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As national and international debate over the CNOOC-Nexen deal heats up it becomes more and more obvious that Ottawa should just wave a wand of approval over the $15-billion takeover.
China, which owns CNOOC Ltd., is a growing global threat, politically and economically, but that’s no reason for Ottawa to rush into a new interventionist foreign-investment stance over what is essentially a marginal transaction for a company — Nexen Inc. — that is of no strategic importance. Canada may need a policy on the role of foreign state-owned enterprises, but now is not the time to create one.
There can be no doubt that between now and maybe forever, China is going to be the cause of global economic and political disruption. Totalitarian regimes are inherently unstable and unpredictable.
It is inevitable, for example, that this Communist version of state capitalism — previously known to the world as fascism — will come tumbling down and take a lot of earnest Western fellow travellers with it.
Politically and strategically, China is also emerging as a confrontation-prone regime that is willing to blend state capitalist economic strategies with other objectives, as Japan is today well aware.
Over a few island specks in the East China Sea, China in recent weeks witnessed a populist uprising within China against Japanese industry — industry that has invested billions and created millions of jobs in China.
The People’s Daily, the main newspaper of the Chinese Communist Party, is reported to have said recently that although Beijing was always “extremely cautious about playing the economic card”, it could resort to economic retaliation if the dispute continues — a threat that seems inconsistent with China’s membership in the World Trade Organization.
China’s fundamentally undemocratic and power-based economic and political system, however menacing, is no reason for Canada to introduce precedent-setting investment rules. CNOOC is just one of many Chinese state-owned enterprises operating around the world, and it is by no means certain that these firms really know what they are doing. Author Ian Bremmer, author of The End of the Free Market: Who Wins the War Between States and Corporations?, told Canada’s Council of Chief Executives last week that the success of international Chinese corporatism is no a sure thing. “They will make mistakes,” he said.
It may be best to let them stumble, to let CNOOC and other similar companies make mistakes. Buying Nexen for $15-billion might be one of them. What is CNOOC going to do with its Calgary-based Canadian arm? Most of Nexen assets, for one thing, are outside Canada. The oil sands properties it is acquiring are said to face some of the toughest extraction challenges in the industry.
For the rest of this article, please go to the National Post website: http://opinion.financialpost.com/2012/09/29/terence-corcoran-cnooc-nexen-deal-not-worth-taking-a-foreign-investment-stand-on/