Tuesday, June 13, 2017

Distrust of Chinese takeover bid illogical but visceral

The ongoing takeover bid by Chinese company Hytera Communications of the Canadian satellite communications company Norsat International has stirred up a lot of emotion on all sides.
The Vancouver-based company sells sensitive communications technology to both the Canadian and American national security forces. The Liberal government has recently greenlighted the sale to the Chinese company, though, apparently without a full national security review to assess the possible impact of transferring proprietary technology outside Canada.
Innovation Minister Navdeep Bains has publicly insisted, rather disingenuously it seems to me, that the government is following the recommendations of the Canadian national security agencies. However, it seems clear that all the deal has actually been subjected to is the usual initial screening process applied to all out-of-country company sales, and not a full national security review. At least two ex Canadian national security directors have gone on record as being surprised and concerned that a full national security review was not carried out.
The Conservatives and NDP are predictably up in arms about it, and now the Liberals are also coming under pressure from a US congressional commission, which does not want to see American military security compromised, particularly not by the Chinese. Mr. Trudeau, for his part, insists that the Americans were consulted on the deal, although he seems reluctant to offer any more details about this consultation process.
The sale has been temporarily put on hold while a counter-bid by an American company, Privet Fund Management, is considered, but Hytera - owned by Chinese billionaire Chen Qingzhou, and boasting access to almost unlimited Chinese state financing - is expected to easily outbid it.
What I find most interesting is the reaction of the Western national security people to the fact that the sale is to a Chinese company. If the US Privet bid were to be accepted, for example, there would not be the same clamouring for national security reviews, and a cursory regular screening would be all that would be required. But China is a very different kettle of fish.
The Trudeau Liberals are throwing themselves into opening up trade with China in a big way, and given the difficulties Canada is currently having with US trade, you can kind of understand the trend. However, I too feel a distinct ambivalence towards increased dealings with China, even if not for any specific reasons - it is all somehow vaguely connected with the China's iffy civil rights policies, and the country's secrecy and general inscrutibility. Brut we are not at war with China, nor they with us, and there is no reason to immediately suspect that the Canadian satellite communications technology is going to be turned against us in some way.
There are clearly some double standards at work here, but there is just something about the "otherness" of China that compels an instinctive and visceral distrust. Interesting, and a little scary.

It ought to be instructive to the Prime Minister that a recent Nanos poll indicates that 76% of Canadians oppose the NorSat sale to the Chinese, and 78% oppose the sale of Montreal-based ITF Technologies to Hong Kong's O-Net Communications, which is also partly owned by the Chinese government. This after an April poll that showed nearly 90% of Canadians are "uncomfortable" with the idea of increased Chinese access to Canada's economy.
Based on these results, pollster Nik Nanos commented that, "If the government continues to embark on this path, it will probably be a significant political risk for them." That should give Mr. Trudeau pause, but somehow I don't think it will enter significantly into his calculations.

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