aecon group china
The time for pleasantries and diplomatic decorum has come to an end. In a candid May 31, 2018 editorial published in the Globe and Mail entitled 'China is Not a Threat to Canada', Chinese Ambassador to Canada Lu Shaye made it clear that a destructively toxic environment has been created by the mainstream media and political class alike towards China, which must now come to an end. Although the Chinese are known for their nearly superhuman patience when dealing with basketcase nations of the TransAtlantic region, the state of anti-Sino hysteria now prevalent across Canada has simply gone too far.

The straw that broke the camel's back was the May 23rd intervention launched by the Canadian government into a strategically important purchase of a failing Canadian construction giant named Aecon Inc. As the buy-out - two years in the making - was on the verge of being finalized, a National Security Review conducted by the Ministry of Innovation, Science and Economic Development concluded that China's ownership of Aecon would be detrimental to Canada by allowing a foreign government access to sensitive military and nuclear technology knowledge that could undermine Canada's safety.

The Ministry justified its decision in the following terms:
"Based on their findings, in order to protect national security, we ordered CCCC not to implement the proposed investment... Our government is open to international investment that creates jobs and increases prosperity, but not at the expense of national security."
Instead of recognizing in China a trusted partner and ally that offers Canada a fresh approach to economic development and cooperation not seen in our country in over 50 years, the majority of the population has been led by evidence-free arguments to see in China only a shifty totalitarian state, abusive towards its own people, hungry to steal technological secrets, desirous of undermining the stability of the "free world" and intent on replacing the USA as a new unipolar world empire.

China is Not a Threat

Speaking to these prejudices in general, and to the Canadian government's veto against CCCC Holdings specifically, Ambassador Lu stated the following:
"China does not agree with politicizing and wantonly using the concept of national security, and opposes adopting discriminatory policies against Chinese enterprises. Canada's rejection of Aecon shows that Chinese enterprises are suffering from unfair treatment."
ambassador china canada
The argument crafted in the National Security Review to justify their rejection of the buy-out was simply that China cannot be trusted because "everyone knows" that the Chinese lick their lips in hunger for our nuclear and military secrets, for which the purchase of Aecon would apparently make them privy.

Were this claim true, then a case for the veto could be made, but as the CEO of Aecon has pointed out on several occasions, none of its military contracts involve secret technology or information. While Aecon does have expertise in nuclear plant refurbishments, they control no patents on nuclear technology, and frankly - considering that China has become the world's fastest growing builder of next-generation nuclear power plants - the idea that it stands to gain by stealing "nuclear secrets" from a country that still uses 1960s nuclear technology and hasn't built a new reactor in 40 years is absurd. That, however, is not the point, as even this argument presumes that China's agenda involves stealing foreign patents and undermining Western nations' security.

Ambassador Lu elaborated upon the absurd claims of technology theft in the following statement:
"Some people are so full of imagination that they claim China's development depends on stealing technologies from western countries. I'd like to advise them to keep calm and think: How could a country such as China - with a population of more than one billion - develop solely by stealing technologies from other countries... China has long been a major powerhouse of independent innovation. According to data released by the World Intellectual Property Organization, China was the largest holder of newly registered patents in the world in 2016 and 2017. These people are advised not to believe that developing countries will always lag behind the West."
This may sound like a surprise to some, but the Ambassador is not exaggerating. While China did move through a necessary period of "copying" Western technology designs as it compressed a process of industrial development that took the West 300 years to effect into the space of a mere 30 years, it has long since matured out of the "copying apprentice phase of development" and into a pioneering identity, which has been jettisoned forward by the unveiling of the Belt and Road Initiative and its increasingly ambitious space program. China has now become a world leader in next-generation nuclear tech, high-speed and mag-lev rail, computer technology, civil engineering projects and space.

For those surprised by this claim, keep in mind that while China's Research and Development investment (measured by percentage of GDP) still lags slightly behind that of the USA (with 2.06% and 2.79% respectively), China's patent applications rose to over 1 million in 2016 (against the USA's mere 510,000) - meaning that the quality of ideas is more important than the quantity of money invested by a nation. The dramatic rise of China's prominence can be seen in the fact that in 1996, China had only 11,974 patent applications while the USA had 177,967.

A Missed Opportunity for Canada - Not China

Lu Shaye's next strong lesson for Canadians arrogantly gloating that they have "successfully defended their country from China" falls upon the fact that the loss of the sale of Aecon is a much greater loss for Canada than for China, and an opportunity to bring Canada into a much-needed new paradigm of growth, creativity and cooperation has been missed.
"The acquisition offered by CCCC at a premium of $1.5-billion was definitely good news for Aecon. It would not only greatly improve Aecon's international competitiveness and tap into its development potential, but also help increase employment opportunities and employee welfare, from which its shareholders would also benefit."
This is no exaggeration. Although Aecon, with its 140-year-old "build anything" capability, is among the most important features of Canada's physical economy1, this power has been left to rot by a systemic policy of political economic incompetence and neglect which has caused our once industrial, growing nation to become a consumer-based, post-industrial, money-worshiping train wreck - especially since the "innovation" of NAFTA, which annihilated millions of productive manufacturing jobs across North America and unleashed an accelerated wave of de-regulation, national castration, and visionless despair.

