I would like to speak to the aspect of your study on determining whether Canada should place a temporary moratorium on acquisitions from state-owned enterprises of authoritarian countries. My area of expertise is China, so I'll talk about Chinese state-owned enterprises in this regard.
I had a look at the Investment Canada Act, and I see that the definition of “state-owned enterprise” is “an entity that is controlled or influenced, directly or indirectly, by a government or agency” or by “an individual who is acting under the direction of a government or agency” or “who is acting under the influence, directly or indirectly, of such a government or agency”.
In this regard I would point out that pursuant to the requirements of the company law of the People's Republic of China, a Chinese Communist Party committee led by its party secretary is required to be at the top of the management pyramid of People's Republic of China enterprises. According to our definition, while, for example, the firm Huawei does not self-identify as a People's Republic of China state enterprise, it is without question ultimately directed by Huawei’s Chinese Communist Party branch general secretary, Zhou Daiqi, who is required under party discipline to comply with direction from Beijing. This discipline would apply to all the party members of Huawei, including the CEO, Ren Zhengfei. I would say that Huawei and indeed all enterprises from China meet the Canadian definition of state-owned enterprise for the purposes of the Investment Canada Act.
Just to supplement that, I would point out that the career paths of leaders in major Chinese state enterprises are determined by the Chinese Communist Party central committee's organization department. Typically a leader in a state enterprise may be transferred by the party to work as a governor or party secretary of a province, and then back to a senior role in another PRC state business entity.
I would very much agree with the government’s recent policy statement on foreign investment review and COVID-19 that “Some investments into Canada by state-owned enterprises may be motivated by non-commercial imperatives that could harm Canada's economic or national security interests, a risk that is amplified in the current context.”
I think it's clear that there is a strong integration of Chinese state enterprises into the political and strategic goals of China’s Communist Party state. I note that Prime Minister Trudeau’s former senior policy adviser for global affairs and defence, Roland Paris, indicated in an article last week that the PRC “uses state-directed firms and targeted economic rewards and punishments to gain political leverage over other countries.” This seems to be a generally accepted view.
We have seen this applied with regard to China’s arbitrary violation of canola seed contracts with Canadian enterprises. There are many other examples that I would be happy to outline in the question period if asked.
Furthermore, looking at this aspect of the enterprises not being like corporate entities in democratic countries, if you look at the PRC's much touted belt and road initiative to restructure global infrastructure in China’s favour, many of the belt and road projects funded by China are in fact money losers, but serve the People's Republic of China's geostrategic interests all the same, and we see this phenomenon of “debt trap diplomacy” in which China has acquired ports in repayment for high levels of debt incurred by these money-losing unfeasible projects.
This is going on not just in the development world. PRC-associated companies’ acquisition of Chinese-language news media here in Canada and PRC-controlled social media applications such as WeChat actually enforce the People's Republic of China Communist Party’s propaganda department censorship norms over communications taking place on the soil of Canada. WeChat is censored out of Beijing even though the communications may occur entirely in Canada, say, between an MP and constituents via this app. I find this highly disturbing and a threat to our democracy.
Ultimately, I believe we should apply the principle of reciprocity in our assessment of Chinese state investment in Canada. For example, the Government of China forbids foreign firms from acquiring Chinese mines and other natural resources, under the Chinese constitution, on Chinese national security grounds. The same would apply for high-tech acquisitions in telecommunications. This is not reciprocal here in Canada. They're able to acquire things in Canada that we would not be able to acquire in China.
Let me conclude by suggesting that the principles of reciprocity and fairness are what our trade and investment policies should reflect. We need to stand up for the international rules-based order by our actions and not just by our rhetoric.
Thank you very much. I look forward to your questions and challenges later on in this event.