CPP board still bullish on China de­spite Huawei row

Calgary Herald - - FINANCIAL POST - EUAN ROCHA

MUM­BAI The Canada Pen­sion Plan In­vest­ment Board (CPPIB), the coun­try ’s big­gest pub­lic pen­sion fund, plans to con­tinue de­ploy­ing cap­i­tal in China, de­spite po­lit­i­cal ten­sions be­tween the two na­tions, CEO Mark Machin said on Wednes­day.

Af­ter the ar­rest of Meng Wanzhou, Huawei Tech­nolo­gies’ chief fi­nan­cial of­fi­cer on Dec. 1, China warned Canada it would face se­vere con­se­quences if it did not im­me­di­ately re­lease her.

Meng, who was granted bail on Tues­day, faces ex­tra­di­tion to the U.S., which al­leges she cov­ered up her com­pany’s links to a firm that tried to sell equip­ment to Iran de­spite sanc­tions.

“There’s a lot of rhetoric al­ways around these sit­u­a­tions. If we cut aside all of the rhetoric, I think China will take a ma­ture, cool­headed at­ti­tude to­ward prag­matic ne­go­ti­a­tions, so we won’t get too much wild ac­tion,” Machin said on a visit to Mum­bai.

CPPIB, one of the world’s big­gest in­vestors, has eight per cent of its funds in­vested in China and has pre­vi­ously in­di­cated it plans to in­crease that sig­nif­i­cantly in the next few years.

Machin, who pre­vi­ously headed CPPIB’s Asia busi­ness and spent more than two decades as an in­vest­ment banker in the re­gion prior to that, said CPPIB is go­ing to keep “en­gag­ing and de­ploy­ing ” cap­i­tal in China.

“We have lots of long re­la­tion­ships in China,” said Machin, adding he did not see any risk to hav­ing peo­ple on the ground there.

Machin’s com­ments come af­ter a for­mer Cana­dian diplo­mat was de­tained in China this week. It was not im­me­di­ately clear if the cases were re­lated, but Meng’s ar­rest has height­ened fears of reprisals against for­eign busi­nesses.

The United States is mulling is­su­ing a new warn­ing to U.S. ci­ti­zens, in­clud­ing busi­ness ex­ec­u­tives, trav­el­ling to China.

On trade ten­sions, Machin said: “At the mo­ment it doesn’t change the long term, but we hope, not just for our­selves but for ev­ery­body, that peo­ple can reach a prag­matic agree­ment and move on.”

With In­dia hav­ing much younger de­mo­graph­ics than China and be­ing fur­ther be­hind in in­fra­struc­ture devel­op­ment, Machin said CPPIB is ex­plor­ing dif­fer­ent op­por­tu­ni­ties in both coun­tries.

“In In­dia, longer term we con­tinue to be very pos­i­tive about de­mo­graph­ics and the grow­ing mid­dle class, con­sump­tion and GDP growth — all these trends con­tinue,” he said Machin.

“We are more likely to be in­vest­ing in as­sisted liv­ing and old-age care in China more than In­dia, while in In­dia look­ing at things like ed­u­ca­tion,” said Machin, whose fund just last week in­vested $123 mil­lion in In­dian on­line tu­tor­ing startup Byju’s.

He said he is not wor­ried about the out­come of the 2019 elec­tions in In­dia, as long as there is pol­icy con­ti­nu­ity. “If we are mak­ing in­fra­struc­ture in­vest­ments and real es­tate in­vest­ments, we need reg­u­la­tory and tax regimes that are pretty pre­dictable in the long term.”

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