Canadian newspaper The Globe & Mail said the Vancouver couple had been living in China since 1984 and opened a coffee shop called Peter's Coffee House in Dandong in 2008. The couple previously worked as teachers in southern China.
The western-style coffee shop had a view of traffic flowing across the China-North Korea border, said the newspaper, adding the couple had a side business helping holidaymakers plan tours to North Korea across the Yalu River.
It said the immediate whereabouts of the Garratts was unknown and calls to their coffee shop went unanswered.
The investigation comes a week after Canada took the unusual step of singling out Chinese hackers for attacking a key computer network and lodged a protest with Beijing. (Reporting by Brenda Goh; Editing by Paul Tait and by Michael Perry)