Chinese Lessons: State Owned Enterprises and the Regulation of Foreign Investment in Canada

A recent influx of Asian investment is changing the character of the Canadian oil and gas industry and reviving old debates on the regulation of foreign investment. Particular attention has been placed on investment by state-owned enterprises (SOEs), driven in part by public suspicion about investment from China, which has been the largest source of SOE capital flows to Canada. Recent amendments to the Investment Canada Act have made SOE investment more difficult and have raised questions about the country’s attractiveness as an investment destination. The paper makes the case for nondiscrimination of SOEs in the investment review process. In the context of a policy framework that is fundamentally supportive of inward FDI, the Canadian government does not require a set of redundant measures to protect against the relatively low risk of undesirable investment.