The Foreign Investment Protection Agreement: Will it Lead to Greater Canadian-Chinese Bilateral Investment?

Abstract

In September, 2014, the Canadian government ratified the Foreign Investment Protection Agreement (FIPA) with China. The move was heralded as a milestone in Canadian-Chinese relations and a harbinger for an increase in Canadian-Chinese bilateral investment. But does the experiences between China and other countries whom China has a similar agreement with support this narrative? After comparing foreign direct investment (FDI) data between China and other OECD countries that have BITs with China, there appears to be no significant relationship between a BITs and FDI. One implication of this is that Canada cannot rely on the FIPA to attract investment from China; it needs to be active in other areas that may be conducive to attracting FDI. Given the political nature of Chinese outward investment decisions, this paper recommends that Canada engage China politically and address other policy areas that are seen as obstacles to FDI in order to attract FDI.