Trudeau Says `Australian Colleagues' Warned on Bid by China

CANBERRA, TORONTO, LONDON, BLOOMBERG -- Canada Prime Minister Justin Trudeau says “Australian colleagues” told his government about the challenges of allowing the Chinese to buy engineering companies before it made the decision to last week reject a bid by a unit of China Communications Construction Co. to purchase Toronto-based Aecon Group Inc.

Canada cited national security concerns as its reason for blocking the C$1.2 billion ($921 million) deal with CCCI. Speaking Tuesday in a wide-ranging interview with Bloomberg, Trudeau said Canada was trying to balance Chinese investment and Canadian sovereignty and said again that Canadian national security agencies recommended nixing the deal.

Trudeau revealed, however, that Canada spoke with unidentified Australians about Chinese acquisitions of engineering firms -- likely a reference to the recent Chinese purchase of Australia’s John Holland Pty. Ltd., a case analysts have cited as comparable to the Aecon bid.

“Having spoken with some Australian colleagues about the challenges that they faced with similar purchases by the Chinese of engineering firms, certainly highlighted to us the potential for challenges with this one,” Trudeau said in Toronto.

Canadian Officials

He didn’t specify if the Australians that Canadian officials spoke to were government officials. Australian Foreign Minister Julie Bishop declined to answer a question on whether officials from her government briefed Trudeau on the issue, saying in an email that “Canada is a sovereign country and questions of foreign investment are a matter for Canada.”

The move by Canada was the latest by Western nations including Australia who are citing national security concerns to halt planned investment from Chinese companies. It also comes amid an increasingly fraught relationship between Australia and its biggest trading partner, China, that’s led to media reports of a diplomatic freeze imposed by Beijing. In addition, Trudeau is looking to strike a deal with the U.S. and Mexico to update the North American Free Trade Agreement. U.S. President Donald Trump has rejected several Chinese takeovers.

Trudeau, who has wooed China and has been in discussions over launching formal trade negotiations, struck a more cautious note Tuesday. He said it’s “simply not the case” that China offers equal investor access to western nations.

“We’re going to expect that things happen fairly, and under fair principles and rules, as opposed to ‘might is right,’" Trudeau said Tuesday. “This is something that I think is an important message to share with the Chinese, not in a malicious or an aggressive way but in a very matter-of-fact way.”

Read more: Canada Blocks Chinese Takeover of Aecon on Security Concerns

He stressed that Canada is interested in defending an “international rules-based order that protects sovereignty, that protects national security, that protects intellectual property.” The Chinese Embassy in Ottawa warned of an investment chill after the Aecon deal was blocked, and complained of “politicization” of the review process.

Australian Prime Minister Malcolm Turnbull, whose government has increased regulatory powers to scrutinize takeovers by Chinese state-owned enterprises, in December accused Beijing of meddling in his nation’s media, universities and government when he announced new laws to clamp down on foreign interference.

CCCC in December 2014 agreed to buy Australian construction company John Holland in a deal that valued the builder at about A$1.15 billion ($861 million). In an interview with the Australian Financial Review in January, John Holland’s chief executive Joe Barr said he had personally advised Aecon executives that the Chinese company’s purchase had been a “good growth story for us” and that being part of a Chinese conglomerate had been “liberating."

Beijing-based CCCC, parent of CCCI, is one of the biggest engineering and construction companies in the world and is the largest contractor building China’s Belt and Road Initiative across Asia through to Africa. Its core businesses include infrastructure construction and design, and dredging. The company posted revenue of 460.1 billion yuan ($72 billion) last year.