Canadian public pension fund investments in China scrutinized
Some argue money enabling government’s persecution of Uyghur minority
Investments in China by Canada’s largest public pension funds are facing increased scrutiny amid worsening relations between the two countries and allegations that some of those investments are funding the oppression of China’s Uyghur minority.
Recently, representatives of the Ontario Teachers’ Pension Plan and the British Columbia Investment Management Corporation, which manages the pensions of B.C. public sector workers, told a parliamentary committee studying Canada-China relations that they had paused new direct investment in China because of the increasing risks associated with that country.
That pause came amid allegations of Chinese foreign interference in the 2019 and 2021 Canadian elections, and of Chinese state actors allegedly harassing Canadians who oppose the Communist Party. Earlier this month, Canada expelled a Chinese consular official, and China retaliated within hours, expelling a Canadian diplomat and saying that Canada had “sabotaged” relations between the two nations.
But Canada’s two largest public pension investors — the Canada Pension Plan Investment Board and Caisse de dépôt et placement du Québec — say they need exposure to the world’s second-largest economy to provide returns for Canadians, but they promise they can invest responsibly in China.
Michel Leduc, a senior managing director with the Canada Pension Plan Investment Board, says the fund is “very cautious about the types of assets that we are acquiring, and the different levels of political and geopolitical risk — rather than completely avoiding what will potentially become the world’s largest economy within the next 10, 15 years.” The pension plan has 10 per cent of its $536 billion in net assets in China.
Mehmet Tohti, executive director of the Uyghur Rights Advocacy Project, says Canadians’ pensions are being invested in companies that benefit from or help enable the Chinese government’s persecution of his people.
The UN Human Rights Office said last August that China is committing “serious human rights violations” against Uyghur people in China’s western Xinjiang region and called for further investigation into “allegations of torture, sexual violence, ill treatment, forced medical treatment, as well as forced labour.”
The Chinese government maintains it is fighting against terrorism and extremism in the region.
In 2021, the Canadian Parliament voted to describe the treatment of the Uyghur people by the Chinese government as a “genocide.”
Leduc says that while the fund is cautious about investing in China, he recognizes it’s not easy to trace supply chains when it comes to some products, like solar panels, because much of the world’s supply comes from a specific region in China. According to the U.S. government, almost half of the world’s supply of polysilicon — a key material in solar panels — is manufactured in China’s Xinjiang region, home to the Uyghur people. The U.S. says that several manufacturers of panels have been accused of using forced Uyghur labour. And because most of the world’s solar panel manufacturing takes place in China, it’s nearly impossible to tell which panels may include polysilicon from Xinjiang, U.S. officials say.
In November, Tohti told the parliamentary committee that Quebec’s pension fund manager has invested more than $2 billion in companies associated with the alleged Uyghur genocide or forced labour.
Hong Kong Watch, a United Kingdom-based non-governmental organization, says many Canadian pension fund managers are investing in index funds — a basket of various stocks of companies — that include firms linked to Uyghur forced labour or that have been involved in building internment camps for the oppressed minority. Those pension funds include Quebec’s Caisse, the B.C. public sector fund and the Alberta Investment Management Corporation.