Conference Board of Canada: Clearer Rules for Chinese Investment in Canada Needed
Glen Hodgson, Chief Economist for the Conference Board of Canada, argues that Canada is not capturing its fair share of foreign direct investment (FDI), particularly from China, and urges a fundamental revamping of Canada’s FDI screening system. He suggests our country can learn a few things from Australia which garners three times as much Chinese FDI as we do (despite being half the size) without harming its national interests.
Mr Hodgson said the 1980s Investment Canada Act is outdated and opaque, and a modernized structure is required to reduce arbitrary political intervention. He desires reform of the current national interest test for all FDI, with special reference to Chinese investment, proceeding from the presumption of innocence. He also wants to bring in a national security test, especially for state-owned enterprises and sovereign wealth funds (such as the China Investment Corporation (CIC)), to better address national security concerns. Currently, the net benefit rule is unclear and politically sensitive, he added.
Taking a page out of Australia’s book, he recommends that, as China does, Canada introduce technology transfer requirements (a major turning of the tables in the global economy) along with criteria for transparency in governance and job creation. In sum, he believes increased Chinese investment would boost jobs and productivity and a win-win for both countries.
Watch the interview: http://www.theglobeandmail.com/report-on-business/video/article4392745.ece
Financial Post report: http://business.financialpost.com/2012/07/05/canadas-takeover-rules-scaring-away-chinese-investments-in-oil-patch-report-warns/