Evidence of meeting #18 for Canada-China Relations in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
A video is available from Parliament.
Liberal
The Chair Liberal Ken Hardie
Dr. Payette, we're having a very difficult time hearing you properly. Can you hold up the microphone? Let us have a look at it.
Liberal
The Chair Liberal Ken Hardie
Oh. Good Lord. Okay. Let's see if you can move it a bit. The sound is very muffled, although it worked fine during the test.
Microphone technique is really critical with those ones, so keep yourself as close to it as possible and maybe slow down just a smidgen so the interpreters can keep up with you.
Chief Executive Officer, Cercius Group Ltd.
Is the current position better?
Conservative
Raquel Dancho Conservative Kildonan—St. Paul, MB
Is it maybe the interpreter's equipment? It sounds very clear.
Liberal
Rob Oliphant Liberal Don Valley West, ON
Chair, he's actually louder and clearer to me than you are to me.
Liberal
Rob Oliphant Liberal Don Valley West, ON
I can hear every word very crisply and clearly, but when you speak, it's quite muffled. I'm just wondering where the problem really is.
Liberal
The Chair Liberal Ken Hardie
Dr. Payette, we'll let you continue, but speak slowly. I'll give you extra time if you need it, and work the microphone as close as you can.
Chief Executive Officer, Cercius Group Ltd.
As I said earlier, the first avenue is avoidance, where we would establish that it's not possible to invest in China, and that would completely shield us from the risk. The second avenue would be to put in place much more restrictive risk moderation or mitigation strategies.
In the first case, since it's not possible to completely eliminate risk, many people will say that we should stop investing in China. In our view, this first scenario is unrealistic, because not interacting with the world's second-largest economy isn't a long-term solution for Canada.
On the other hand, in the second scenario, we must keep one thing in mind, especially with respect to funds of a public nature, which is what we are more concerned with here, definitely. Before investing in the People's Republic of China, it's very important to understand the partners you are going to do business with and the supply chains, but also the close ties that some businesses may have with state power or the People's Army structure. These things are sometimes much harder to find, unless of course you conduct much more thorough due diligence studies than just looking at the annual reports of certain businesses. In our view, sooner or later, much more specialized businesses that are not affiliated with Chinese companies or institutions are going to have to be mobilized to guard against this type of risk, before investing on Chinese soil.
Of course, we understand the federal government's concern over the human rights issues raised, especially since the relatively recent publicizing of the Xinjiang and Hong Kong cases. That said, it's very important to know that there are other types of risks related to investing in China.
As my colleague pointed out, there are intellectual-property risks in e supply chain, but there are also risks of technology capture by the military. In that sense, you need to look at the first aspect, which is the human rights issue, but you also have to look at the issue of proximity to public or non-public organizations—there's a slight distinction between the two, it doesn't mean everything—and party leadership. It's also a matter of looking at the ties that some companies are going to have with the Chinese military-industrial sector.
We see so much more than the human rights issue. This is not about ranking, but many more things must be considered when talking about investing on Chinese soil. The private sector, of which we are a part, sometimes accompanies Canadian, European and American companies. We're used to that kind of questioning, especially with respect to partners, but also supply chains and all that.
I'll stop here. I can take questions from committee members later on.
Liberal
The Chair Liberal Ken Hardie
Thank you very much, Dr. Payette.
We will now go to our first round of questions.
We have Mr. Chong for six minutes.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
Thank you, Mr. Chair.
I assume that the Alberta Investment Management Corporation is not coming today. Is that right?
Conservative
The Clerk of the Committee Ms. Christine Holke
Basically, as soon as we published the notice of meeting, I received a call from them telling me that they weren't available to appear today.
Conservative
The Clerk
It was at the beginning of last week, I believe. Then they called me to say that it was a scheduling issue and that they couldn't make it.