The federal government’s rejection of the proposed $1.5-billion takeover of Aecon Group by a unit of China Communications Construction Co. is a “setback” for the two nations’ trade relations – but the decision isn’t surprising, according to international trade lawyer Mark Warner.

“I’m not surprised, I would have been surprised had it gone through,” Warner, principal with MAAWLAW, told BNN Bloomberg in an interview Thursday.

“Obviously we want to develop the Chinese market and we want to get some kind of trade agreement with them and this is going to be a setback to that. But we have to do it in a way that doesn’t destroy our existing trade and investment relationships.”

Those relationships include allies like the United States, Germany and France – countries that have raised national security concerns associated with investments from Chinese state firms, Warner said.

“We’re really in line with our allies. Had we gone forward with something like this in infrastructure, a key sector like that, we would be an outlier.”  

Ottawa announced a full national security review of the deal for Aecon – the Canadian construction giant known for its involvement in projects such as Toronto’s CN Tower and the St. Lawrence Seaway – in February.

The Trudeau government faced a number of warnings from experts to proceed cautiously when weighing investment bids by Chinese state-owned firms.

China's embassy in Ottawa responded to Wednesday's move by warning it wasn't good for the countries' business relationship and that it would "seriously undermine the confidence" of Chinese investors.

But Warner said that China has been curbing outflows of foreign investment for some time now amid concerns with systemic risks.

“The Chinese will huff and puff,” Warner said.

“I think ultimately China has to play with someone, and we’re still a good country to play with. I think the fact that the government didn’t say ‘no’ right off the bat, they took it to last day … It’s an indication to China that we do want to do something with you, but help us.”

With files from The Canadian Press