Canada was one of the few nations whose growth in exports to China last year surpassed the growth in imports, according to a new report from Statistics Canada.

In 2004, Canada exported more than $6.6 billion in merchandise to the Asian giant, a 38.8% increase, the government agency says.

At the same time, Canada’s imports from China rose 29.7% to nearly $24.1 billion. China is now Canada’s second largest trading partner, behind the United States, according to the report.

Since 1990, Canada’s imports from China have risen at an annual average rate of 22.8% while export growth averaged 12.5%.

In the first quarter of this year, exports to China were up around 20% from the same quarter in 2004, while imports rose 30%.

StatsCan says China trailed only the United States as a source of Canadian imports last year, bumping Japan and Mexico to third and fourth place respectively.

The report notes that the composition of our imports from China has shifted markedly. Machinery and equipment surpassed consumer goods such as clothing for the first time early in 2004. By the first quarter of 2005, imports of machinery and equipment were 20% higher. More than half of last year’s growth was in computers and telecommunications equipment.

Imports of industrial goods also rose sharply last year. The $1-billion rise was led by petrochemicals and plastics, as well as iron and steel and aluminum.

Automobiles, mostly parts, constituted the fourth largest and fastest growing group of imports last year. These imports have risen sharply from nearly nothing 10 years ago, especially motors and parts.

With respect to exports, the report says that Canada and Australia were the only major OECD nations to post above-average growth last year, which reflected their large resource content.

Exports of industrial goods rose 66% last year, their largest increase in the past decade, before which shipments were negligible. They were up again 57% in the first quarter of 2005 from a year earlier.

Organic chemicals and metals and minerals led industrial goods, contributing nearly one-third of all Canadian goods exported to China in 2004.

Canada’s energy exports to China doubled last year, all the result of coal which represented two-thirds of China’s energy consumption. Coal consumption rose 12% in 2004 alone.

StatsCan says this growth should continue at a torrid pace in 2005, as coal remains in short supply pending a number of new projects coming on line over the next few years.

The study also found that direct investment in either direction remains minimal, with Canadian enterprises more active in China than their Chinese counterparts in Canada.