Dancing with the Dragon: Canadian Investment in China and Chinese Investment in Canada

While Canadian trade and investment with China is today relatively modest, with China well on track to displace the United States as the world’s largest economy, Canada must make it a priority to prepare for a future characterized by dramatically increased trade and investment between our two countries. This paper sheds light on some the issues and measures Canadian governments will have to consider as they look to establish safe and prosperous relationships with China. To begin with, Canadians choosing to invest in China must be prepared for the risk inherent in that country’s peculiar “capitalism with socialist characteristics.” The Chinese state continues to play an interventionist role in many significant sectors in the economy, and the strategy behind China’s overseas investment in countries such as Canada is specifically aimed at furthering China’s own national security goals and geopolitical influence. Canadians wishing to do business in China will also require great cultural competency. The cultural institution known as guanxi — in which gifts to sway influence are considered an acceptable, even desirable practice — persists in China, with even native Chinese unclear on where to draw the line between “good” guanxi and “bad” corruption. At home, Canadians may soon be forced to confront questions about how much of our own land security and natural resource security we are willing to compromise by permitting Chinese investment to gather up our farmland and key industries. Canadians should decide sooner, not later, how well our own strategic interests are served by permitting unrestricted Chinese investment in our economy. In anticipation of these issues, Canada’s federal and provincial governments should provide increased support for a more comprehensive training and research infrastructure that better prepares Canadians for the growing bilateral trade between our countries. They should also reinvest in the monitoring and regulatory enforcement for food and product safety to ensure that Canadians remain protected from unsafe Chinese imports.