Canada's oil patch open for Chinese business: Flaherty
By Jorge Barrera, the Financial Post
August 10, 2009
Jim Flaherty, Canada's finance minister, speaks at the opening of a Bank of Montreal branch in Beijing, China, on Monday. Canada wants Chinese state-run entities such as China Investment Corp. to consider North American listings.
Jim Flaherty, Canada's finance minister, speaks at the opening of a Bank of Montreal branch in Beijing, China, on Monday. Canada wants Chinese state-run entities such as China Investment Corp. to consider North American listings.
Photograph by: Nelson Ching/Bloomberg, Nelson Ching/Bloomberg
Finance Minister Jim Flaherty rolled out the welcome mat for Chinese investment in the Canadian energy sector Monday, saying this country’s foreign-investment rules pose little hindrance to the growth of a Chinese presence.
Mr. Flaherty, in Beijing to give Canadian corporate interests a boost in the region, said China is flush with U.S. dollars reserves and is looking to spend it in the “emerging energy superpower” that is Canada.
In meetings with Chinese Vice-Premier Li Keqiang and Chinese Finance Minister Xie Xuren, Mr. Flaherty said neither indicated concerns Canada’s foreign-investments regulatory framework would hinder Chinese business interests.
“They did not express any concerns,” said Mr. Flaherty. “We are encouraging Chinese foreign direct investment in Canada . . . so long as there is compliance with the governance concern and other rules that we have with Investment Canada.”
China has recently expressed concern over its difficulty in establishing a presence in Canada’s energy sector.
“China has a great need for natural resources,” said Mr. Flaherty, during a conference call with reporters. “Over time, we will see more investment by Chinese businesses in Canada and, over time, we will see growth by our financial institutions in this market (China).”
Mr. Flaherty was accompanied by a high-powered Canadian coterie of financial and corporate leaders, including Mark Carney, governor of the Bank of Canada, along with senior executives from Canadian banks, major insurance firms and the Toronto Stock Exchange.
The state of the global recession and efforts by governments to re-energize their respective economies dominated much of the discussions, said Mr. Flaherty.
“We agreed it is important that the other countries in the G20 keep their commitments that provide stimulus to their economies,” said Mr. Flaherty.
Carney is scheduled to deliver a speech Wednesday to the Canadian Financial Forum in Beijing on how the Canadian model could be used to build a “resilient financial system.”
Mr. Flaherty said his second trip to Beijing was aimed primarily at promoting Canadian corporate interests in China, and to also to entice more Chinese investment into Canada.
While China has been making deals with energy rich countries around the world like Iran and Venezuela, it has failed make any serious inroads into the Canadian energy sector.
In a speech delivered in Geneva on May 4, an official with state-owned China National Petroleum Corp. called for a strategic alliance between China and Canada to create an energy corridor hooking energy-rich Western Canada into energy-starved China.
“The opportunity is there. The question is action. China is prepared for the future and we see the potential Sino-Canadian relationship as a tangible, long-term, mutually beneficial strategy,” the official said during a forum attended by Alberta Premier Ed Stelmach.
But Chinese interests have been stymied by regulatory, political and private-sector obstacles.
The high price of developing the oil sands has been a concern for China, which wants to bring in their own cheap labour to offset costs. Chinese firms have also encountered energy players reluctant to enter into major joint ventures. An undercurrent of political hostility also exists toward a large Chinese business presence in the Canadian energy sector.
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