Ban Chinese State-Owned Companies from Investment in Canada, Says China Expert

June 15, 2020 Updated: June 16, 2020

One of Canada’s top China experts is calling for a moratorium on investment in Canada by Chinese state-owned enterprises, citing major economic and security concerns. 

Charles Burton is an associate professor of political science at Brock University, senior fellow at the Macdonald-Laurier Institute’s Centre for Advancing Canada’s Interests Abroad, and former counsellor at the Canadian embassy in Beijing. 

He says enterprises owned by the Chinese Communist Party (CCP) try to invest in Canada in key sectors in order to advance the strategic influence of the regime. These enterprises then work with the military in China to gather information which they can use strategically, putting Canada’s security and economic interests at risk.

“A lot of things that we think are commercial enterprises are in fact actors whose primary mandate is to further the interests of the Chinese strategic and military apparatus,” Burton said at a June 8 meeting of INDU, the Parliamentary Committee for Industry, Science and Technology.

“[T]hese enterprises are closely connected to the ministries of the Chinese state that they respond to, and they are required to be governed by their CCP branch. … [T]hey are designed to realize the overall interests of the Chinese state and are therefore able to draw on all of the resources of the Chinese state, including military intelligence or other resources to engage in cyber espionage or the ability to acquire information about their competitor’s technology and economic operations.”

Burton said the cozy relationship between the Chinese military and state-owned companies allows these enterprises to acquire information about their competitors in key strategic sectors, such as high technology, through espionage or cyber-espionage and theft of intellectual property. 

The Chinese regime is unlikely to invest in any sector that doesn’t serve a specific political goal or advantage, he adds. 

“We have to look at any Chinese investment which is controlled by the Chinese Communist Party, which all of them are required to be by virtue of their citizenship in the People’s Republic of China,” he said.

“I think that we’ll find that most of them, if not all of them, are serving the interests of the Chinese state and are not simply about enhancing the profitability of a company in Canada through a shrewd investment by a private kind of consideration or corporate considerations—they’re state considerations.”

Burton’s comments come as Ottawa mulls allowing Chinese telecom giant Huawei access to Canada’s 5G network, despite warnings by the United States that approval of Huawei would mean Washington would limit intelligence sharing with Canada.

China’s Stake in Key Canadian Sectors

China has been buying key assets in Canada and other Western countries for a number of years.

In 2013, the Harper government allowed a Chinese state-owned company to buy Canadian oil giant Nexen.

The Liberal government under Justin Trudeau has allowed the takeover of two sensitive high-tech companies, drawing heavy criticism from intelligence and security circles. In one case, Canada allowed a Chinese company to buy Norsat, a Vancouver-based satellite communications firm. In another case, a Hong Kong-based company was allowed to buy Montreal-based ITF Technologies, a laser technology company.

Meanwhile, Chinese state-owned companies continue to purchase major stakes in Canadian companies.

A Chinese state-owned company has a major stake in Teck Resources, a Canadian mining company that was criticized in 2016 after appointing a Chinese regime official to its board of directors.

And state-owned Chinese mining company Shandong Gold’s proposed takeover of TMAC Resource’s Hope Bay gold mine in the Yukon is pending approval from Ottawa. 

David Harris, a former contractor for the Canadian Security and Intelligence Service (CSIS), told The Epoch Times that if the deal goes ahead it will pose serious risks for Canada on economic and national security fronts.

“I share the grave concern of a growing number of Canadians galvanized by the continuing and extensive involvement of the Chinese dictatorship in our economic lives, particularly in the post-COVID world,” said Harris, director of the intelligence program at INSIGNIS Strategic Research in Ottawa.

“The threat posed by Beijing to Canadians’ well-being is highlighted by this recent initiative that seems to have a possible predatory flavour, given the way in which state-backed buyers are poised to take control of a very significant strategic and security-oriented resource.”