Describing the dismal state of affairs and the benefits of the purchase in October 2017, Aecon CEO John Beck stated:
"We will be bulked up financially be the presence of our partners and will be able to compete on an equal footing with many international contractors that are now present in Canada... We are now small compared to the large players and we need to be able to compete on an equal footing for the benefit of Canada... In the last year and a half, no significant new contracts were awarded. They've all been lost. All of them."
For anyone who is afraid that China's ownership of Aecon would destroy Canadian jobs, as is being repeated by the media, they would do well to observe how other buy-outs effected in recent years by CCCC (such as the purchase of Australia's John Holland Group in 2015) have seen only dramatic growth of local jobs, productivity and international activity - especially within Belt and Road related projects.

The Chinese Dream of building (and re-building) the world is already happening. Those who shoot themselves in both feet by not participating or holding back are only going to wind up placing themselves last in benefiting from this transformative phase.

The Strategic Importance of the Belt and Road

The purchase would not only have revived Aecon's raison d'etre as a leading nation-building organization, liberating it from the constraints of monetarism which infest Western business models, but also would have allowed it to participate in the international Belt and Road projects that have been transforming Asia, Russia, the Middle East and Africa at increasing rates of progress since it commenced in 2013. One-Belt-One-Road currently represents 65 countries and 60% of the world's population directly. It has risen in scale to the equivalent of 20 Marshall Plans and includes $2 trillion of investments into the real economy with millions of souls being lifted out of poverty and given skills, and life purpose every day.

The fact that a Chinese firm such as CCCC, which represents one of the largest players in Belt and Road projects, is 65% owned by the Chinese government is not a reason to assume that it's interest in a Canadian firm is bad for Canada. In fact, one of the reasons for the great success enjoyed by Chinese companies in building long-term projects is that they operate according to principles once adhered to by Western nations in the first couple of decades after WW2, when our nations grew at their most rapid rates in history. Whereas the de-regulated, globalized West has been held back from enjoying the fruits of long term projects for decades, China's economy is shaped by the use of:

1) Productive, nationally-directed credit

2) Glass-Steagall standards, which separate speculative banking from productive banking

3) Long-term planning where loans can be delivered without IMF-style conditionalities and with very low interest rates.

The Belt and Road Initiative is raising hundreds of millions out of poverty and providing an alternative to the Hobbesian "might makes right" system of international relations dominated by the financial oligarchy. Currently, many Western companies are yearning to play a positive role in the Belt and Road's construction, as well as benefit from Chinese capital investments into our own economies. However, due to the fact that they have been permitted to atrophy under decades of visionless policies, these companies cannot compete with international players any longer, nor can they perform competitively if they are bound by the constraints of "shareholder value" logic, which demands high, quick returns, with as little long-term thinking and planning as possible.
trudeau xi jinping

'Deal! Well, maybe. Actually, no.'
A Point of Hope

While the frustration which China feels is palpable, the Ambassador ended his article on a positive note:
"I hope Canadians can embrace China as simply a different country and not regard China as a threat just because of our differences. Only by getting rid of such kinds of demons can Canada relieve the burden, co-operate with China and come aboard the express train of China's development."
The case for Canada's involvement in this new age of prosperity and peace should be clear to all thinking citizens. The Belt and Road Initiative is spreading across the world and Canada's role in bridging the gap between Eurasia and the United States through the Arctic is vital. The development of rail, resources and energy programs centered around 3rd and 4th generation nuclear power, space technology and northern cities is at our finger tips. Companies such as Aecon will play a vital role in constructing these projects.

Canada's involvement in the Asia Infrastructure Investment Bank places Canada in a strong position to play a role in these projects and the existence of a historic tradition of nation-building (although currently dormant) can be awakened if the right balance of crisis and opportunity were to strike.

The Chinese understand very well that the speculative bubble known as the "Western economy" is collapsing. They understand that the only thing which has value in a real economy are the people and everything necessary to maintain the population in a state of improving standards of life. They know that this ultimately is given meaning and purpose by humanity's unique capacity to make discoveries and apply the fruits thereof for the benefit of the species in the form of unbounded scientific and technological progress. They also know that it is only through long-term visions for the future that you can fuel the noblest sentiments of mankind that allows us to make those discoveries and act with dignity towards our neighbours, ourselves and our posterity.

The next time an opportunity to have a future with China's Belt and Road is presented, it would be best to ensure that our government act in accord with the best interests for Canada and the world by not throwing sand into the gears of history.

Footnote

1. Physical economy is the proper definition of the "real" component of the economy that is directly tied to the maintenance and increase of a nation's people, both in the present and indefinite future. This is to be understood as primary to all functions of "financial" gains occurring within a system - whose values must always be kept subservient to the "real" values of infrastructure, culture, and agro-industrial productivity. Examples of the great nation-building accomplishments in Aecon's portfolio include: The St Laurence Seaway (1954), St. John's Harbour (1931), Trudeau Airport (1969), CN Tower (1974), and Vancouver Skytrain.
About the author

Matthew Ehret-Kump is a historian, lecturer, and political activist who has represented the International Schiller Institute, as well as the Committee for the Republic of Canada. Matthew has focused on organizing diplomatic conferences and seminars since 2007 across Canada and the USA in order to promote global infrastructure mega-projects, bank reform and other cultural initiatives in the promotion of global development and cooperation. In June 2012, Matthew co-founded the online history/geopolitical review Canadian Patriot (canadianpatriot.org) which features unique analysis into Canadian history, economics and geopolitics. He can be reached via matt.ehret@tutamail.com