Bloomberg
Canadian Prime Minister Stephen Harper, critical of China's human rights record, is seeking to assure Chinese officials the Asian country remains a welcome investor in Canada's energy industry.
Two of Harper's senior cabinet ministers -- Trade Minister David Emerson and Finance Minister Jim Flaherty -- are in China this week canvassing for more Chinese investments and seeking to ensure better business ties.
Canada believes it ``can move on with a relationship cold on the political side and warm economically,' said Wenran Jiang, director of the China Institute at the University of Alberta. ``That has some risks in it. The Chinese are interested in Canadian energy and resource sectors, but not to the extent they are going to die for it.'
Flaherty is scheduled to meet China's Finance Minister Jin Renqing and central bank Governor Zhou Xiaochuan on Jan. 18. China is Canada's second-largest trading partner after the U.S., with a combined C$36.6 billion ($31 billion) of trade in 2005. Canada imported C$22.4 billion more Chinese goods than it exported to the country during the year.
Flaherty outlined plans in November to reduce barriers to foreign investment and said he will seek to develop a ``principle-based approach' to reviewing acquisitions from abroad. He singled out large state-owned enterprises with ``non-commercial objectives' as unwelcome investors.
Transparency
``The question is do you want non-democratic foreign governments buying your companies or your non-renewable resources in ways where the basic standards of openness and transparency are not respected,' said John Kirton, a professor of international politics at the University of Toronto.
China's state-owned companies have largely stayed away from Canada's burgeoning oil sands developments, in part due to concerns investments will trigger a political backlash, Jiang said. The oil sands contain the largest pool of reserves outside the Middle East, with more than C$100 billion in capital spending planned over the next decade by firms such as Total SA.
Chinese companies hold two minority stakes in Canadian oil sands interests, with both acquisitions made before Harper defeated the Liberal Party in elections last January.
Cnooc Ltd., which is 71 percent-owned by state-controlled China National Offshore Oil Corp., holds a 17 percent stake in Canada's MEG Energy Corp. China Petrochemical Corp., parent of Asia's largest refiner, owns a 40 percent stake in Canada's Northern Lights oil sands project with Synenco Energy Inc. The two investments were worth less than C$300 million combined.
More Spending
Canada would welcome more investment, Emerson said today in Beijing.
``We are open to and encourage Chinese investment in the oil sands business or other industries of the Canadian economy,' he said.
The visits this week will allow Chinese officials to outline their concerns about the relationship between the two countries, and consider future investments in industries including car manufacturing, said Paul Evans, chief executive of the Asia Pacific Foundation of Canada.
``This is partly about listening to the Chinese,' Evans said in a telephone interview. ``We haven't had the kinds of high-level contacts with the Chinese now for almost a year.'
Harper is betting a more assertive stance on human rights won't get in the way. After meeting with Chinese President Hu Jintao at the Asia-Pacific Economic Cooperation summit in November, Harper noted the Chinese weren't accustomed to ``frank' discussions with Canada.
`Sell-Out'
As Harper was boarding his plane Nov. 16 on his way to the summit, he said promoting trade shouldn't require the government to ``sell out' Canadian values.
The Chinese have been ``very willing to listen to open, candid comments on issues relating to democracy, freedom and rights -- that's not an issue,' Emerson told reporters later today in a telephone conference. ``So it's really us getting our act together as a country on trade and investment.'
Canadian Natural Resources Minister Gary Lunn held meetings in Beijing during the same week of Harper's comment to encourage Chinese energy officials to consider joint ventures with Canadian companies. The minister was accompanied by Pat Daniel, Chief Executive of Enbridge Inc., a Canadian company proposing a C$4 billion oil link between the oil sands and the country's Pacific coast.
``He encouraged joint partnerships,' Philip Jennings, a ministry bureaucrat at the meetings in Beijing, said in a telephone interview.
Investment Laws
The previous Liberal Party government was also wary of investments from the Asian country. Efforts by China Minmetals Corp. to acquire Canadian miner Noranda Inc. in 2004 prompted Emerson, then a Liberal minister, to seek changes in the country's investment laws to make it easier for the government to review transactions deemed threats to national security.
The Conservatives are making more of an effort to attract foreign investments, Emerson said in a Nov. 28 interview.
``We are being more open, more transparent and more assertive (politically), but we are equally being more aggressive on the trade and investment side,' Emerson said.
Trade between Canada and China trade grew 14 percent between January and November 2006, to C$38 billion, from the same period a year earlier, according to Statistics Canada.
To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net .