A scholar on China has warned that affording more scrutiny to Chinese state-owned enterprises with regard to foreign takeovers of Canadian companies won’t entirely remove the risk of losing strategically to the communist regime.
“All Chinese global enterprises are fully integrated into the PRC [People’s Republic of China] party-state, corporate, military, and security apparatus, because as party General Secretary Xi Jinping has put it ... ‘the party leads everything,’” said Charles Burton before the House of Commons industry and technology committee on May 1.
“There are no Chinese industrial enterprises existing independently from China’s party-state,” added Burton, a senior fellow at the Macdonald-Laurier Institute.
Burton and other experts and stakeholders were testifying with regard to the committee’s study of Bill C-34, which seeks to amend the Investment Canada Act.
Burton was reacting to comments made by Minister of Innovation François-Philippe Champagne, who testified before the committee on April 26.
Burton said that any foreign investment from China should be subjected to the “most stringent” national security test regardless of the sector.
He said that any intellectual property that a Chinese company becomes privy to through an investment in a Canadian partner “is as a matter of course going to be covertly transferred through Chinese Communist Party channels.” The regime will then use the technology to further its own interests, he said.
In making the case about Chinese corporations being under the control of the regime, Burton gave the example of telecommunications giant Huawei.
He said it “does not self-identify as a Chinese state-owned enterprise, but like all PRC institutions, its org chart suggests that Huawei’s Chinese Communist Party branch takes precedent over the Huawei board of directors in corporate decision-making.”
Bill C-34, sponsored by Champagne, seeks to strengthen the Investment Canada Act to better protect Canada’s economic security.
The bill would grant authority to the minister of innovation and the minister of public safety to impose conditions on a transaction to mitigate the risks without obtaining an order-in-council from the cabinet, as is currently the case. Champagne told the committee this will speed up the review process and make it more flexible.
Jim Balsilie, former Blackberry CEO and now chair of the Council of Canadian Innovators, provided several recommendations to the committee and encouraged the bill be strengthened.
“If assets are deemed critical to Canada’s prosperity and security, then the [act] needs to ensure they remain in our control regardless of the type of foreign counterparty or nature of commercial relationship,” he said.
He also suggested that the federal government should give itself legislative powers to unwind any prior investment, university partnership, joint venture, or merger or acquisition.
