Michael Kovrig Calls China ‘Uninvestable’: Implications for Canadian Businesses

Michael Kovrig, a former Canadian diplomat, has described China as increasingly “uninvestable,” recommending Canadian businesses reassess their approach to investing in China due to rising geopolitical risks. In an interview with BNN Bloomberg on Monday, Kovrig emphasized the importance of having an exit strategy for companies still dependent on the Chinese market. “If you can invest elsewhere just as easily, you should be prioritizing other markets,” Kovrig stated, advising that the risks in China may now outweigh potential benefits.

Kovrig’s remarks are informed by his personal experiences with China’s complex geopolitical landscape, having been detained in China for nearly three years. Alongside fellow Canadian Michael Spavor, Kovrig was taken into custody in apparent retaliation for Canada’s arrest of Huawei CFO Meng Wanzhou on a U.S. extradition request. The two were released in September 2021 following Meng’s deferred prosecution agreement with U.S. authorities.

Post-release, Kovrig has been contributing as a senior adviser for Asia at Crisis Group, a non-profit focused on conflict prevention. Despite attempts to improve Canada-China relations, such as Canadian Foreign Affairs Minister Melanie Joly‘s recent visit to China, Kovrig maintains that the geopolitical environment has become more intricate since his detention.

Kovrig stressed, “The risk-adjusted rate of return of a lot of involvement… is not worth it. The Chinese market has become increasingly uninvestable, both in terms of its likely expected rate of return but in particular the geopolitical risk.” With trade dynamics becoming more complex, recent rounds of tariffs highlight the challenges businesses face.

China’s investigation into Canadian canola imports, following Canada’s imposition of tariffs on Chinese electric vehicles and other goods, underlines these complexities. Kovrig predicts that Canada will increasingly look to strengthen its North American economic ties. He advocates for strategic economic derisking to “ensure that they don’t have the capacity to hurt us,” while cautioning that tariff implementation should be “intelligent and careful” to avoid unintended negative consequences.