CIC’s new office raises questions about sovereign interests

Whatever the reasons, CIC may need to hire an army of PR professionals to convince Canadians that it is bringing something more than self-interest to the table. A recent poll by the Asia Pacific Foundation of Canada highlighted the country's skepticism, noting that only 18% of the people support a Chinese state-owned enterprise buying a controlling stake in a Canadian company.

Even Canadian law is not clear on the issue. A memo from the Institute of Asian Research at the University of British Columbia stated, "The Investment Canada Act does not provide clear guidelines on whether foreign investments are detrimental to Canadian national security, nor does it discriminate on the basis of ownership. The Minister of Industry and the Cabinet of Canada have full discretionary power."

CIC has tried to paint itself as a passive investor - simply looking to invest a portion of China's $2.85 trillion in foreign reserves wisely - but it has also been quite obviously strategic about its stakes. Since 2009, five Chinese state investments in the energy and mining sectors have totaled nearly $10 billion. It owns a 45% stake in an Alberta oil and sands project owned by Penn West Energy Trust, as well as a 5% stake in Penn West. In 2009, it paid $1.5 billion for a 17% stake in debt-riddled mining company TeckResources. It has also come to light that not only is China one of the largest customers of Potash - which makes fertilizer - but it also owns a stake worth over $5 billion.

While time will tell the extent of CIC's Canadian ambitions, the concern is that without clear regulations on the wider issues of state investments into foreign companies, any certainty provided down the line may be too little, too late.

 

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• Topics
• North America
• Greater China
• CIC