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Editorials Globe editorial: China’s Aecon buyout needs a full security review

It might have seemed like plain-vanilla news when it came out, last October, that the international arm of a Beijing-based firm called China Communications Construction Co. (CCCC) had settled on terms to buy the Canadian construction giant Aecon.

Aecon shareholders approved the $1.5-billion deal almost unanimously. CCCC is huge, with $185-billion in assets and about 150,000 employees worldwide, according to Fortune magazine. As Ottawa inched toward trade talks with China, here was evidence of deepening economic ties on a grand scale.

Currently, the only thing blocking the takeover is the Trudeau government, whose rubber stamp seems to be hovering over the paperwork. It is conducting a routine "net benefit" review, as it must for most foreign takeovers of this size.

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Canadian competitors are grumbling, but mostly in self-serving or sentimental terms. So what if Aecon was a homegrown corporate "jewel," with 140 years of history? Businesses only rarely rise to the level of national heirlooms.

And if, as Aecon rivals darkly warn, the takeover leads to cost-cutting in the construction industry, what budget-conscious government or overtaxed citizen could object?

Critics of the deal also point to the Chinese firm's ethical lapses: Its subsidiaries and corporate predecessors have been accused of bribery and bid-rigging in Bangladesh and the Philippines, respectively.

But it is not credible to suggest that, because CCCC played dirty in countries where corruption is common, they are liable to start handing out cash-filled envelopes to Canadian officials.

Where the critics have it right, and where the government needs to act with deadly seriousness, is on national security.

CCCC is a state-owned enterprise – Beijing has a 63-per-cent stake in the firm – and it works in close collaboration with the Chinese government on sensitive military projects. A subsidiary of the company is widely believed to have helped build artificial islands in the South China Sea, part of China's efforts to establish sovereignty and military power in the contested maritime region – a strategy the Trudeau government has criticized.

The company has also said it is bringing a Communist Party cell onto its org chart, at a time when Beijing is trying to strengthen the role of these political minders.

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What would the Chinese government want with Aecon? Lots, potentially. Aecon has been involved in building or repairing a great deal of sensitive Canadian infrastructure, from the Darlington nuclear plant in Ontario to shipyards in Halifax where a new fleet of Canadian Navy ships is being built.

We should not assume it is beyond the Chinese government to try to glean intel about facilities Aecon has built. The French newspaper Le Monde reported last month that Beijing has been bugging the African Union headquarters in Addis Ababa, built by a state-owned Chinese construction firm and opened in 2012. (China and the AU denied the report.)

The good news is that the federal government has a mechanism for looking into worrisome foreign companies buying Canadian firms.

If, in the course of the standard foreign-investment review, the minister of innovation, science and economic development (Navdeep Bains, in this case) decides that an investment "could be injurious to national security," he can refer it to cabinet, which can in turn order a national-security review.

Ordering one of these for the Aecon takeover is a no-brainer. We don't know for sure that letting the Chinese government renovate Canadian nuclear plants and giving it access to shipyard blueprints would undermine our security, but anyone can see that it is possible.

Still, the Liberals seem resistant to the idea.

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Faced with calls for such a review from the Conservatives this week, Mr. Bains was non-committal. And last summer, amid calls for the same in the takeover of a Vancouver-based satellite firm by a Chinese company, the Trudeau government instead waved the purchase through.

We worry that the government has an eye on prospective trade talks with Beijing and hopes to avoid delivering the awkward public brushback of a security review. It can't fall into the trap of thinking that way.

If Ottawa's push to deepen ties with China is to have any integrity, Mr. Trudeau and his cabinet must show the public that deeper ties won't mean compromised security.

Here is a great chance to do that, by properly vetting the Aecon takeover.

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