Whether its telecoms or energy supplies China continues to find itself barred from entry to new markets. Canada’s Prime Minister plans to keep foreign SOEs from taking over Canadian companies. The Canadian government accepts the fact that slower growth will result to ensure that foreign control does not encompass key Canadian companies and resources. The controversy occurred because of a bid to purchase a Canadian company with the rights to the third largest oil reserve in the world from a Chinese company. Chinese SOEs continue to look for places to invest their capital and both the Canadian and US governments have seen fit to question the security risks if one such foreign SOE decided to be used by the Chinese National Government as a piece of soft power.
Due to this bar on SOEs, foreign investment in Canada has slowed and only 2.3% of Chinese foreign investment occurred in Canada. Prime Minister Harper further muddied waters by telling a business-school audience that, “When you are dealing with large state investors — foreign governments as the investor — I think it would be foolish for the Canadian government to provide absolute clarity.” This seems a poor indicator for investment in Canada. China has found other outlets for its SOEs to invest in. As the US companies continue to set up shop in China and face strict regulations Chinese SOEs may face even worse regulation… At least in Canada.
One point Prime Minister Harper made that seemed particular interesting was, “Canada can’t assume “that the country’s only interest would be in simply letting the so-called market, which isn’t always a free market, decide all these things.””
2 Responses to Canada Verses China
Sometimes a country views it wise to keep foreign governments out of its economy. It is viewed as a major security risk. Congress blocked the sale of Huawei products in the US, because it feared a potential security risk from builtin backdoors in the software. Despite the fact that Huawei denies such allegations and that investigations found no obvious concerns. Huawei has since given up on attempts to gain access to the US market.
I remember a similar thing happening in the United States over the summer with a meet producer. I never really heard the end of the conversation over whether we should let a Chinese SOE take control over some of our food resources, but clearly this is a sign that China is interested in more foreign investment.