Canada seeks gains from China in exchange for oil deal

Canadian Prime Minister Stephen Harper said yesterday his government will seek to correct trade imbalances with China as he manages a wave of takeover spending from the country.

Harper, speaking at the Bloomberg Canada-Asia Conference in Vancouver, said Canada needs to diversify trade to Asia because of sluggish growth in much of the rest of the world, adding that the relationship also needs to become reciprocal.

"The Chinese are acutely aware, in my own experience, of the fact the trade and investment flows are disproportionately in their favour," Harper said. "They recognise that has to change," he said, adding "we will also be seeking things from them."

Harper's ability to bolster economic relations with China, which he calls a national priority, is being tested by concern the country may gain too much influence over Canada's oil sands, the world's third-largest pool of oil reserves. A poll by Sun News Network last week showed a majority of Canadians surveyed want him to reject a US$15.1 billion takeover of Calgary-based oil company Nexen by CNOOC.

Harper said he is aware Canadians are wary of Chinese investment and said it is incumbent on China to show it can play by "the same rules" as Canadians. To provide clarity, Canada's government is preparing a "policy framework" for foreign investment to explain the government's decision regarding the Nexen bid and future transactions, he said.

Canada's system for weighing takeovers is "highly subjective and unpredictable", Toronto-based research group CD Howe Institute said in a study released in December last year. The rules may have contributed to the decline in Canada's share of global foreign-direct investment, it said.