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Chinese Investment in Canadian Energy Sector Hits Five-Year Low

The Canadian energy sector is now among the least favoured sectors for Chinese investment, with only CAD$400 thousand invested in the first quarter of 2016, which marks the lowest quarter for new Chinese investment into the Canadian energy sector since Q3 2010. That quarter had no investment into Canadian energy, but was preceded by C$2 billion in investment in Q1 2010 and C$6 billion in Q2. For more details on recent trends in Chinese investment in Canada, see our Q1 2016 update.

In contrast, after Q1 2013’s record C$20 billion in new investment into energy, new investment flows have averaged around C$240 million per quarter. The decline in investment is even more apparent across years: in 2014, the average quarterly investment flow was C$600 million, for a yearly total of over C$2 billion; in 2015, the average quarterly investment flow was just C$120 million, for a yearly total of less than C$500 million. The number of quarters seeing little investment is also increasing: between 2010 through 2012, only two quarters had less than C$100 million in new investment; between 2013 through 2015, that number had risen to seven, indicating a new normal for investment flow amounts.

C$30 million was invested by China into Canadian energy in Q4 2015, whereas Q3 had C$400 million. The last quarter higher than Q3 2015 was one year before, Q3 2014, which had C$1 billion in new investment and was also the most recent billion-dollar-plus quarter. Energy’s drop in Chinese investment flows has been partially counteracted by gains in other sectors, with transport and construction going from C$0 in new investment in 2014 to C$500 million in 2015, while entertainment and commercial real estate’s new Chinese investment grew by C$1 billion, or over 600%, between years.

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