Tories Try to Calm China Oil Concerns

Prime Minister Stephen Harper says Chinese National Overseas Oil Corporation's (CNOOC) proposed takeover of Canadian energy company Nexen is anything but a done deal.

"Nobody should prejudge the government's decision," Harper said in Toronto on Tuesday. "This investment will be thoroughly scrutinized before it is either accepted or rejected."

Industry Minister Christian Paradis must decide if the Chinese takeover of Nexen is of "net benefit" to Canada.

The minister also appeared to acknowledge the deal is controversial, warning CNOOC and Nexen to do "their homework."

"It's not up to the government to convince Canadians that there is a net benefit, but this is for the stakeholders to do," he said in Montreal.

While Paradis notes the deal must comply with national security law, critics still worry it would give the Communist Chinese government — which owns CNOOC — too large a foothold in Canada's energy sector.

Greg Autry, senior economist with American Jobs Alliance, warns Beijing is "obviously ramping up for war with our allies, like South Korea, Japan, Taiwan, and preparing for war with (the) United States and the rest of the western world."

Joseph Caron, a former Canadian ambassador to China, is less defensive. He says CNOOC is willing to submit to Canadian regulations by listing shares on the Toronto Stock Exchange and planting headquarters in Calgary.

"The more the company is integrated in that regulatory framework, the more checks and balances, if you like, there are on its corporate behaviour," he said.

Caron also says approval of the Nexen takeover would give Canada "strong arguments" as it tries to get Beijing to open up its economy to Canadian investment.

Harper confirmed Tuesday the issue is on his agenda.

"When I deal with Chinese officials, we do regularly raise issues of Canadian investments that exist in China as well as prospective Canadian investments in China," he said.

Meantime, Caron says Chinese investment in Canadian resources is only the latest wave of foreign interest.

"In a few years we may have to get used to the idea of very, very significant investments from India or Russia or Brazil," he said.