China slowing down? Don’t worry about it – by Drew Hasselback (National Post – July 25, 2012)

The National Post is Canada’s second largest national paper.

Earlier this month we saw some figures that suggest China’s rapid economic growth is starting to slow. China’s second-quarter GDP rose by 7.6%, slower than the 8.1% reported in the first quarter.
 
The slowdown in headline GDP might shock those who are banking on China’s future prosperity to sustain commodity prices. But Canadian lawyers doing business in that part of the world are less worried about it.
 
For one thing, Canadian lawyers have learned not to focus too narrowly on China, but rather to target the business opportunities available through Asia. “Your focus is on China because of the GDP numbers, but this is Asia, and the Koreans are still very involved in this,” says Jay Kellerman, a mining lawyer with Stikeman Elliott LLP in Toronto.
 
For another, Canadian lawyers have come to understand that business flows to and from China can be choppy. Much of Canada’s resource business is built on the foundation laid by the oomph Chinese demand has built into commodity prices. News of a slowing Chinese economy might set off alarm bells for an already nervous resource industry — but this doesn’t necessarily translate into concerns over deal flow.

And cue the events of this week. Things seemed quiet, and then bam, CNOOC announces a US$15.1-billion friendly, all-cash bid for Nexen Inc. There’s plenty of work making the rounds. CNOOC’s legal advisors are Stikeman Elliott LLP and Davis Polk & Wardwell LLP, while the Nexen legal team includes Blake Cassels & Graydon LLP and Paul, Weiss, Rifkind, Wharton and Garrison LLP. Advising Nexen’s board of directors are Richard A. Shaw Professional Corp. and Burnet, Duckworth & Palmer LLP.
 
There are other reasons for Canadian miners not to fear a slowing Chinese economy. Brett Kagetsu, a partner with Gowling Lafleur Henderson LLP in Vancouver, notes the Chinese economy is still defined by long-term issues, such as mass urbanization. “Despite the fact there may be a current slowdown, they all still see growth in the need for resources in the future. I would think they’re maybe looking at the current market as a good opportunity, given the lower prices of the stocks.”
 
David McIntyre of Norton Rose Canada LLP in Toronto says despite the slowdown in the headline number, the Chinese economy is still growing at a significant rate. That classic demand for raw materials remains a source of business, but lawyers are also doing lots of non-resource deals as the Chinese economy expands and diversifies. “The legal work we’re doing feeds into long-term factors.”
 
China is pushing to deploy its foreign currency reserves away from U.S. treasuries and into hard assets, Mr. McIntyre adds. The Chinese economy has also been creating a steady stream of large companies that aim to operate on the global stage. “There’s been a real push to make those companies internationally important firms.”

For the rest of this article, please go to the National Post website: http://business.financialpost.com/2012/07/25/china-slowing-down-dont-worry-about-it/