Relations between China and Canada have been strengthening over the past few months, as business deals and treaties are under review. However, University of Calgary professor Josephine Smart said more caution should be placed on decisions that affect Canadian business and resources.
“Dancing with the Dragon: Canadian Investment in China and Chinese Investment in Canada,” a new report from the U of C’s school of public policy, urges Canadians to question how much they are willing to sacrifice to Chinese foreign investment.
“Dancing with the Dragon,” which came out on September 6, coincided with the Asia Pacific Economic Cooperation Leaders’ Meeting in Vladivostok, Russia, where the Canada-China Foreign Investment Promotion and Protection Agreement was signed. FIPA is a legally binding treaty designed to promote bilateral investment between China and Canada.
According to Smart’s report, Canada’s investment in China in 2011 was $4.5 billion, while China’s investment in Canada was $10.9 billion.
With China expected to become the world’s largest economy, Chinese-Canadian relationships are coming into focus, said Smart.
Smart, who teaches anthropology and specializes in Chinese economics, wrote “Dancing with the Dragon” with the intent of creating discourse about the consequences of doing business with China.
“I want people to think about long-term pain versus short-term gain,” said Smart regarding government policies enacted without consideration of the potential long-term effects of selling Canadian resources to foreign investors.
In the report, Smart draws attention to Chinese foreign direct investment policies and their protectionist position towards “strategic resources.”
“The Chinese government has stated very clearly that there are a number of sectors in their economy that they consider as key sectors, or what they call ‘pillar’ sectors,” said Smart. “They are of central importance to national security and they don’t allow wholly owned foreign investment.”
According to Smart, these ‘pillar’ industries include natural resources like water, oil, gas, coal, mining, public goods and services, telecommunications, military technology, heavy industries and food production.
China welcomes foreign investors in these key sectors, but only under the condition that they will be partnered with state-owned enterprise.
“It is their way of safe-guarding sectors of the economy that they consider key to future national security interest,” said Smart. “As a country with wonderful resources, we have one of the greatest holdings of clean, fresh water in the world, we have tremendous agricultural production capacity and we have the privilege of being a food export country. How can we, as a nation, not safe-guard our production capacity?”
Smart suggests that the Canadian government become more cautious in foreign investment. She also recommends involving more citizens in the process.
“A democratic system can come up with a coherent strategy,” said Smart. “Why do we not have any discussion with Canadians and within the government about the future strategic plan for our country?”
According to a Sun News Abacus Data poll, 69 per cent of respondents opposed the China National Offshore Oil Corporation takeover of Nexen, the Calgary based oil and gas company.
Industry ministers will decide whether the $15.1 billion takeover by a Chinese state-owned enterprise is in the best interest of Canada.
“I think the question of if this is good or not needs to be more widely discussed and more carefully considered,” said Smart.