Canadian Minister Harper just met Chinese President Hu Jintao on the margins of the APEC Senior Leader’s Meeting in Vladivostok on September 8, 2012. While APEC does important work in addressing trade issues affecting Asia Pacific commerce, often the highest profile outcome of these annual meetings are the bilateral meetings between senior government leaders, which capture far more media and public attention than does the actual APEC sessions which focus on important but lower profile trade issues. Thus for Canada the single most important meeting during the APEC meeting is almost certain to be the Harper-Hu bilateral.
The background to the meeting is a pattern of steadily improving bilateral ties between Canada and China, combined with a strengthened trade and investment relationship between the two countries. Important irritants, such as the presence in Canada of fugitive Lai Changxing have been eliminated, while visits by President Hu to Canada in 2010 and by Prime Minister Harper to China in 2009 and 2012 have given the relationship forward momentum that not evident at the beginning of Prime Minister Harper’s Conservative Party government in 2006.
Most dramatic, perhaps, has been the extraordinary rise of Chinese investment in Canada, which has risen dramatically from relatively low levels to well over $20 billion in 2012. Prime Minister Harper before his departure for Vladivostok spoke at length on questions related Canada-China relations, but his remarks were especially focused on recent Chinese investments, particularly the recent announcement by China National Overseas Oil Corporation’s (CNOOC) of a proposed take-over of Nexen, a Canadian oil company with extensive petroleum holdings abroad. This transaction, if approved by Canada, would have a value of $15.1 billion (Canadian dollars) making it the largest single China energy investment outside of China.
Canadian law requires that the Nexen deal must be submitted for review by Industry Canada under the terms of the Canada Investment Act, as is the case for all large foreign investments in the Canada. The Canada Investment Act was amended by the current Canadian government to include special scrutiny for State-Owned Enterprises (SOEs) and considerations of national security.
There have been no cases of Chinese foreign bids to acquire Canadian assets being turned down under the Canada Investment Act. The only negative decisions affected a would-be US acquisition of a Canadian company on national security grounds, and the attempts of the Anglo-Australian firm BHP to acquire Potash Corporation on the grounds that the bid did not meet the test of being in the “net interest of Canada”.
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