My kid went back to China twice with the grandma. According to the Chinese Consulate General at Vancouver, the child can ONLY get Chinese Travel Document if none of the kid's parents is Permemant resident or citizen of Canada. Chinese goverment only admit this kid has chinese citizenship. I guess Chinese Embassy at Ottawa should have the same rule, but the best thing is to call them and ask, which was I did the first time when my kid went back to China.
Chinese travel document is used for people with Chinese Citizenship but not good for applying passport, for example kids . It is like a simplified version of Chinese passport with two years expiry date.
The benefit of going back to China with Chinese travel document is that you don't need to extend the expiry date of visa, because you enter China as a chinese citizen and the canadian custon won't check the consent letter (授权书) even the kid is traveling without either parent. It seems like they don't care the kids with other citizenship than Canadian. Another small benefit is that chinese travel document with longer expiry date (two years) than Canadian visa (six months) and it's produced faster and costs cheaper than Canadian Visa. I would like to call it “物美价廉"。
Canada has dual-citizenship, so the birth certificate proves your kid is a Canadian. This fact won't change except your kid revokes his/her citizenship through certain procedure.
Evenif you plan to bring your kid to Canada some time later, your can either apply for Canadian passport here (only three years expiry for kids) or apply at Canadian embassy/ consulate general in China. Your kid can use his/her Canadian passport when entering Canadian border, but he/she has to have a chinese travel document/passport when he/she leaves Chinese border (Canadian visa isn't necessary on his/her chinese travel document/passport). So you'd better keep your kid's travel document since the Chinese custom will check the entry stamp when the kid enters China.
I once did quite long research about this and hope it helps.