Don't single out China as security threat, say CEOs

Canadian business leaders have heard all the warnings about China: fears that Chinese hackers and cyber-spies may be trying to breach the computer networks of Canadian companies and government departments, and concerns about huge state-owned companies taking over vital Canadian resources.

The warnings haven’t fallen on deaf ears, but they don’t exactly have Canadian companies running for the exits. China is just too big and too wealthy to scare off business that easily.

Some of Canada’s top executives met in Ottawa this week at a forum hosted by the Canadian Council of Chief Executives. The two-day event, called Canada in the Pacific Century, attracted some of the top CEOs, government ministers and academics all keen on prying open the vast Asian marketplace for Canadian business.

Bank of Canada governor Mark Carney was there, assuring Canadian companies it’s never too late to break into the Asian market. Carney told his audience there is still the potential for "a huge amount of growth" in China.

'Do you want money to go to Iran or Sudan or Zimbabwe, or do we want them to invest here?' —Wenran Jiang, University of Alberta expert on China

Canadian businesses have known about China’s potential for years. So have Canadian politicians. Ottawa sent its first trade delegation to the People’s Republic in 1972, not long after the two countries established formal diplomatic relations. Jean Chretien led numerous Team Canada missions to China during his tenure as prime minister.

Even current Prime Minister Stephen Harper, who was cool to China when he was first elected in 2006, eventually came around to the realization the world’s biggest market could not be easily ignored. There is now even talk of China and Canada one day reaching a free trade deal.

Through the years, trade with China has been accompanied by concerns about human rights, free speech and Tibet; questions often brushed aside or ignored – politely or pointedly – by China’s leadership. Recently though, as China has grown in political, economic and technological strength, new fears have arisen about Asia’s rising superpower.

Last week, as shareholders in the Calgary-based oil and gas producer Nexen were voting to approve a $15.1-billion takeover bid by CNOOC, the China National Offshore Oil Corporation, the Canadian Security Intelligence Service (CSIS) was releasing its annual report.

CSIS warnings

Without naming China, CSIS warned of what it called the "opaque agendas" of foreign state-owned enterprises.

"When foreign companies with ties to foreign intelligence agencies or hostile governments seek to acquire control over strategic sectors of the Canadian economy, it can represent a threat to Canadian security interests," warned the report.

CSIS also sounded the alarm on cyber-security, revealing in its report that Canadian government computer networks were facing serious attacks on a daily basis. As a primary example, the CSIS report cited a 2011 incident in which computers at the federal finance department and Treasury Board were compromised. While the report makes no mention of the origin of that attack, it’s believed to have been launched from China. CBC News also learned last week that CSIS has warned some of Canada's top executives to beware of cyber threats from Chinese hackers.

All this has led some to view China with suspicion. A recent poll found two in three Canadians believe the federal government should reject the Chinese takeover of Nexen. Ottawa has repeatedly offered assurances it will act in Canada’s best interests.

At this week’s meeting of chief executives in Ottawa, there were some dire warnings about what might happen if Canada were to reject the Nexen takeover deal.

"Are we going to let the Chinese invest in countries that have no clear rule of law and no transparency?" asks Wenran Jiang, a China expert at the University of Alberta.

"Do you want money to go to Iran or Sudan or Zimbabwe, or do we want them to invest here?"

To Jiang, Canada should not treat China as an enemy but rather as a business partner. Chinese investment in Canada, he says, is "a good bargain." As for allegations of Chinese-backed computer hacking or corporate espionage, Jiang says Canada should present whatever evidence it has and deal with Chinese authorities on a case by case basis.

'Cyber-threats can come from anywhere'

"We cannot just go out with a blanket accusation, saying this is a potentially hostile power and any economic activities getting closer to us will undermine our national security."

John Manley, the former Liberal cabinet minister who now heads the Canadian Council of Chief Executives, had similar words of assurance for those who might regard China as a security threat.

"You know, any of our companies that are members of our council would say that they have concerns about cyber-security," says Manley

"This is not a China issue. This is a factor that is playing out in the modern world. And sure, you can get cyber-attacks from China. But you can get them from Canada; you can get them from elsewhere."

Wendy Dobson, a business professor at the University of Toronto and member of the Asia Pacific Foundation, agrees cyber-security is an issue and that there are growing questions about how many threats are emanating from China. She says it's wrong to single out the Chinese for scrutiny, but she warns Canadian businesses need to know that risks are out there.

"I guess all I'm saying is don't discriminate against the Chinese. But for heaven's sake, know what you're doing."