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BEIJING (Reuters) - China and Canada on Wednesday signed a series of deals to boost modest levels of bilateral trade and finished negotiations on a foreign investment protection pact after 18 years of talks.
Canadian Prime Minister Stephen Harper, keen to boost oil exports to China and thereby reduce reliance on the U.S. market, said the investment agreement would help increase trade.
"This is an historic step forward ... it will provide greater predictability and protection for Canadians seeking to do business in China," he told a news conference after talks with Chinese Premier Wen Jiabao.
Both nations will need to conduct a legal review of the deal and then sign and ratify it before it can take effect.
The relatively small amount of bilateral trade -- which amounted to less than C$60 billion ($59.4 billion) in 2010 -- shows how much potential there is for growth.
Harper said Canadian investment in China rose by 39 percent in 2010 from 2009 to hit nearly C$5 billion. Chinese investment in Canada the same year totaled $14 billion, an increase of 9 percent from 2009.
Harper wants to ramp up exports and reduce Canada's reliance on the huge U.S. market. He is particularly keen to increase exports of oil.
Ottawa intensified its calls to diversify exports last month after Washington vetoed a pipeline that would have carried crude from the western province of Alberta to Texas.
China does not import any Canadian oil, but says it is interested in doing so. The two nations also signed an extension of a memorandum of understanding on energy issues covering oil, gas and nuclear energy as well as trade and investment.
Harper said the investment deal would not override existing Canadian laws, which say the government can reject foreign takeover bids it deems not to be in the national interest.
Chinese firms have spent more than C$5.5 billion ($5.4 billion) on Canadian energy assets in the last seven months alone, a trend which could eventually challenge the government.
A major poll last year showed 76 percent of Canadians opposed the idea of a state-owned Chinese firm trying to buy a controlling stake in a Canadian company.
"We have, I think, a pretty open regime when it comes to Chinese investment in Canada and I've obviously raised ... with the Chinese certain cases where we're concerned about non-approval of existing investments by Canadians in China and we expect to see even-handedness on this going forward," he said.
Officials said Harper was referring to problems suffered by Bank of Nova Scotia and Manulife.
A Chinese Foreign Ministry statement paraphrased Wen as telling Harper that China was willing to increase its imports of Canadian energy and natural resources.
China wants to establish a "long-term, stable and multi-faceted cooperative partnership relationship in the field of energy resources," Wen said, without elaborating.
Both countries should look at the possibility too of signing a free trade agreement, Wen added, in the brief statement carried on the Foreign Ministry's website(www.mfa.gov.cn).
The two sides also signed a deal which Canadian officials said should allow the immediate resumption of Canadian beef and tallow exports after a nine-year pause.
Canadian officials said the deal on beef should allow the immediate resumption of beef and tallow exports, which Beijing halted in 2003 after Canada found a case of mad cow disease.
China committed itself in 2010 to resuming trade in Canadian beef and tallow. However, commercial trade has not resumed because of Beijing's standing restrictions on beef containing the growth enhancer ractopamine.
Additional reporting by Ben Blanchard; Editing by Ron Popeski