CALGARY, June 6, 2013 /CNW/ - Many of China's state-owned enterprises
(SOEs) are among the world's most powerful companies. One such company,
CNOOC, recently received federal approval for the acquisition of
Canada's Nexen Inc. But SOEs are enigmatic, as shown by a report
published today by The School of Public Policy. Author Duanjie Chen
reveals the make-up of these government-controlled businesses and
argues that Canada should avoid fostering their growth.
Chen describes SOEs as "a very powerful tool of the Chinese government's
industrial policy, which is aimed at a ruthless expansion of its global
economic empire." SOEs have seen spectacular growth over the last two
decades, driven by the Chinese government, which provides cheap or free
business inputs in order to create globally dominant corporate powers
in areas of strategic importance to the country. However, Chen argues
that strategy comes at a high price: lower priority on human rights,
the environment, social justice and corporate rectitude. This disregard
is not something the Canadian government should encourage, she argues.
Chen also challenges the claim that SOEs can be likened to Canadian
Crown corporations. For one, Crown corporations are created to remedy
market failures for essential services; China's SOEs are meant to chase
profits. Chinese SOEs also aren't publicly accountable the way Crown
As a matter of policy, Chen advises the Canadian government to uphold
the position it announced following the CNOOC-Nexen deal: to end the
trend of takeovers of Canadian businesses by SOEs. Rejecting these
acquisition attempts would reflect Canadian business principles.
"Canada's business sector should contribute to market-driven economic
growth, through efficient management and upright corporate behaviour.
It should not be allowed to become an instrument in China's distorted
and often disreputable drive toward global hegemony," Chen writes.
The report can be found at www.policyschool.ucalgary.ca/publications
SOURCE: The School of Public Policy - University of Calgary
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