emissions and prevent further biodiversity loss. Canada will also work in concert with G7 partners to help the region meet its growing $2.1 trillion infrastructure funding gap.
Finally, Canada’s Indo-Pacific Strategy expands and deepens regional partnerships (Objective 5). Canada will seek to reinforce its influence among partners and allies in the region, offering more diplomatic, economic, military and technical support and cooperation, and answering the call from regional partners for deeper engagement.
This is a whole-of-society effort. Canada’s Indo-Pacific Strategy has implications for all Canadians, and it leverages the efforts of non-governmental organizations, non-profit groups, the private sector, universities and colleges, Indigenous Peoples and Canadian workers. Canada will support their commitment and effort, and it aims to position Canadians for success through engagement with this dynamic, rapidly growing part of the world.