Is Canada ready for a closer relationship with China?

Report recommends policies for facilitating investment between two countries

CALGARY, Sept. 6, 2012 /CNW/ - A report published today by The School of Public Policy and authored by Josephine Smart addresses some of the major challenges Canada faces both in investing in China and managing Chinese investment into Canada. The author also proposes policies that could help Canada overcome these challenges.

"There is clearly more room for Canadian investment in China, but some cautionary notes are in order," Smart writes. One of these notes concerns China's economic system of "capitalism with socialist characteristics." Smart explains that the state can exercise its direct and indirect influence on corporate decisions and that this represents a major investment risk.

Smart also argues that corruption remains pervasive in China. "How investors deal effectively with demands for bribery - without causing unnecessary and sometimes extreme legal, reputational and financial costs - is a big challenge," she writes.

Preparing Canadians for investment in China comes down to building cultural competency. "The enhancement of government-funded China studies, and language training facilities, will be crucial to the development of capacity building in Canada," Smart writes.

Here at home, China's thirst for strategic resources is expected to bring about more and more investment into Canada in the years to come. Chinese interest in the energy sector is clear, but this interest is likely to broaden to include farmland and agricultural production.

Smart argues that Canada is well-advised to start formulating a policy stance around how much of our food system we are willing to hand over to foreign control. Greater government inputs into food safety standards compliance in imported products should also be a priority according to the author.

The report can be found at www.policyschool.ucalgary.ca/publications

SOURCE: The School of Public Policy - University of Calgary

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