China envoy warns Canada against politicizing Nexen deal

TORONTO Sat Sep 22, 2012 2:28pm EDT

A woman walks into the Nexen building in downtown Calgary, Alberta, July 23, 2012. REUTERS/Todd Korol

A woman walks into the Nexen building in downtown Calgary, Alberta, July 23, 2012.

Credit: Reuters/Todd Korol

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TORONTO (Reuters) - China's ambassador to Canada warned in remarks published on Saturday against letting domestic politics drive the Canadian government's decision on whether to approve a Chinese state-owned oil company's proposed $15.1 billion takeover of Calgary-based Nexen Inc.

"Business is business. It should not be politicized," Ambassador Zhang Junsai said in an interview with Canada's Globe and Mail newspaper.

"If we politicize all this, then we can't do business," he added, referring to the Canadian Industry Ministry's review of CNOOC Ltd's proposal to buy the Canadian oil and gas producer.

The deal, if completed, would mark the first outright takeover of a large Canadian energy producer by a Chinese state-owned enterprise.

The ambassador also said negotiating a full free-trade agreement within a decade would be the best way of assuring fair, two-way trade and investment between China and Canada.

"It's time to open up each other's markets," Zhang said in remarks that coincide with Chinese Commerce Minister Chen Deming's visit to Canada. "It's high time to do the exploratory work on the possibility of a free-trade agreement."

The newspaper said it was the first time that a senior Chinese representative called for early, accelerated talks on a free-trade deal.

Concern that China has unfairly limited Canadian companies from investing there is one of the issues affecting the debate within Canada on whether the government should approve CNOOC's bid for Nexen.

Industry Ministry officials are looking closely at the bid to determine whether it is of net benefit to Canada.

CNOOC, whose offer has already been endorsed by Nexen shareholders, said it did not expect Chen to raise its sensitive takeover bid during talks with the Canadian government.

But Canadian Trade Minister Ed Fast fully expects to discuss ways to expand Canada's relationship with China when he meets with Chen on Sunday, Fast's spokesman said on Saturday.

"Canada wants to continue to expand its relationship with China, but we want to see it expand in a way that produces clear benefits for both sides," spokesman Rudy Husny said in an emailed statement. "Minister Fast will continue this discussion when he meets with his counterpart tomorrow in Vancouver."

Canada's priority is to remove what it considers to be Chinese trade barriers on goods and services, and increase exports such as lumber, grains, beef and value-added products, Husny said.

In the Globe interview, Zhang said a free-trade treaty would go a long way toward expanding trade and investment between the two countries, an important goal for Canadian Prime Minister Stephen Harper.

Harper wants to ease the dependence of Canada's export-oriented economy on the United States, its main trade partner.

Although Canada is seeking substantial foreign investment in its oil and gas industry, the CNOOC move is raising concern inside the cabinet, where some members are wary of letting a Chinese state-owned enterprise buy up domestic assets.

Zhang said Canadian fears over China's intentions are unfounded. "We are not coming to control your resources," he said.

(Reporting by Frank McGurty; Additional reporting by David Ljunggren in Ottawa; Editing by Will Dunham)

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Comments (28)
Doncheng wrote:
Well one way to sale yourselves is to let a Chinese controlled enterprise to take over your company!

Sep 22, 2012 11:56am EDT  --  Report as abuse
Bartyoda wrote:
Any decision is political, especially by the government. “Warning” Canada on the Nexen deal represents a typical “bully” attitude. China need to learn to let the free market dictate business deals. Absolutely no international deal is devoid of politics; especially true with any national corporation from China which is 100% controlled by the party. Wake up and welcome to the world!

Sep 22, 2012 12:39pm EDT  --  Report as abuse
usagadfly wrote:
That’s rich! China, of all countries, claiming that politics and the economy should not be mixed! Just look at the trouble in East Asia they are causing over resources. Do we want those people bullying here in North America? I think not.

Keep the Chinese out of North America. If they want to buy resources, they can buy them from North American owned companies. They have a simply horrid record of relations wherever they have invested.

Sep 22, 2012 12:47pm EDT  --  Report as abuse
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