I think this guy is reading too much into politics (democracy) and investment -- Libyan example really does not apply as China imports almost no oil from Libya. China buys most her oil from open market supplied by Saudi, Iran, Sudan and none of them are shining examples of democracy
Harper in China: Juggling oil sales and core principles
Published On Sat Feb 04 2012
http://www.thestar.com/article/11261...ore-principles
Like so much in Canadian politics, the economic emphasis of Prime Minister Stephen Harper’s second trip to China is ultimately linked to Canada-U.S. relations. China is the new engine of global prosperity, and here at home concern is growing that our reliance on the battered U.S. economy will precipitate a long economic decline in Canada.
Indeed, John Baird made a statement about Ottawa’s changing agenda last summer when he chose China for his first official visit as foreign affairs minister, only travelling to Washington some weeks later. Ed Fast, new minister of international trade, likewise made an official visit to China this fall prior to his first official visit to Washington.
Canada does not do well in the booming Chinese market. The trade imbalance is 4 to 1 in China’s favour, and over the past decade our exports have actually lost market share as the U.S., Europe and Australia implemented more China-proactive policies. Consequently, Fast has increasingly been voicing his support for, at long last, establishing a Canada-China Foreign Investment Promotion and Promotion Agreement (FIPA).
One reason for Canada’s weak showing in the Chinese economy is that Canadian investors are nervous about doing business in a country that rejects separation of powers between the judicial, legislative and executive branches of government. Unlike most of our trading partners, China’s judiciary is not independent; it falls under the leadership of the Chinese Communist Party. Local courts cannot rule impartially and independently if directed otherwise by high-level authorities. So in cases of breach of contact, Canadian investors in China have difficulty getting compensation for their losses, especially in cases where promised protections of proprietary industrial processes have not been maintained.
As Canada’s Department of Foreign Affairs and International Trade website puts it, “the main purpose of a (FIPA) is to ensure greater protection to foreign investors against discriminatory and arbitrary practices and to enhance predictability of the policy framework affecting foreign investors and their investments.”
But negotiations on this FIPA have been dragging on since 1994, with more than a dozen rounds of talks since 2004 alone. And it is very unlikely that Harper will be signing any trade accords on this trip.
Why? The truth is there is little incentive for China to negotiate such an agreement. Chinese investment in Canada is already protected by our rule of law, and by Canada’s transparent and fair business regulations. Terms like “reciprocal fairness” or a “level playing field” are not in the vocabulary of the Chinese leadership nowadays, and Canada can like it or lump it.
The failure of the FIPA negotiations are mirrored by 15 years of failed western engagement with China in human rights dialogue. In some ways the human rights situation has actually deteriorated since the dialogues began in 1997. The Chinese Communist Party recently proposed a law to allow detention for up to six months in undisclosed locations, without charge or trial. A lot of this is already happening to human rights lawyers and political activists. Some who are eventually released tell harrowing tales of physical and psychological torture. Others have simply disappeared, and prospects of their return appear bleak.
For this trip, there is no indication the Prime Minister will take a softer line on China’s human rights record than he has in the past. Just last month, for instance, Foreign Minister Baird renewed the government’s criticism of China’s crackdown on religious freedom. “In China we see Roman Catholic priests, Christian clergy and their laity, worshipping outside of state-sanctioned boundaries, who are continually subject to raids, arrests, and detention,” Baird said during a speech in England. “We see Falun Gong practitioners, Tibetan Buddhists, and Uighur Muslims face harassment and physical intimidation. These abhorrent acts fly in the face of our core principles, our core values.”
Beijing might to respond to Harper’s human rights engagement with the usual plea for understanding: China will respect human rights eventually, however its low state of development, and the legacy of its culture and history, do not allow for implementation of human rights measures just now.
But judging by recent remarks from President Hu Jintao, condemning the insidious influence of western ideas in China, raising human rights this time around will more likely get Harper a sharp rebuke, including vehement accusations of Canada attempting to interfere in Chinese internal affairs — sometimes accompanied by banging on the table for emphasis.
Then the talk will move on to trade, and this is when Beijing will quickly buy any oil that Canada can’t pipe south to the U.S.
