The Globe and Mail
OTTAWA -- Natural Resources Minister Gary Lunn had a clear message for his hosts during a recent trip to Beijing Chinese investment in Canadian energy and natural resource sectors is welcome, but as minority interests in Canadian-controlled joint ventures.
Mr. Lunn travelled to China this month at a time when relations between Ottawa and Beijing appear to be on a rocky path.
The federal minister said he experienced none of the criticisms or concerns that another group of parliamentarians heard during a visit in October. He said Chinese officials, including Ma Kai, director of the powerful National Development and Reform Commission, remain enthusiastic about the bilateral partnership.
The tone was very positive, Mr. Lunn said in an interview yesterday. We talked about energy issues, we talked about trade relations, we talked opportunities for increased exports of Canadian lumber as they are looking to build housing for 15 million people a year. In every aspect, it was very positive.
The Natural Resources Minister said he assured the senior Chinese officials that Canada remains a welcome home to investment from their state-owned companies. But he told them the preferred route would be Chinese participation in joint ventures as minority partners.
There is no question there is a question about having foreign state-owned companies taking direct control of Canadian resources, Mr. Lunn said.
But I believe the correct model to pursue is joint ventures it's working well, you get Canadian expertise and people familiar with Canadian regulatory process and that's something I encouraged them to do at every step of the way.
Mr. Lunn said the two countries are now exploring the sale of Canadian uranium to help fuel China's massive expansion of nuclear reactors. But he said any sale would have to include agreements on non-proliferation issues.
The minister visited Beijing just a few weeks after a delegation of 10 senators and MPs travelled to China. Those parliamentarians said they encountered blunt talk about the increasing frostiness in Canada-China relations, and they voiced concerns this week that the tensions could hamper business relations.
In his fall economic update last week, Finance Minister Jim Flaherty announced that Ottawa would impose additional screening on proposed foreign takeovers by state-owned companies that don't operate under market principles.
Mr. Flaherty did not single out China or any other country that the rules might apply to, but Chinese state-owned oil companies are seen as less transparent and more organs of the government than a Western company such as Norway's Statoil ASA, which operates more like a private company.
Wenran Jiang, director of the China Institute at the University of Alberta, said Chinese officials fear the investment monitoring could result in a highly politicized process, similar to the one in the United States that derailed a bid by Chinese National Offshore Oil Corp. to acquire Unocal Corp.
Chinese investors already find Canada's regulatory regime quite complicated and added that an additional screening process would be viewed as discriminatory.
But Mr. Jiang said most Chinese companies are not looking for majority control in Canadian companies, preferring minority position along the lines of two recent investments in Canadian oil sands projects.
What the Chinese companies are looking for is to joint-venture with Canadian enterprise and being on the equity side, so when the product is sold on the market, they can get the profits. That is primarily the motive, he said.
What Mr. Lunn is saying to the Chinese is not much different than what the Chinese wanted.