Governor General to visit China amid concerns over declining investment

FILE - Governor General David Johnston responds to questions during a one-on-one interview at his official residence, Rideau Hall, in Ottawa on Wednesday, November 28, 2012. (Patrick Doyle / THE CANADIAN PRESS)

OTTAWA -- Gov. Gen. David Johnston will serve as the sharp end of a political stick that the Harper government is pointing at China this coming week, amid renewed concern that Chinese investment in Canada is drying up.

Within hours of delivering Wednesday's throne speech in Ottawa, Johnston will be on a plane bound for the People's Republic for his first official visit as Governor General. He's been there about a dozen times already in a long academic career that predated his arrival at Rideau Hall.

Johnston's China travels will also overlap with visits by two top Conservative cabinet ministers: Foreign Affairs Minister John Baird and Natural Resources Minister Joe Oliver. And it will come just a week after Trade Minister Ed Fast wraps up his fourth visit to China.

Johnston said he will meet with China's newly-installed leaders, including President Xi Jinping and premier Li Keqiang.

In an interview with The Canadian Press, Johnston was upbeat about the prospect of promoting the government's Asia-focused economic agenda -- and pushing the yardsticks forward on four decades of Canada-Sino relations.

"(It) has developed well over the last 40 years, perhaps not as quickly as some would have liked," he said. "But I think we're at an important hinge period where we can see some important changes in the future."

Johnston will address the powerful Canada China Business Council's annual general meeting in Beijing a few days after his arrival. And he said he knows energy and investment will be top of mind.

China is hungry for natural resources and Canada is eager to oblige, but there are serious obstacles, including a stalled pipeline process to carry Alberta crude to Pacific Ocean ports, as well as mixed messages about whether Canada is really open to foreign investment from so-called state-owned enterprises.

Johnston's visit comes just two weeks after one of Harper's most influential former cabinet ministers, Jim Prentice, warned that the government was chasing away needed foreign investment with its new regulations against state-owned enterprises buying into the oilpatch.

Prentice, now a CIBC executive, said Chinese investment has all but dried up.

Prentice said investment in the oil and gas sector so far in 2013 had plummeted to $2 billion from $27 billion during the same period last year, while mergers and acquisitions dropped to $8 billion from $66 billion.

Johnston said he would be delivering a simple message to Canadian and Chinese business leaders: "We are a trading country. We encourage foreign investment."

Johnston appeared to play down the fact that the Harper government has moved to curb majority acquisitions in the oilsands. It delayed approving acquisitions by China's CNOOC and Malaysia's Petronas last year, while amending foreign investment rules to make future deals like those far less likely.

"From time to time there will be decisions made that will not permit a particular investment decision to go ahead," Johnston said. "If you look at the broad range of opportunities, investments, we've seen a lot, we'll see more."

Johnston said he wants to build people-to-people connections between the two countries, especially in education -- a topic close to his heart not only because he has headed Canadian universities but because three of his own daughters studied in China.

Johnston said he wants to see the number of Chinese students studying at Canadian educational institutions rise to 100,000 in the next five years, up from the current 84,000.

He also suggested that Canadian business leaders should look to the recently deceased Paul Desmarais Sr. as a model for how to get ahead in China.

Desmarais, he said, began travelling to China in the early 1970s at the height of the Cultural Revolution.

"He was a pioneer. He saw the promise of China. He went there at a very difficult time. He was not fazed by the fact that there was the upheaval of the Cultural Revolution," said Johnston, who was friends with the Power Corp. titan, who died this past week at 86.

Desmarais, he said, established close personal relationships with China's "different leaders as they came along," a practice that his sons have carried on.

"It's a great example of a Canadian entrepreneur looking well beyond Canada, not simply to the United States, and well beyond the conventional markets to be a leader, and persisting in it for decades."

Satisfying China's need for face-to-face, high-level contact has been a hard-learned lesson for the current government -- Harper was publicly chided by a former Chinese premier in 2009 for taking three years to visit -- but it has clearly been internalized.

"From our perspective, it's important to continue to go there, to maintain the dialogue. We're building long-term relationships and you don't do that with sporadic visits," Oliver said in an interview.

Baird also noted that imperative when announced his trip to the interior megacities of Chengdu and Chongqing, as well as Beijing.

Baird added one more point, one that's not a favourite topic of his Chinese counterparts.

"Throughout this visit, I will continue to promote not just Canadian interests but also our values, including the promotion of human rights and religious freedom."

Asked how he planned to raise human rights, Johnston chose his words carefully. Would he raise specific cases of imprisoned dissidents, for instance?

Johnston said human rights is an area of "continual discussion" that has been "respectful" and will continue in the future.