Canada East Online
An expert in Chinese-Canadian relations says Canada should be trying to develop a strategy to persuade Chinese investment in projects like refineries to get better value out of oilsands crude, rather than shipping it to the United States for processing.
Wenran Jiang, director of the China Institute at the University of Alberta, says he senses a paranoia in Canada to embrace Chinese investment. And that fuels concern on the other side as well, he says.
"There is hesitation from the Chinese side to come in or not to come in," said Jiang, who has organized three bilateral trade conferences aimed at energy co-operation between Canada and China since 2004. "They've done some homework, but I don't think they know it very well."
Operating in northern Alberta's increasingly crowded oilsands is a complicated, fast moving landscape where the Chinese would need local expertise, he says.
There's a big difference between business interests from China moving into the global market now and the Japanese coming onto the world scene in the 1980s, he says.
"I would say the Chinese have funding, have the need for resources but they don't have brand name or the management skill that the Japanese were supposed to have when they marched through the world with Sony, Panasonic and whatever, you name it," said Jiang.
"They said 'we do things better, we do whatever under our management' 1/8. The Chinese don't have that at all - they want a joint venture," he said.
China sees Canada as a country which has no cost estimate for looming environmental protection, soaring labour costs to develop natural resources and no plan to explain how tripling the production of oilsands crude will be dealt with environmentally, Jiang says.
The province of Alberta has long said it will allow the free market to dictate what it is developed here and would provide no incentives for building refineries to process oilsands crude. But Jiang says it's important for Canada to be more than just a supplier of raw material for the United States, where it is refined and sent back at a higher price.
Although there has been much speculation about Asian interest in the oilsands, the only moves into the area by Chinese companies have been relatively small.
In fact, of the estimated $50 billion invested in the oilsands since early 1990s, Chinese interests account for only about $300 million, Jiang says.
State-owned China National Petroleum Corp. was rumoured to be interested in Husky Energy Inc (TSX:HSE) several years ago, but didn't follow through.
"If they had, they would be making huge profits," agreed Jiang. "That's another example that they don't have perfect calculations or marketing information."
CNPC recently said it had obtained lease rights to explore about 250 square kilometres of land in the oilsands of northern Alberta. But that's a minuscule investment for a company with 1.2 million employees said Jiang.
"They have not bought anything substantial here in Canada and I do not see them coming in a big way, either," said Jiang.