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From left, Ontario minister Michael Chan, Markham Mayor Frank Scarpitti, president of Markham Cultural Centre Dr. Ken Ng, Toronto Consul-General of the People’s Republic of China Xue Bing and John McCallum commemorate the founding day of the People’s Republic of China.

Prime Minister Justin Trudeau is dispatching one of his most trusted cabinet veterans to Beijing.

John McCallum is leaving elected politics as part of Tuesday's cabinet shuffle to become Canada's next ambassador to China.

The former bank economist was relied on to handle one of the new government's most challenging files upon taking office in 2015, managing the Liberal pledge to welcome thousands of Syrian refugees.

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Read more: Freeland tasked by Trudeau to negotiate with Trump administration

Analysis: Trudeau cabinet shuffle about protecting crucial U.S., China relations

Read more: From refugee to immigration minister: Ahmed Hussen appointed cabinet role

As ambassador, Mr. McCallum will now play a key role in expanding Canada's trading relationship with China, including a possible free-trade agreement between the two countries. Chinese officials have spoken of "rare, historical opportunities between China and Canada" under Mr. Trudeau's leadership.

China is not normally a destination for politically connected ambassadors but one former Canadian diplomat said it is the right time to send someone who will have the ear of Mr. Trudeau.

"I think it's time to have someone like John McCallum in the position as ambassador to China," said Stewart Beck, president and CEO of the Asia Pacific Foundation of Canada, who spent most of his career in Canada's foreign service with postings, including as consul-general in Shanghai. "I think it's an inspired choice."

Mr. Beck added that Mr. McCallum will need to balance the desire for increased trade with the fact that polling shows many Canadians are distrustful of Chinese state-owned companies and want Ottawa to promote human rights abroad.

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A senior government official outlined the thinking behind the appointment.

"We needed a very senior voice, especially because we are launching exploratory trade talks, so there's a lot happening there," the official said.

Speaking with reporters Tuesday following the shuffle, Mr. McCallum said he was initially surprised when Mr. Trudeau raised the idea with him last week. However Mr. McCallum said Mr. Trudeau spoke of the importance of having a strong connection between the Prime Minister's Office and Canada's envoy in China.

Mr. McCallum noted that his wife, Nancy Lim, is Chinese and they are looking forward to the assignment.

"I was very enthusiastic to accept," he said, describing the expansion of ties between the two countries as fundamental to Canada given that China is the world's second-largest economy.

China is looking to secure more Canadian agriculture and energy exports. Mr. Trudeau has already moved in this direction by approving the Kinder Morgan pipeline, which will transport Alberta bitumen to the Pacific coast for export to Asian markets.

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For its part, the Trudeau government views Chinese investment as a source of economic growth. Mr. McCallum visited China in 2016 to promote tourism and immigration and later said he'd like to see immigration spread more evenly throughout Canada.

"The last thing we want is that every immigrant either goes to Toronto or Vancouver," he said last summer after his trip to China.

The popularity of Toronto and Vancouver as destinations for Chinese immigrants and real estate investors has become a major public-policy issue for political leaders in those two cities, as experts struggle to assess the degree to which money from China has contributed to skyrocketing house prices.

Mr. McCallum also heads to Beijing at a time when Canada and the United States are taking starkly different approaches to dealing with China.

President-elect Donald Trump views China as a currency manipulator that must be challenged in order to protect domestic manufacturing jobs. Mr. Trudeau, however, has cultivated warm relations with Beijing. Chinese leaders speak fondly of former prime minister Pierre Trudeau, who defied Washington's wishes by establishing diplomatic relations with communist China in 1970.

The Canada China Business Council said in a report released last year that a free-trade deal between the two countries would generate $7.8-billion in additional economic activity within 15 years, creating an additional 25,000 jobs.

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Mr. McCallum won six consecutive elections in Markham, which is Canada's most ethnically diverse community and home to a large number of Chinese-Canadians.

In announcing the cabinet shuffle, Mr. Trudeau said Mr. McCallum's work in bringing in more than 39,500 Syrian refugees "has been an inspiration to Canadians and an example to the world." In a statement, the Prime Minister said the Canada-China relationship "will be well served by such a strong presence from our government."

With a report from Robert Fife

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