It won’t be a hard sell for us, because China much prefers to depend on energy supplies from a politically stable liberal democracy like Canada. Beijing’s support for Col. Gadhafi ended up costing China millions in lost infrastructure investment after rebels toppled the Libyan dictator. And China’s other oil-rich friends, like Iran and Sudan, are similarly vulnerable to potential disruptions depending on the vagaries of domestic politics and the international environment.
Selling our oil to China via the controversial Northern Gateway pipeline would do much to redress Canada’s trade shortfall, and during the Prime Minister’s visit we will no doubt hear expressions of enthusiasm by Chinese state-owned firms anxious to invest in Canadian energy projects.
Herein lies the rub.
The heads of these companies are mostly appointed by the Chinese Communist Party. For them, enterprise management is not just doing business, it is a personal career path to senior government and party posts. They answer to the party, not to their companies’ boards of directors.
In wanting more latitude to invest in Canada, China’s state-owned enterprises will also want to seek capital in Canadian markets and list on Canadian stock exchanges. But some of these companies bring practices from a “wild west” business culture that fall far short of standards required of companies listing on Canadian exchanges. Think tricks like falsifying accounts to overstate revenues and understate obligations; fabricating claimed contracts; tax evasion; off-the-books diversion of large sums to the personal accounts of executives; and using bribes or kickbacks to gain advantage in contract bids.
The research firm Muddy Waters, which monitors business practices in China, recently reported that fiscal malfeasance by Chinese businesses listed on foreign exchanges are likely just the tip of a large iceberg. Chinese companies operating abroad often blatantly disregard intellectual property rights and proprietary production processes. They routinely recruit economic spies to engage in cyber-espionage and steal commercial or government secrets in order to further the interests of the Chinese state.
And the spectre of Chinese state ownership in the Canadian economy presents regulatory and law enforcement nightmares, because agencies monitoring corporate behaviour have neither the China expertise nor the resources to effectively meet these challenges.
All of this must change.
The Harper trip is all about increasing trade activity between Canada and China, which Canada needs if our economy is to continue to grow and create jobs in the years and decades ahead. But Canada’s national interests will be best served by a prudent, principled and informed approach to China.
Charles Burton is an associate professor of political science at Brock University in St. Catharines, and is a former counsellor at the Canadian embassy in Beijing
It won’t be a hard sell for us, because China much prefers to depend on energy supplies from a politically stable liberal democracy like Canada.
Harper in China: Juggling oil sales and core principles
Published On Sat Feb 04 2012
http://www.thestar.com/article/11261...ore-principles
Like so much in Canadian politics, the economic emphasis of Prime Minister Stephen Harper’s second trip to China is ultimately linked to Canada-U.S. relations. China is the new engine of global prosperity, and here at home concern is growing that our reliance on the battered U.S. economy will precipitate a long economic decline in Canada.
Indeed, John Baird made a statement about Ottawa’s changing agenda last summer when he chose China for his first official visit as foreign affairs minister, only travelling to Washington some weeks later. Ed Fast, new minister of international trade, likewise made an official visit to China this fall prior to his first official visit to Washington.
Canada does not do well in the booming Chinese market. The trade imbalance is 4 to 1 in China’s favour, and over the past decade our exports have actually lost market share as the U.S., Europe and Australia implemented more China-proactive policies. Consequently, Fast has increasingly been voicing his support for, at long last, establishing a Canada-China Foreign Investment Promotion and Promotion Agreement (FIPA).
One reason for Canada’s weak showing in the Chinese economy is that Canadian investors are nervous about doing business in a country that rejects separation of powers between the judicial, legislative and executive branches of government. Unlike most of our trading partners, China’s judiciary is not independent; it falls under the leadership of the Chinese Communist Party. Local courts cannot rule impartially and independently if directed otherwise by high-level authorities. So in cases of breach of contact, Canadian investors in China have difficulty getting compensation for their losses, especially in cases where promised protections of proprietary industrial processes have not been maintained.
As Canada’s Department of Foreign Affairs and International Trade website puts it, “the main purpose of a (FIPA) is to ensure greater protection to foreign investors against discriminatory and arbitrary practices and to enhance predictability of the policy framework affecting foreign investors and their investments.”
But negotiations on this FIPA have been dragging on since 1994, with more than a dozen rounds of talks since 2004 alone. And it is very unlikely that Harper will be signing any trade accords on this trip.
Why? The truth is there is little incentive for China to negotiate such an agreement. Chinese investment in Canada is already protected by our rule of law, and by Canada’s transparent and fair business regulations. Terms like “reciprocal fairness” or a “level playing field” are not in the vocabulary of the Chinese leadership nowadays, and Canada can like it or lump it.
The failure of the FIPA negotiations are mirrored by 15 years of failed western engagement with China in human rights dialogue. In some ways the human rights situation has actually deteriorated since the dialogues began in 1997. The Chinese Communist Party recently proposed a law to allow detention for up to six months in undisclosed locations, without charge or trial. A lot of this is already happening to human rights lawyers and political activists. Some who are eventually released tell harrowing tales of physical and psychological torture. Others have simply disappeared, and prospects of their return appear bleak.
For this trip, there is no indication the Prime Minister will take a softer line on China’s human rights record than he has in the past. Just last month, for instance, Foreign Minister Baird renewed the government’s criticism of China’s crackdown on religious freedom. “In China we see Roman Catholic priests, Christian clergy and their laity, worshipping outside of state-sanctioned boundaries, who are continually subject to raids, arrests, and detention,” Baird said during a speech in England. “We see Falun Gong practitioners, Tibetan Buddhists, and Uighur Muslims face harassment and physical intimidation. These abhorrent acts fly in the face of our core principles, our core values.”
Beijing might to respond to Harper’s human rights engagement with the usual plea for understanding: China will respect human rights eventually, however its low state of development, and the legacy of its culture and history, do not allow for implementation of human rights measures just now.
But judging by recent remarks from President Hu Jintao, condemning the insidious influence of western ideas in China, raising human rights this time around will more likely get Harper a sharp rebuke, including vehement accusations of Canada attempting to interfere in Chinese internal affairs — sometimes accompanied by banging on the table for emphasis.
Then the talk will move on to trade, and this is when Beijing will quickly buy any oil that Canada can’t pipe south to the U.S.
It won’t be a hard sell for us, because China much prefers to depend on energy supplies from a politically stable liberal democracy like Canada. Beijing’s support for Col. Gadhafi ended up costing China millions in lost infrastructure investment after rebels toppled the Libyan dictator. And China’s other oil-rich friends, like Iran and Sudan, are similarly vulnerable to potential disruptions depending on the vagaries of domestic politics and the international environment.
Selling our oil to China via the controversial Northern Gateway pipeline would do much to redress Canada’s trade shortfall, and during the Prime Minister’s visit we will no doubt hear expressions of enthusiasm by Chinese state-owned firms anxious to invest in Canadian energy projects.
Herein lies the rub.
The heads of these companies are mostly appointed by the Chinese Communist Party. For them, enterprise management is not just doing business, it is a personal career path to senior government and party posts. They answer to the party, not to their companies’ boards of directors.
In wanting more latitude to invest in Canada, China’s state-owned enterprises will also want to seek capital in Canadian markets and list on Canadian stock exchanges. But some of these companies bring practices from a “wild west” business culture that fall far short of standards required of companies listing on Canadian exchanges. Think tricks like falsifying accounts to overstate revenues and understate obligations; fabricating claimed contracts; tax evasion; off-the-books diversion of large sums to the personal accounts of executives; and using bribes or kickbacks to gain advantage in contract bids.
The research firm Muddy Waters, which monitors business practices in China, recently reported that fiscal malfeasance by Chinese businesses listed on foreign exchanges are likely just the tip of a large iceberg. Chinese companies operating abroad often blatantly disregard intellectual property rights and proprietary production processes. They routinely recruit economic spies to engage in cyber-espionage and steal commercial or government secrets in order to further the interests of the Chinese state.
And the spectre of Chinese state ownership in the Canadian economy presents regulatory and law enforcement nightmares, because agencies monitoring corporate behaviour have neither the China expertise nor the resources to effectively meet these challenges.
All of this must change.
The Harper trip is all about increasing trade activity between Canada and China, which Canada needs if our economy is to continue to grow and create jobs in the years and decades ahead. But Canada’s national interests will be best served by a prudent, principled and informed approach to China.
Charles Burton is an associate professor of political science at Brock University in St. Catharines, and is a former counsellor at the Canadian embassy in Beijing
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