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Ambassador Lu Shaye Interviewed by The Globe and Mail
2017/03/28

Robert Fife: First thing I'd like to ask you is what were your instructions from Beijing in what they want you to achieve as the Ambassador?

Lu Shaye: My instructions from Beijing were clear and simple. That is to promote further development of China-Canada friendly relations on the basis of the achievements made.

Robert Fife: China and Canada are trying to negotiate a free trade agreement. As part of that agreement, would you like Canada to lift the restrictions on Chinese state ownership by being enabled to invest in Canadian oil sands and other resource industries?

Lu Shaye: I think the purpose of conducting exploratory discussions between China and Canada is to ultimately sign a Free Trade Agreement, which would open up much broader prospects for further expanding our bilateral trade and investment. To sign the FTA is to lift the restrictions on investment and trade as much as possible by our two sides and lower the thresholds. China has invested in many fields in Canada. In the past, Chinese investment usually went to energy and mining industries. But now the investment is gradually increasing in areas such as manufacturing, agriculture and scientific research.

Steven Chase: I would like to follow up on the question. What we would like to know is when it comes to relations between China and Canada, trade relations, is China's expectation that state-owned companies will be treated no differently from other companies in Canada?

Lu Shaye: There is no doubt that both China's and any other country's companies should be treated equally without discrimination. Since the policies adopted by the Chinese government provide fair and just treatment for all foreign enterprises in China, we certainly hope to see that Chinese enterprises investing abroad be treated equally in the same way.

Steven Chase: Because right now we have a situation where the Canadian government forbids Chinese state-owned companies from investing in new oil sands that was put in place in 2012. Do you expect that would be lifted as part of the free trade agreement?

Lu Shaye: The Canadian government certainly has the right to make any decision on foreign investment in Canada, and so does the Chinese government in China. However, any country's government should take the interests of both its own country and other stake-holders into account when it comes to make foreign policies. In this context, the concerning parties need to enhance communications and consultations to accommodate the interests of both sides and seek the greatest common divisor so as to reach more consensus. With FTA negotiations, both sides can put their respective requests on the table so that we can identify which ones are acceptable and which ones are not, and figure out what we can compromise on and what we can not. If we do so, we can do it well. Only by mutual understanding and mutual accommodation can consensus be reached in the end. If neither side makes concession, there will be no progress on the negotiation.

Steven Chase: So what is China's request in the trade negotiations? What is China's request with regards to Canada's treatment of state-owned enterprises?

Lu Shaye: China and Canada have already held the first round of exploratory discussions on FTA. Though I have not got the details at present, I do believe some positive results have been made because the two sides agree to hold the second round of discussions in April. It demonstrates both sides have the willingness to continue the discussion. Any request from both sides could be put forward in the process.

Robert Fife: One of the conditions China expected in terms of beginning the free trade talks which we saw when our Prime Minister met with your President and Premier in Beijing was that they negotiated an extradition treaty so that China can seek the repatriation of people who they believe are corrupts or criminals to go back to China. Where is the status of those negotiations now? Are you close to getting an agreement on extradition treaty because no talk has been going on?

Lu Shaye: China is willing to negotiate and sign an extradition treaty with Canada. However, the talks have yet to begin as presumably there may be some concerns in Canada. Notwithstanding the status, we would like to strengthen cooperation with Canada in judicial and law-enforcement areas to jointly combat crimes such as duty-related crimes and economic crimes. Let the criminals have nowhere to hide in any country.

Robert Fife: China signed cyber security agreements with the United States and Great Britain. Will you be talking to Canada about cyber security agreement with Canada as well?

Lu Shaye: With regards to cyber security issue, China is willing to work with any other country to jointly safeguard and realize a fair and reasonable cyberspace order. Recently, China has released International Strategy of Cooperation on Cyberspace, which is substantive in content. We can offer you the document shortly if you are interested, so that you can have a comprehensive and accurate understanding of China's policy on internet governance, cyber security and the development and international cooperation in cyberspace.

Steven Chase: I would like to follow up on the question about cyber security agreement. Our understanding is that when the United States and Great Britain signed a cyber security agreement with China, the intention was that both sides committed that they would not conduct industrial espionage, cyber hacking against each other. Has the Chinese government prepared to sign the same sort of cyber security agreement with Canada where both sides agree not to conduct corporate industrial espionage against each other?

Lu Shaye: It depends on needs of both sides and whether it is necessary. China has never been conducting cyber espionage activities against any other country. I don't know whether relevant Chinese departments are suspicious of cyber espionage activities against China conducted by Canada. In my view, it depends on whether the two sides think it is necessary to sign such an agreement.

Steven Chase: One of the stories, one of the developments in Canada over the past six or seven years has been efforts by companies like Huawei and ZTE. They want to sell their products to the Canadian government and businesses. The Canadian government in the past years has been very resistant about allowing Huawei into critical infrastructure like telecommunications and data that is considered high security. So my question is, as part of these new relations between Canada and China, do you expect the companies like Huawei will be treated the same as any other western telecommunications equipment providers?

Lu Shaye: Do you think it is rational to exclude and elbow out products by Chinese companies with the excuse of information security? Huawei and ZTE, two leading Chinese high-tech companies, are doing businesses all over the world. Why do they become such a big concern in Canada and your neighbor the U.S. while not so in other countries? As far as I know, western high-tech telecom companies face no obstacles in sellling their products in China. Abusing national security or improperly using it as an excuse, is a kind of protectionism.

