Royalties are the price Alberta charges companies for the right to develop a resource, such as the oilsands. (CBC)

When China Investment Corp. invested $1.7 billion in Teck Resources stock in July, it looked like another step in the Chinese government's much-discussed strategic plan to buy resources while they're cheap.

China has reserves of billions, perhaps trillions, of U.S. dollars, accumulated by its massive exports of manufactured goods to the West. It also has a growing need for raw materials to feed those factories.

Put the pile of cash together with the growing long-term demand and low commodity prices, and it all adds up: China can recycle that money by buying resources, or at least the companies that produce them, or making loans in exchange for commodities, as it has done with Russia and Brazil.

The thesis is widely accepted, but so far, the Teck deal is not just the tip of the iceberg in terms of Chinese investment in Canadian mining; it's about 90 per cent of the total.

Aside from the Teck deal, where the government-owned China Investment Corp. is buying new subordinate-voting stock, "they haven't been that active so far," a mining executive said.

The other deal, signed in early June, involves Consolidated Thompson Iron Mines Ltd.'s development in northern Quebec.

Wuhan Iron and Steel (Group) Corp. agreed to invest $240 million US in the company and the development of the Bloom Lake property, and buy ore from the project once it's operating.

Offshore petroleum appeals

That's not quite the case in the petroleum industry, where there have been several high-profile takeovers of companies listed on the TSX. But even in those cases, the deals have less to do with Canadian resources and more to do with Toronto stock listings for companies with international operations.

Just days before the Teck stock purchase, Addax Petroleum agreed to a $8.27-billion takeover offer launched by the Chinese government's Sinopec International Petroleum Exploration and Production Corp.

The deal, which has been described as the biggest Chinese takeover ever, presented Addax shareholders with a windfall. But its effect on Canada is minimal; the company is controlled by the Addax and Oryx Group of Switzerland, and operates in Iraq, offshore West Africa and three West African countries, Nigeria, Cameroon and Gabon.

The purchase is Sinopec's second "Canadian" target since September 2008, when it paid $2 billion for Tanganyika Oil Co. Ltd., a company with assets in Syria.

There was a Canadian mining deal before Teck, but it was much like the Addax and Tanganyika takeovers. Aluminum Corp. of China (Chinalco) bought Peru Copper in 2007 for $840 million. The company was based in Vancouver, but its main asset was the Toromocho project, a huge undeveloped Peruvian copper deposit.

Dabbling in oilsands

China has made several smaller investments in Alberta's oilsands. Sinopec holds a half share in the Northern Lights project, with French company Total Canada owning the rest. The project is potentially huge, holding more than one billion barrels of bitumen.

Chinese-controlled CNOOC Ltd., a giant oil multinational, purchased one-sixth of privately held MEG Energy Corp. for $150-million in 2005, a small investment in terms of oilsands, that was to give the CNOOC an introduction to the area.

Aside from the deals that are publicized because they involved publicly-traded companies, "there have been quie a few smaller deals," said Sarah Kutulakos, executive director of the Canada-China Business Council.

But overall, the Chinese investment in Canada is tiny. Federal statistics from the end of 2008 put Chinese foreign direct investment — an investment involving a long-term relationship, a lasting interest and a significant influence on the management of the company — at just $2.75 billion. (Canadian direct investment in China was nearly $3.6 billion.)

Chinese investment discouraged

The small figure may be the result of Canadian policy. Canada discouraged Chinese investors a few years back, said Lorna Wright, a professor of international business at the Schulich School of Business at York University in Toronto.

She cited the Minmetals/Noranda case, where the Chinese company Minmetals and Canada's Noranda couldn't reach a deal in 2004.

Now, however, the chill on Canada-China deals appeals to be easing. Canadian Trade Minister Stockwell Day recently spent a week in China, trying to incease trade and investment.

"If there was a welcome mat out, they would like to invest," Wright said.

The credit squeeze and lower commodity prices have pressured many resource companies. That has made them more receptive to Chinese investors, Kutulakos said.

"Our resources are very appealing to them," she said, suggesting that deals like Teck may become more common in the future.