China’s hostage diplomacy in the fight over Huawei executive Meng Wanzhou and questions about the potential for espionage using the tech giant’s overseas operations have Canadians spooked about high-tech investment.
And British Columbians are even more skeptical than other Canadians about such investment from Asia and its potential benefits, according to a poll commissioned by the Asia Pacific Foundation.
“That hesitancy toward foreign direct investment surprised me,” said Jeffrey Reeves, vice-president of research for the foundation. “We usually think of our orientation to Asia as a net positive.”
The national poll was conducted in February as relations with China deteriorated as a result of Canada’s arrest of Meng in Vancouver, at the request of the United States.
Soon after, China arrested two Canadians, former diplomat Michael Kovrig and entrepreneur Michael Spavor, then ordered the retrial of Canadian drug offender Robert Lloyd Schellenberg.
About 62 per cent of British Columbians believe the federal government is allowing too much direct investment in Canada’s high-tech sector by China, the highest level of concern in the country. By comparison, only five per cent are wary of investment from Europe.
Seven in ten Canadians believe that Asia will be driving global innovation in 10 years, but British Columbians aren’t inclined to throw open the doors to foreign investment. Just 13 per cent of West Coasters think relaxing restrictions on foreign investment is a good idea, according to the survey of 1,506 Canadian adults.
People understand that innovation and investment capital will come from China, Japan and India in the medium to long term, said Reeves.
“There is a concurrent sense within the Canadian public that there is inherently something more risky about accepting investment from Asia,” he said.
Chinese involvement in the telecommunications sector is a particular concern to Canadians, one that is shared by many other countries.
Last month, security officials from 30 countries met in Prague to create guidelines on the installation of 5G wireless networks because of concerns that equipment supplied by 5G powerhouse Huawei could be used for Chinese state espionage.
About half of Canadians doubt that the benefits of increased Asian investment in the tech sector would outweigh the risks.
Modelling based on the poll found that people were more likely to oppose projects involving China than other countries such as the United States or Japan and that projects involving telecommunications were more likely to raise red flags with respondents than sectors such as animation, life sciences or clean tech. The predicted probability of a project being opposed was 64 per cent for China, but just 28 per cent for Japan and 32 per cent for the United States.
“Telecommunications and China were the two subject areas where we saw widespread concern across the country,” said Reeves. “People were less concerned when it involved life sciences or clean tech, things that aren’t as politically charged.”
Opposition dropped substantially when people were told the project passed a Canadian national security review.
India and Japan are seen as countries that could supply high-tech expertise, while China is viewed as a potentially rich source of capital.
“There is a real desirability around access to Chinese capital but there is concern is around national security that we don’t see from states like Japan and India.
People were more comfortable with joint ventures between Canadian and Asian firms as a way to access capital, and less eager to allow foreign firms to set up wholly-owned subsidiaries in Canada or buy Canadian companies outright.
“There is a concern about the lack of transparency in the Chinese political process,” said Reeves.
Huawei’s murky ownership structure — including claims that it is employee-owned and free from state control — tends to heighten those concerns.
“I think Huawei could address those concerns in Canada and around the world by making a public listing, disclosing its ownership structure and saying who is in what role,” he said.
Chinese investment in Canada fell by 47 per cent in 2018 to $4.43 billion because of diplomatic tensions and tighter foreign investment rules implemented by China, according to Canada-China Investment Tracker. Canada launched a security review of Huawei and blocked a $1.5-billion takeover of a Canadian construction firm by a Chinese company.