‘We need to exercise more caution’

Cabinet subjected the deal to a full national security review in February.

Elcock also said a rejection of the deal could lead to a “sharp” response by China, potentially through soft moves like restricting Chinese residents from visiting Canada, in turn damaging its China-dependent tourism industry. Other experts warn that it would lead to a broader pullback of Chinese capital investment into Canada, or that it could sour CanadaChina free trade talks, which have yet to begin in earnest.

His comments came as part of a panel discussion hosted Wednesday by Ottawa-based think-tank Macdonald-Laurier Institute.

Duanjie Chen, a senior fellow at the MLI who has closely studied past Chinese takeovers, warned that China has “created monsters” over recent decades in the form of SOEs with the explicit intention of expanding its reach into developed countries through acquisitions.

“It’s not aiming at profit but market share—particularly in developed countries,” she said.

A growing number of developed nations including Canada, Australia, the U.K. and others, have levelled allegations against China in recent years for influence-peddling and political bribery. SOEs often lay the groundwork for that influence, experts warn.

“We could harm ourselves if we insist on opening our doors widely to a state who does not believe in the private property rights and free market system, but is using its SOEs in the disguise of commercial entities.”

China’s centrally owned enterprises have grown rapidly in recent decades, with the value of its overseas assets growing from around US$79 billion in the 1990s to more than US$900 billion today.

That growth is part of a mammoth plan by China in recent years to expand its global influence, most visible in its Belt and Road initiative that aims to dramatically expand its road, rail and sea ties with the rest of the world.

CCCC is central to the undertaking, according to analyst reports, and is China’s largest financial beneficiary of the plan.

Charles Burton, a former Canadian diplomat who served in China and associate professor at Brock University, said Canada could suffer financially if it rejected outright any foreign investments by Chinese SOEs.

“That said, clearly we need to exercise more caution than the current government is currently exercising,” he said.