Expert fears China’s strategic takeovers
• Canada needs to clarify its foreign investment rules, as the COVID-19 pandemic puts the country at heightened risk of strategic takeovers by aggressive foreign actors like China, several international affairs experts say.
In testimony before a House of Commons committee on Monday, experts repeated the long- held claim that Canada needs to more clearly define what it considers its “strategic interests,” particularly when the economic fallout from the pandemic has made many Canadian firms ripe for acquisition. Ottawa has in recent months signalled that Canadian assets are at a higher risk of foreign takeovers, and has moved to review proposed acquisitions more closely.
Charles Burton, senior fellow at the Ottawa- based Macdonald- Laurier Institute, said potential takeovers by Chinese state- owned enterprises ( SOES) are particularly worrisome, as they could be used on behalf of the Communist Party of China to advance its foreign strategic interests
“Most of them, if not all of them, are serving the interest of the Chinese state, and are not simply about enhancing the profitability of the company in Canada through a shrewd investment,” he said.
Ottawa has for years struggled to strike a balance between attracting foreign investment and fending off politically- motivated takeovers by foreign states. Those concerns reached new highs in 2013 when Ottawa threatened to reject — but ultimately approved — China’s $15-billion purchase of oilsands giant Nexen. More recently, in 2018, the Liberal government rejected the takeover of Canadian construction firm Aecon by a Chinese SOE, citing national security risks.
Burton on Monday reiterated concerns about Chinese- led takeovers in strategic assets like energy or telecommunications. Many investments made by Chinese firms are done purely out of strategic, rather than commercial interests, he said — like those being pursued under China’s Belt and Road initiative. “Many projects funded by China are in fact money losers, but serve the People’s Republic of China’s geostrategic interest all the same,” he said.
In April, Industry Minister Navdeep Bains put forward policy changes allowing Ottawa to more closely scrutinize “investments of any value, controlling or non- controlling” by foreign companies, particularly those involving public health or the supply of critical goods and services. Attorney General David Lametti has also put forward draft legislation that would extend timelines allowed for the review of foreign takeovers.
Other experts on the panel disagreed Canada is at a higher risk of foreign takeovers, saying the hundreds of billions pumped into the economy by the federal government and Bank of Canada has kept companies relatively healthy.