Steven Chase: That's a very interesting comment. We have had a new government in Canada for 15 months now. I would like to ask you, has China noticed or taken note of a change from this new government which is with respect to China and with respect to more trust in China when it comes to nation security and other matters?

Lu Shaye: In fact, country to country relationship should be based on trust. Generally speaking, mutual respect, equality and mutual trust are the basic principles of China's foreign policy, and we apply these principles to any other country. Whenever these principles are well implemented, bilateral relationship enjoys favourable development. So we wish to continue to enhance mutual trust with the Canadian government, jointly promote bilateral relations and cooperation in all respects and benefit our two peoples. Last year, Chinese Premier and Canadian Prime Minister exchanged visits, and they set an example in enhancing mutual trust for our two governments and two peoples from all walks of life.

Robert Fife: Can I ask you sir? You mentioned the national security concern you see as trade protectionism. Do you see the restrictions on the state ownership in the oil sector also as a Canadian protectionism?

Lu Shaye: That depends on how the Canadian side views its own interest. Keeping the restrictions on oil sands investments or removing them, whichever choice serves the Canadian interest better, is not determined by the Chinese side, but a judgment made by the Canadian side.

Robert Fife: You talked about how China wants to invest in health, agriculture and high technology, and not just resources but you wanna move from resources into these areas. Does that mean any Chinese company should be able to come and invest? That's what you'd like to see in the free trade?

Steven Chase: We ask this question because we don't have a lot of state-owned enterprises in Canada. You have lots of them. We don't have a lot of experience of that in Canada. They are mostly private companies. Does the ambassador believe that China wants to see their government-owned enterprises when they're coming to Canada treated as the same as any other western company?

Lu Shaye: These state-owned companies, just like private companies, firstly are Chinese companies, which should be treated with the same standard. I hope the Canadian side could refrain from treating Chinese state-owned companies in a biased way. As far as I know, Canada also has state-owned companies, just with different names and functions. The Canadian side should not refuse to recognize the market status of China's state-owned companies just because of those differences.

Steven Chase: We don't have prejudices but our intelligence agencies like Department of National Defence or CSIS or Communications Security Establishment have in the past raised concerns about Chinese state-owned enterprises trying to invest in Canada.

Lu Shaye: I am not saying the Globe and Mail is biased. I just make a general reference to some Canadians.

Robert Fife: How do you answer that some of the security services have raised the issue, I mean, not this government, as far as we know? In the past, former government had rejected some Chinese investment because security services said that they were working for the Chinese government.

Steven Chase: I can give an example of O-Net Communications. They want to buy fiber laser technology company in Montreal and the Canadian intelligence services said that don't let them buy it because it would help the Chinese advance military grade laser technology. This is the recent example we hear about and that's why we ask the question.

Robert Fife: Just for your context, the Conservative government Mr. Harper said NO in 2012. The Liberal government reviewed it and approved it.

Lu Shaye: In my opinion, investment is investment, it should not be mixed with politics. This also applies to bilateral FTA talks, otherwise the negotiation will be very difficult. What I mean by politics is "politicalizing". Politics are everywhere, but we shall not go to the extreme and politicalize every topic.

Robert Fife: As part of the free trade, the Canadian government is doing consultations with Canadians. They are saying that Canadians may have concerns about China including issues relating to environment, labour, gender equality, rule of law and human rights. Free trade deal with China would not deter Canada from urging and working with China to meet those obligations. Is there any concern that this free trade agreement could be derailed as Canada pushes too hard on human rights?

Lu Shaye:As I said just now, FTA negotiation is about free trade. If mixed with other factors, the negotiation will become very difficult. We do not shy away from topics like human rights or environment protection, and are willing to discuss these issues with the Canadian side, but not in FTA talks. We have other mechanisms and occasions. What we don't want to see is one side presses the other side to make concessions by using democracy or human rights as a bargaining chip.

Robert Fife: May I just finally ask you? I think you would agree that there are different mood between the Trudeau government and former Conservative government. Since Mr. Trudeau's election, the Prime Minsiter's been to China. Your foreign minister's been here. Your Premier has been here. When will the President come to Canada?

Lu Shaye: Our two countries have witnessed very frequent high level exchanges, which strongly promote our bilateral relations. President Xi Jinping and Prime Minister Trudeau have met several times on the margin of multilateral meetings, and they have opportunities to meet again this year on multilateral occasions. Governor General Johnston paid a visit to China in 2013, we hope President Xi could visit Canada at an early date, but this depends on his schedule.

Robert Fife: This year?

Lu Shaye: The Chinese Embassy will work actively to facilitate a visit by President Xi to Canada. But as I just said, whether he could make it or not depends on his schedule. President Xi has a very tight schedule this year, with many important domestic commitments, like the 19th CPC National Congress this autumn, and the Belt and Road Forum for International Cooperation held in Beijing in May.

Robert Fife: Thank you Ambassador.

Lu Shaye: I am always very glad to talk with the media. If you have any question in the future, please contact me anytime.

(Please be noted that Ambassador Lu Shaye spoke Chinese in the interview. This is the English translation.)

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