The Chinese state has no business in the infrastructure of this nation, Justin Trudeau now says.
In rejecting a Chinese takeover of construction firm Aecon, Mr. Trudeau told us that any potential for Chinese state interests creeping into control of significant Canadian infrastructure has to be cut short as a threat to national security.
What he hasn’t told us is how far that threat goes. Is it just Chinese state control of infrastructure that must be averted? Or resources, or sensitive technology? Or does Chinese state ownership of any significant economic interest in Canada constitute a threat?
That’s the national-security question Canada, and its Prime Minister, must answer.
On Thursday, Mr. Trudeau indicated that rules governing investment by Chinese state-owned enterprises, or SOEs, could be hammered out in potential free-trade negotiations with China. But while investment rules can be negotiated, you don’t bargain over national security.
The Prime Minister has now accepted the idea that Chinese SOEs serve the Chinese state, rather than pure commercial interests, and have to be treated with a measure of suspicion. That’s realistic. The question is where Beijing’s businesses will not be allowed to go.
With the Aecon case, Mr. Trudeau has drawn a wide circle around Canadian infrastructure.
The problem was not simply that by swallowing Aecon, the proposed buyer, China Communications Construction Co. Ltd., would be able to pass on information on sensitive projects it is working on, or get control of sensitive infrastructure. The problem was that once CCCC had a Canadian subsidiary in that kind of business, it could eventually get involved in all kinds of infrastructure.
Just look at Australia, the PM told reporters, a country that one day suddenly realized that a foreign government owned a big chunk of its electricity grid.
While the Australian experience was a little more complicated – in 2016, it blocked a Chinese SOE, State Grid, which had several smaller power-industry interests, from buying into major electricity distributor Ausgrid – Mr. Trudeau’s example was notable. It implied that once a Chinese SOE gets into your country’s infrastructure, it can creep into more influence – and that has to be stopped before it starts.
That’s not an entirely novel warning. Ward Elcock, the former director of the Canadian Security Intelligence Service, had expressed a similar concern: Once a Chinese state firm owns Aecon, the government can’t really control the projects they work on.
He may be right – but that fear of what might come can apply to a lot of foreign takeovers. The definition of critical infrastructure might cover roads, waterworks, shipping and on and on.
In Aecon’s case, Canada’s security services, and Mr. Trudeau’s cabinet, could have considered national security as a pretty narrow matter. They might have instead asked only if it gave CCCC access to classified info, or the blueprints to military bases, or restricted technology. They went broader.
Yet, they might have gone broader still. Chinese SOEs are fundamentally arms of the Chinese state, with a Communist Party unit at its core, Brock University China expert Charles Burton said. They might be able to call on the resources of the Chinese state, like espionage intel or surveillance, to help them with bidding on projects in Canada.
And, Mr. Burton said, there’s also the general concern about Chinese economic influence leading to political influence in Canada. Once a Chinese SOE becomes a major player in the Canadian economy, it has influence to lobby for China’s strategic interests, whether opening the Canadian north to Chinese mining, or support for China’s geopolitical interests, and can hold out the threat of closing operations, laying off workers or withdrawing investment. “Is it desirable for a foreign state to have economic leverage in a Western democracy?” Mr. Burton asked.
Those questions apply to just about any takeover by a Chinese SOE. In this case, approving Aecon was politically risky by the time the Liberal government decided. Polls show Canadians are against takeovers by Chinese SOEs; security experts like Mr. Elcock had warned against the Aecon deal; the United States had qualms. But China, the world’s second-largest economy, isn’t disappearing. What’s our national-security policy next time?
We now know that Mr. Trudeau sees takeovers by Chinese state enterprises as a broad security threat to Canada. So tell us, Prime Minister, is it because of what they’re buying, or what they might do – or because of what they are?