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Charles Burton is an associate professor of political science at Brock University in St. Catharines, and is a former counsellor at the Canadian embassy in Beijing.
Prime Minister Stephen Harper has drawn remarkably little support from political commentators since he announced approval for the Chinese National Overseas Oil Corp. to buy Nexen Inc., but then banned any further sales of Canadian oilsands companies to state-owned firms, except in “exceptional circumstances.”
Responses to the two-part announcement have ranged from “baffling” to “incoherent” to even “an irresponsible farce.”
The federal government’s decision was a long time coming, and rightly so, as it will have enormous implications for Canada’s political economy for generations to come. China is undeniably an engine of future global prosperity, so a major policy decision like this — with far-reaching consequences for Canada’s economic relations with China — cannot be made lightly. Nor should it be based on partisan political considerations, because Canada’s national interest is very much at stake here.
In the bid for Nexen, the government of China bent over backward to make sure CNOOC passed the Investment Canada Act “net benefit to Canada” test in converting Nexen to a Chinese state enterprise. Besides offering to pay 61 per cent more than Nexen’s stock price, Beijing agreed to let Ottawa review CNOOC’s compliance with commitments to corporate governance, especially transparency and disclosure, as well as adherence to Canadian laws, practices and free market principles.
In other words, this Chinese state firm is to function in a way quite different from that of Chinese state firms in most other countries. Clearly, Beijing very much wanted this deal to happen, and got it by making what are major concessions for China.
But Ottawa’s barring of future deals of this ilk is based on the reality that China is playing a long game in its stealthy strategic approach to investment in Canada. Since 2005, the Chinese state has made larger and larger investments in Canada’s energy sector through CNOOC, PetroChina and SinoChem. These include a 60-per-cent stake in two oilsands properties held by the Athabasca Oil Sands Co. in 2009, the purchase of Daylight Energy Ltd. for $2.2 billion in 2011, and deals with Talisman Energy and Total SA’s Northern Lights oilsands project.
For the rest of this article, please go to the Globe and Mail website: http://www.thestar.com/opinion/editorialopinion/article/1300372–stephen-harper-s-decision-on-cnooc-finally-gets-the-china-connection-right