Investment Canada Act Update: Canada Opens Door to Greater Investment From China and Expands Global Opportunities

Canada-China Trade and Investment Opportunities

The Governments of Canada and China have taken a number of significant steps in early 2026 to reset the trading and investment relationship between the two countries. In particular:

• On January 16, 2026, the Canadian Government released the Canada-China Economic and Trade Cooperation Roadmap, which represents a commitment from both countries to “build healthy, stable and sustainable economic and trade relations under the new Strategic Partnership between Canada and China.” The Roadmap states (1) “the Canadian side welcomes Chinese investments in Canada in areas such as energy, agriculture, consumer products, and other sectors,” (2) “both sides commit to further improving the transparency for foreign investments in accordance with their domestic legal frameworks,” and (3) “both sides commit to supporting two-way investments and trade in clean and conventional energy.”
• During the same week, Canada and China further strengthened their investment ties through a significant trade agreement that reduces tariffs on electric vehicles (EVs) from China and canola from Canada, aiming to enhance economic cooperation and create new opportunities for Canadian and Chinese businesses. The agreement allows for the import of up to 49,000 Chinese EVs at a reduced tariff rate of 6.1%. This is a significant decrease from the previous 100% tariff imposed in 2024, which was part of a broader trade dispute.
• On January 20, 2026, the Federal Court of Canada set aside a November 2024 order from the Canadian government to close TikTok’s Canadian operations based on national security concerns, sending the matter back to the Minister of Industry for review. The Federal Court decision was reportedly the result of an agreement between TikTok and the Canadian government under which a fresh national security review process would be initiated.

Additional Expansion of Foreign Investment into Canada (United Arab Emirates, Qatar, Australia, India)

In addition to reshaping the Canada-China investment relationship, the Canadian government has also been making significant efforts to expand trade and investment from other sources, including:

• Entering into a foreign investment promotion and protection agreement (FIPA) with the UAE in November 2025 to provide a framework for enhanced predictability and certainty concerning bilateral investments between Canada and the UAE. In connection with the announcement of the FIPA, the UAE committed to investing up to C$70-billion in energy, artificial intelligence, logistics, mining and other priority national and strategic industries in Canada.
• Announcing an agreement to conclude negotiations on a FIPA with Qatar by summer 2026 to enable Canadian businesses to more easily expand their operations in, and to attract investment from, Qatar. The agreement, announced on January 18, 2026, was accompanied by a commitment from Qatar to make significant investments in Canadian nation-building projects.
• Entering into a trilateral technology and innovation partnership with Australia and India: the Australia-Canada-India Technology and Innovation (ACITI) Partnership, in November 2025, pursuant to which the parties agreed to strengthen cooperation in critical and emerging technologies, to complement existing bilateral initiatives. ACITI will emphasize green energy innovation, resilient supply chain development, including in critical minerals, and artificial intelligence adoption.

Implications for Businesses Investing in Canada and the Investment Canada Act

Even without formal amendments to the Investment Canada Act (ICA), these steps — individually and especially collectively — represent a significant evolution in Canada’s foreign investment policy.

In recent years, Canadian government officials have been highly skeptical of Chinese investments in certain sectors, and the ICA has recently undergone a series of amendments that provide the Canadian government with a greater ability to review investments from any jurisdiction on national security grounds, even where the assets being acquired are located outside of Canada. The ICA requirements have not changed: each foreign investment in Canada still requires a notification to the Canadian government and a national security screen, and more significant investments in Canada require a “net benefit to Canada” review and approval.

That said:

• Certain types of investments from China that were considered unlikely to be approved can be reconsidered, especially in areas explicitly identified by the formal policy statements (e.g., energy, agriculture, consumer products).
• The strengthening of relationships with China and other countries allows businesses to again explore various types of investments — such as joint ventures, strategic alliances or other forms of collaboration — which may undergo shorter reviews or may not be subject to ICA notification obligations.
• To the extent that an investment in Canada raises national security concerns, those concerns may be more likely to be addressed with undertakings or binding commitments rather than being rejected outright.

Canada’s new liberalized investment policy towards China and other countries is likely to manifest itself in changes to the way that the ICA is administered and enforced going forward, while the Canadian government remains focused on reviewing foreign investments under the ICA with a view to protecting Canada’s national security interests in key strategic sectors.

For further information on the implications of these developments for energy investment and Canada-China relations, please contact a member of our Competition, Antitrust & Foreign Investment group or Energy & Energy Infrastructure group.