Risks from Chinese takeovers mean Canada needs tougher investment rules: experts

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Canadian officials should tighten rules on foreign investment by state-owned entities from authoritarian countries, such as China, and consider making permanent rules imposed on takeovers during the coronavirus pandemic, experts say.

The House of Commons industry committee is holding hearings on whether there should be a freeze on large foreign takeovers of Canadian businesses and whether the Investment Canada Act needs changing.

As part of those hearings, the committee heard on Monday about the need to balance the impact any regulatory changes could have on investor confidence with the threats posed by allowing Chinese firms either owned by or tied to the state to takeover Canadian businesses.

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However, the concept of how “strategic” should be defined remains a key question and one MPs should try to define more clearly as they recommend how the government should move forward, experts said.

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“We’re not here to make China any favours. We especially shouldn’t at this time. But some investments might still be in the interests of both and we should cautiously pursue those while restricting others,” said Daniel Schwanen, vice president of research at the C.D.

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