A Canadian goodwill mission led by Governor-General David Johnston met with the top tier of China's political leadership in Beijing on Thursday, agreeing to work more closely together on culture and winter sports.

The agreements mark a new effort to join hands with the world's second-largest economy as Canada prepares for a third round of free-trade exploratory talks in about two weeks, and an expected second visit to China by Justin Trudeau as Prime Minister later this year.

But an afternoon meeting between Mr. Johnston and Chinese President Xi Jinping inside Beijing's luxurious Diaoyutai State Guesthouse on Thursday also underscored the potential pitfalls for Ottawa in pursuing a new "golden era" with an authoritarian regime that keeps thousands of political prisoners and is regularly accused of torturing those who press for human rights.

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Read more: Chinese dissident Liu Xiaobo dies at age 61

The meeting began at 5:30 p.m. on Thursday.

Five minutes later, imprisoned Chinese writer and democracy champion Liu Xiaobo died. He was awarded the Nobel Peace prize in 2010 for "his long and non-violent struggle for fundamental human rights in China," and his death marked the first time since the Nazi era that a Nobel laureate died in custody.

Although the time for the Canadian meeting was confirmed far in advance, the seriousness of Mr. Liu's late-stage liver cancer was well known – the Chinese hospital where he was kept issued grave updates on his health, warning this week that his organs were failing.

He died as Mr. Johnston and Mr. Xi exchanged pleasantries.

"You are an old friend of the Chinese people," Mr. Xi told Mr. Johnston.

"I'm willing to make joint efforts with you to push forward Sino-Canadian relations to achieve new levels of co-operation and communication," the Chinese President added. He later called for the two countries to "initiate negotiations on a free trade agreement as soon as possible," state media reported.

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Mr. Johnston reciprocated his host's warm feeling. "Mr. President, it's wonderful to be back in China. I feel I've returned home," he said.

"We are especially grateful to you for making time for us."

The two men later looked on as Chinese and Canadian officials signed a pair of deals meant to create new ties between the two countries. Canada pledged to co-operate on the development of China's winter Olympics and Paralympics, and signed on to a new China-Canada joint committee on culture.

Then the meeting broke and the Canadians, including Carla Qualtrough, Minister of Sport and Persons with Disabilities, Bardish Chagger, Minister of Small Business and Tourism, and NDP leader Tom Mulcair, moved to a formal dinner with Mr. Xi.

Hours later, Foreign Affairs Minister Chrystia Freeland issued a statement eulogizing Mr. Liu as a "giant of humanity" who "believed in the human quest for freedom, the certainty of political progress and the importance of dispelling hatred with love."

He "selflessly declared that he would 'forever be living with the guilt of a survivor and in awe of the souls of the dead.' Today, the world stands in awe of Mr. Liu, his example and his quest for a better world."

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The statement said Mr. Liu "spent many years imprisoned for peacefully exercising his right to speak freely," but its tone contrasted with more damning responses from ministers in other countries, including British Foreign Secretary Boris Johnson, who said of Mr. Liu's treatment by China: "This was wrong."

And the pictures of Mr. Xi and Mr. Johnston smiling together near the moment of Mr. Liu's death created a striking image of the uncomfortable situations that can arise conducting affairs with a regime in which the crushing of dissidents and promises of international amity are carried out by the same people.

The Canadian government in a recent internal report said China's treatment of its people is worsening. "In the past two years the overall trend for human rights continues in a decidedly negative direction," says the report, which was obtained by The Canadian Press.

Mr. Trudeau's government has urged China "to do more" on human rights, but also approved Chinese investments in sensitive sectors.

Canada has not, however, been silent on Mr. Liu. John McCallum, the former cabinet minister who is now ambassador to China, said in a statement on Wednesday: "We have repeatedly expressed our grave concerns about Mr. Liu's well-being to the Chinese authorities. … We continue to appeal to China to uphold its international human-rights obligations, including freedom of expression, and to release those imprisoned for exercising their rights."

And the Governor-General's trip has sought to elevate Canadian connections with China in areas such as innovation, elder care, support for the disabled and hockey – hardly unsavoury goals.

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"We have to sell Canadian people that stronger ties with China is a good thing. And I am convinced that they are," Mr. McCallum said on Thursday in a meeting with the Communist Party Secretary of Beijing, who is also president of the city's Olympics organizing committee.

Conducting sports diplomacy will allow China to benefit from Canadian expertise on ice and snow – while also improving access to China for Canadian coaches, athletes and businesses before the 2022 Winter Olympics, Ms. Qualtrough said.

It "definitely is part of the trade agenda," she said. But co-operating on the Olympics and Paralympics also gives Canada a new platform to "advance the agenda for people with disabilities in China through the hosting of the games," she said.

Mr. Qualtrough offered sports, too, as a potential way to bridge some of the thorny questions with China. Forge bonds through sport, she said, and it can be "easier to have more difficult, heavier diplomatic discussions."

Canada is far from alone in grappling with how to navigate China's central importance to the global economy while maintaining a commitment to human rights.

On Thursday, U.S. Secretary of State Rex Tillerson said Mr. Liu "dedicated his life to the betterment of his country and humankind, and to the pursuit of justice and liberty" and "embodied the human spirit that the Nobel Prize rewards."

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He was joined by other leaders in expressing anger and sorrow. German Chancellor Angela Merkel called Mr. Liu a "courageous fighter for civil rights and freedom of expression."

But U.S. President Donald Trump expressed enthusiastic praise for China's President on Thursday, calling Mr. Xi "a friend of mine. I have great respect for him."

"He's a very talented man. I think he's a very good man," Mr. Trump said.