China Vice Minister Han Jun Jan 14 2015 BLG LLP speech Photograph by Ulle BaumSM

China wants equal treatment for state-owned firms: Top official

China would likely push for Canada to treat its state-owned enterprises the same as any other companies if the two sides were to enter into free trade talks, said a top Chinese official visiting Ottawa.

Notwithstanding the low price of oil, China remains “highly concerned” about Canadian restrictions on investments by state-owned enterprises in oilsands companies, said Chinese Vice Minister Han Jun after delivering a speech on China’s latest five-year plan in Ottawa Jan. 14 at the Borden Ladner Gervais law office in Ottawa.

Mr. Han, who holds a rank roughly equivalent to a deputy minister in Canada, had also met with public servants in Agriculture Canada and Global Affairs Canada during his visit, he said.

Canada’s government banned foreign state-owned enterprises from acquiring Canadian oilsands producers in all but “exceptional circumstances” in 2012, though at the time it approved the takeover of Calgary’s Nexen oil company by Chinese state-owned enterprise CNOOC and the takeover of Canadian natural gas producer Progress Energy by Malaysian SOE Petronas.

Chinese Ambassador Luo Zhaohui told Embassy in November that rule was discriminatory against Chinese companies, and argued that Chinese SOEs operate by the same market principles as privately owned companies.

Mr. Han reiterated China’s desire to negotiate a free trade deal with Canada, two months after Mr. Luo made the same pitch to Embassy and several years after China’s government first proposed free trade talks to Canada’s government. The former Conservative government backed away from that offer. The new Liberal government in Canada has tasked Trade Minister Chrystia Freeland with building trade ties with China. The Liberal government has not yet said whether it will agree to enter into free trade talks with China.

The treatment of Chinese SOEs might be “touched upon” if Canada and China enter into free trade negotiations, Mr. Han told reporters after his speech.

“What I want to say is: do not put a special label on the SOEs from China. They are also a market player. Equal players should be given equal treatment,” he said.

In addition to the rules for oilsands companies, Canada’s government has set a lower threshold for the review of acquisitions of Canadian companies if the buyer is a foreign SOE. Under the Investment Canada Act, any acquisition by an SOE of a Canadian company worth about $375 million or more—the exact figure changes annually and is expected to be published in early 2016—is subject to a review through which the federal government must determine if the deal would be of net benefit to Canada. That threshold gets bumped up to $600 million for private companies, a number that is also changed regularly.

Canada’s government has preserved the existing lower threshold for SOEs under the Investment Canada Act in the text of the recently negotiated Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement with the European Union.

News Source: http://www.embassynews.ca/news/2016/01/20/china-wants-equal-treatment-for-soes-says-top-official/48095