Chinese investments in Canadian natural resources and technology sectors pose significant security implications, primarily by creating strategic dependencies on a foreign state and exposing critical sectors to economic and political coercion.

The Canadian government has increasingly viewed these investments through a national security lens, moving away from a more open approach.

Critical Minerals and Strategic Vulnerability 

The most significant security concern is China's dominance in the supply chains for critical minerals, which are essential for green energy technologies and military applications.

• Supply Chain Control: China controls a substantial majority of the global production and processing of key critical minerals like lithium, cobalt, and rare earths. By investing in Canadian mining companies, particularly those involved in developing these minerals, China can further solidify its control over the global supply chain. This creates a vulnerability for Canada and its allies, as China could restrict exports or manipulate prices to gain political leverage.

• Political Coercion: Canada's reliance on Chinese investment for mining projects can make it susceptible to coercion. Chinese companies have often been described as "investors of last resort" for high-risk Canadian mining ventures. If Canada were to take a policy stance that Beijing opposes, China could threaten to withdraw this investment, thereby jeopardizing projects and harming the Canadian economy. In 2022, Canada took a firm stance by ordering three Chinese companies to divest their shares in Canadian critical mineral firms, a clear sign of the government's shifting priorities.

Technology and Data Security 

Chinese investments in Canada's technology sector, particularly in telecommunications, present a direct national security threat.

• Espionage and Data Access: Concerns about Chinese state-affiliated companies like Huawei and Hikvision are a primary driver of this security review. The fear is that these firms' equipment could contain "backdoors" that allow the Chinese government to conduct espionage or access sensitive data on Canadian citizens and businesses. In 2025, the Canadian government took a significant step by ordering a Chinese surveillance equipment manufacturer to cease its operations in the country. This action highlights the government's commitment to protecting its digital infrastructure from foreign state-sponsored espionage.

• Intellectual Property and Strategic Technologies: China's strategy of "Military-Civil Fusion" is a major concern. Through investments in Canadian tech startups and R&D, Chinese firms can gain access to intellectual property and cutting-edge research in areas like artificial intelligence, quantum computing, and advanced materials. This technology could then be leveraged to advance China's military and intelligence capabilities, posing a direct threat to Canadian security.

Canada's Evolving Policy Response 

The Canadian government has acknowledged these threats and is actively adjusting its policies to address them. The Investment Canada Act, which reviews foreign investments for national security concerns, has been updated to explicitly consider "economic security" as a factor. This new framework allows the government to review investments that could create strategic dependencies or undermine Canadian control over key innovation sectors. The government is also promoting its own Critical Minerals Strategy to attract investments from "like-minded" countries and reduce reliance on China.

Ultimately, while Chinese investment provides a valuable source of capital, its long-term security implications—including the potential for economic coercion and the risk of espionage—have led Canada to adopt a much more cautious and security-focused approach.