Trudeau right to block takeover

It’s unlikely Justin Trudeau was in a celebratory mood last week after he and his cabinet blocked the Chinese takeover of the giant Canadian construction firm Aecon Group.

Wooing China as a trading partner has been one of his most celebrated priorities since becoming prime minister, and saying no to this particular deal at this stage in the courtship has angered the Chinese and thrust bilateral relations into a deep freeze.

Yet despite the setback this will mean for Trudeau’s agenda, and however difficult the decision was for him to make, he did the right thing for Canada.

There’s enough evidence to conclude the $1.5-billion sale of one of Canada’s biggest construction firms to an enterprise that’s 63 per cent owned by the Chinese state poses an existential security threat to Canada and is simply not in its national interest.

It’s frustrating, if understandable, that Canadians cannot read the full findings of the national security review of the takeover bid and understand all the reasons for the government’s decision.

What Canadians should know is that China Communications Construction Co., — the failed bidder for Aecon — is basically owned and managed by the Chinese state, which is itself essentially controlled by the country’s president and ruler for life, Xi Jinping.

This means China Communications Construction Co., exists not just for commercial purposes but to serve the Chinese state. And since that state is majority owner, the servant part of the job description is likely the most important one.

While China should be engaged and not shunned, it remains an unreliable partner. And we can’t ignore the costs of greater engagement.

China stands accused by many of its overseas competitors, including the Americans, of stealing intellectual property, counterfeiting famous commercial brands, pilfering trade secrets and offering companies a slice of the Chinese market — if they share their technology.

There are compelling reasons to believe China does all this, as much as it protests to the contrary.

That’s why Trudeau wisely declared China should not own and control such an important and essential Canadian firm.

Aecon is a major player in critical Canadian infrastructure projects. It’s a partner in the $2.7-billion refurbishment of Ontario’s Darlington Nuclear Generating Station. It’s building the massive Site C hydro-electric dam in British Columbia.

Were Aecon owned by the Chinese state — and that country’s policy is to have Chinese Communist Party members in its enterprises — the Chinese state would have easy access to sensitive information of vital interest to Canada.

The federal government tried to find a way around this that would allow the deal to proceed. It failed and so did the deal.

Canada is not the only country to act on such suspicions. Australia stopped a Chinese state-owned enterprise from buying control of its largest electricity distributor. It just couldn’t surrender sovereignty over its electrical grid to a country that plays by its own rules.

There will, of course, be economic and diplomatic fallout from Trudeau’s choice. Prospects of a free trade deal with China that would offer a vast, expanding market for Canadian exports have been dashed for now. China may also retaliate by limiting Canadian canola exports.

Trudeau’s response should be to keep travelling the road to a new and better relationship with China — even if he’s just hit an unavoidable bump along the way.