Canada should avoid helping to grow companies that are owned by the Chinese government, warns a report from the University of Calgary.
After CNOOC, a Chinese state-owned enterprise (SOE), was allowed to acquire Calgary-based Nexen Inc. in 2012, the Canadian government announced it would no longer allow takeovers of Canadian businesses by SOEs.
Report author Duanjie Chen urges the Canadian government to uphold this policy, saying that SOEs distort the business landscape because they receive unfair advantages from the Chinese government. Some of these advantages include cheap or free land and natural resources, subsidized financing costs and price controls.
Although SOEs are sometimes compared to Canadian Crown corporations, Chen said that there is a difference: Crown corporations are created to provide essential services and answer to the public, whereas SOEs are designed to make large profits and are not accountable.
Her report also delves into the complicated structure and history of China’s major SOEs, including CNOOC.
“Canada’s business sector should contribute to market-driven economic growth, through efficient management and upright corporate behaviour,” Chen wrote. “It should not be allowed to become an instrument in China’s distorted and often disreputable drive toward global hegemony.”
@jenstden
