Skip to main content
The Globe and Mail
Get full access to globeandmail.com
Support quality journalism
Just $1.99 per week for the first 24weeks
Just $1.99 per week for the first 24weeks
The Globe and Mail
Support quality journalism
Get full access to globeandmail.com
Globe and Mail website displayed on various devices
Just$1.99
per week
for the first 24weeks

var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){console.log("scroll");var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))}pencilInit(".js-sub-pencil",!1);

A woman walks out of China National Offshore Oil Corp. headquarters building in Beijing, Dec. 10, 2012.

JASON LEE/REUTERS

Beijing has responded with silence to Prime Minister Stephen Harper's vow to block future takeovers of Canadian oil sands companies by foreign government-owned firms.

In the first official remarks since Ottawa approved the $15.1-billion takeover of Nexen Inc. by China National Offshore Oil Corp., a spokesman for China's foreign ministry said Beijing "welcomed" Canada's decision to let the purchase go ahead. "We hope the relevant acquisition will be carried out in a smooth manner, so as to bring mutual benefit and profits to both sides," Hong Lei told a regularly scheduled press conference Monday in Beijing.

But when asked whether Mr. Harper's bar on foreign state-owned enterprises could be seen as targeted at China, Mr. Hong avoided the question. "I think relevant parties should support the mutually beneficial co-operation between China and Canada," he said in response to a question from The Globe and Mail about the new rules. "Next question."

Story continues below advertisement

Two things likely motivate the buttoning of the lips:

First, the Chinese government seems genuinely relieved that the Nexen takeover was allowed to go through. State media have been holding up Ottawa's approval as a victory after years of having takeovers by Chinese-owned firms – including a 2005 bid by CNOOC for U.S. energy giant Unocal – blocked by foreign governments. Chinese media have thus far downplayed the giant caveat Mr. Harper attached to CNOOC's purchase of Nexen.

Second, China would never allow a Canadian or American firm to buy a large Chinese oil firm, making it difficult for Beijing to complain about Mr. Harper's adjustment of the rules.

"I'm not surprised" at the silence, said Laban Yu, a Hong Kong-based energy analyst for the Jeffries investment bank. "Anything they say can be thrown back at them pretty quickly. If they say 'why no more takeovers?', it can easily be said 'well you don't exactly allow foreign companies into your energy market, so take this one [Nexen] and be quiet.'"

Mr. Harper has in recent months made it clear that a lack of reciprocity in market access was one of his key concerns about the Canada-China trading relationship.

Beijing may well be irritated by Mr. Harper's sudden reversal – after months of saying Canada was wide open to Chinese investment – but it has likely also noted the political backlash the CNOOC-Nexen deal has caused in Canada, and will likely tread carefully to avoid worsening the situation. "If there's going to be a response, it will probably be through back channels," Mr. Yu said. "I'll bet they just keep their mouths shut, and if they think they can change the rules behind the scenes, they might."

One Chinese media outlet broke ranks and portrayed CNOOC's takeover of Nexen as a strategic mistake, rather than the breakthrough Beijing had been hoping for.

Story continues below advertisement

"While the domestic audience was cheering [the approval of the deal], very few people noticed the attitude that Canadian government expressed afterwards," read an article by researcher Li Dongchao that appeared in Monday's China Business News, a newspaper owned by the state-run Shanghai Media Group.

By offering such a massive overpayment for Nexen (the $15.1-billion offer made on July 23 represented a 61 per cent premium on Nexen's market value), CNOOC had "stirred up resource nationalism" in Canada, which will make the next Chinese energy foray into North America even more difficult, Mr. Li wrote.

"Many people think this approval of the [Nexen] purchase means CNOOC reached a wonderful victory in the fight, and that [resource-producing areas] of North America have opened their gate to Chinese companies. But, the reality is just the opposite: the gate to North America has been opened for China's national oil companies, but it will also probably be closed, or at least the threshold will be made higher."

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies