Edition 03: We take a deep dive into Chinese investment in Canada, Minister MacAulay heads to China to sell Canadian ag, and the China-U.S. trade spat simmers. Also, panda cubs!
Quote of the week:
“As far as investments go, this one is pretty black and white.” – Rachel Notley on the pandas at the Calgary Zoo. (Sigh.)
One Big Story: Chinese Investment in Western Canada
There were no earthshattering developments in the last couple weeks, but there have been some under-the-radar developments in Chinese investment in Canada’s West. I’ll dive into those developments, and then look at Chinese investment in the West in general later in the Brief.
• A probe into offshore tax evasion has resulted in catching the head of a Chinese natural gas company – financed with Chinese capital – of evading taxes and not properly being able to manage run-down gas wells in Alberta.
The investigation, led by the Canada Revenue Agency, “sheds fresh light on the tangle of companies, numbered firms and offshore entities used by private investors with Chinese ties such as Mr. Yang to snap up thousands of aging oil and gas sites in Alberta through the energy-price downturn.”
This has in turn raised issues for the Alberta Energy Regulator, which “signed off on Sequoia’s acquisition of 3,200 gas wells even though the company appeared to lack the financial wherewithal to pay for cleanup.”
• Secondly, the founder of Chinese company Anbang was found guilty of fraud in Shanghai. Control of the company has been turned over to the Communist Party – which is a big deal, because Anbang owns significant assets in B.C., including twenty retirement complexes and Vancouver’s largest office complex.
Concern over Chinese investment in Canada almost always has to do with the potential for influence by the Chinese Communist Party – a current example is the brouhaha with Aecon.
Pop to our “By the Numbers” section to learn more about Chinese investment in Western Canada!
This week on the noise-o-meter…
Again, B.C. is discussed more in the context of China than the Prairie provinces, although far less than usual. This includes stories about the drama involving Anbang and human interest stories in China. Alberta articles mainly had to do with the Calgary Zoo receiving a panda bear family of four on loan from China. Manitoba and Saskatchewan articles focused on the U.S.-China trade spat.
Stories from the West
• From Business in Vancouver, a look at how one hotel’s “China-ready” initiative has brought in a staggering number of tourists.
• From The Globe and Mail, a story on the panda family exhibit that recently opened at the Calgary Zoo.
• Not a new story per say, but CBC’s Geoff Leo won a national award for his story, “The China Connection,” which is tells the story of how “the Saskatchewan government partnered with a company linked to a businessman who was wanted by China for fraud.” The story is from last year, but if you haven’t checked it out I highly recommend it.
Issues that Matter
Trade and Investment
• Public debate on the potential Aecon deal continues to be heated, with more op-eds written in favour or against the takeover of the company by a Chinese state-owned enterprise. This includes an op-ed from Aecon’s perspective, and another urging for a government policy on Chinese investment. [Check out the last China Brief for a deep dive into this issue.]
Additionally, Aecon has formally backed out of bidding on the Gordie Howe bridge, after last month the federal government decided it would not be considered for the project due to its Chinese ties.
• Ahead of Chinese economic data due out this week, this article points out what signs will be there if the Chinese economy is finally starting to slow.
• The China-U.S. trade spat continues, with little headway made with negotiators in China early this month.
In the meantime, the numbers have been crunched on Trump proposed Chinese tariffs: if implemented, they will cost an estimated 134,000 American jobs, mostly in agriculture.
An interesting piece in the BBC gives historical background to the China-U.S. trade spat – all the way back to 1783.
• On Friday, Canadian Agriculture Minister Lawrence MacAulay travelled to China for a trade mission to promote Canadian agriculture. He will be in China for a week.
He will meet with several e-commerce companies while there, such as Alibaba, to discuss market opportunities. E-commerce is a growing opportunity for foreign agriculture (like what is happening with Thailand).
• A flashpoint in the China-U.S. trade spat is soybeans. China appears to no longer be buying American soybeans, as no new contracts have been signed for weeks.
They are trying to fill this gap in a few ways – including buying more soybeans from Canada.
Beef Magazine published a piece discussing the growing importance of Chinese investment in agriculture around the world.
Clean Energy & Natural Resources
• China has created a new weather control machine – that is about the size of Alaska.
• A new battery has been developed in China that can store renewable energy. This has the potential to boost the use of solar and wind power, as this would make these power sources more reliable.
• This article points out that – even though China is “cleaning up its act” – bad pollution habits are moving to other developing countries.
• Chinese officials have quietly been pressing the Canadian government about the illicit flow of marijuana from Canada to China.
• A Chinese newspaper released a piece urging Canada to develop a holistic China policy.
• Another Chinese newspaper discussed the Zisha cultural delegation that is visiting cities across Canada, from China. This is being done for “the purpose of strengthening cultural exchanges between Canada and China.”
By the Numbers
How much does China invest in Western Canada? As it turns out, it varies greatly by province.
Alberta has attracted by far the largest amount, with most of this investment going into energy. Most – 87% – of investment has been from state-owned enterprises (SOEs). British Columbia has the next greatest amount of investment, most of which is in energy, and metals and minerals, although recently there has been a surge in real estate. Chinese investment in B.C. is mainly from private companies.* Investment in Saskatchewan has largely been in the same categories as in B.C., with 72% coming from SOEs. Manitoba has had very little investment from China – $7.6 million in the last 20 years – which has come entirely from private companies and has been concentrated in health/biotechnology and agriculture.
Chinese investment has grown in the West in the last decade – very little investment occurred before 2008.
(All information is from the China—Canada Investment Tracker. It’s a great resource, check it out!)
• In Northern China, a new film-making hub has been opened – which is bigger than any other film centre in the world, including Hollywood.
That’s all for today! Questions, comments? Send them my way! – Sarah Pittman, policy analyst
The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.
[i] Media measurement is provided by a third-party, independent media monitoring service. To be included in the noise-o-meter, “China” must be in the title, and one of the four western provinces somewhere in the article. While not a perfect system, this gives us an idea of how much China and the West are being discussed together.
*This post has been updated to reflect new information provided by the China-Canada Investment Tracker with respect to B.C. investment.