Misperceptions of Chinese Investments in Canada and Their Correction: Evidence from a Survey Experiment

Foreign direct investment (FDI) from China has recently met with increasing public opposition in many host nations. Why does the public respond less favourably to Chinese FDI than to FDI from other countries? We explore this question by conducting a series of survey experiments in Canada, where the majority of the public holds a negative opinion of Chinese investment. We find that the bias can be attributed to innumeracy about the relative size of China's FDI and misinformation about investment rules that govern FDI projects in Canada. Correcting both misperceptions substantially reduces the bias of respondents against FDI projects from China. These results suggest that corrective information can lead to positive change in public attitudes, a finding that has important policy implications for Canadian leaders hoping to expand the country's business ties with China.