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The slump — evident in nearly all the sectors that traditionally attract interest from Chinese firms — is partially the result of capital controls imposed by Beijing in 2016 and 2017. China is attempting to stabilize its currency — down 10 per cent at its weakest point last year — by preventing money from fleeing the country via overseas investments.

But a host of other factors are also likely at play, Houlden said, including Chinese investor caution due to poorly performing Canadian energy investments and an overall chill cast by a year of fraught relations between Ottawa and Beijing.

In May, Ottawa blocked the $1.51 billion takeover of the construction firm Aecon Group Inc. by a Chinese state-owned enterprise, citing national security concerns. The federal government is in the midst of another comprehensive national-security review on the involvement of Chinese telecom giant Huawei in Canada’s eventual 5G mobile network.

And Ottawa is locked in an escalating diplomatic row with Beijing over the detention of Huawei senior executive Meng Wanzhou, arrested in Vancouver on a U.S. extradition request — a move that was followed by the detentions of Canadian citizens in China.

Photo by AP Photo/Andy Wong

Though the Meng case is too recent to have had an impact on the investment data, the rising scrutiny of Chinese firms in Canada is likely to have already taken a toll on investment flows, Houlden said.

“In general I think there was a chilling effect due to investment turndowns that predate the Meng case,” he said. “Mergers and acquisitions are expensive, they are time consuming, there’s a lot of uncertainty, particularly in the case of China where security concerns are more likely to come into play. Do you really want to go through a year of litigation and then get turned down? Those things have a cumulative effect.”