Canada’s largest pension fund plans to invest hundreds of millions in Chinese solar panel makers

TORONTO – Canada’s largest public pension plan plans to invest hundreds of millions of dollars in Chinese solar panel makers that had been blacklisted by the U.S. amid security concerns over Chinese technology. The…

Canada’s largest pension fund plans to invest hundreds of millions in Chinese solar panel makers

TORONTO – Canada’s largest public pension plan plans to invest hundreds of millions of dollars in Chinese solar panel makers that had been blacklisted by the U.S. amid security concerns over Chinese technology.

The Public Sector Pension Investment Board, known as PSP Investments, said Wednesday it plans to invest US$379 million in two companies it refers to as Wuxi Suntech and Tianjin Baosteel Solar, two of the world’s largest solar panel manufacturers.

PSP said the investment was made after successful due diligence and that it was in line with Canada’s national security policy under the Investment Canada Act, which “provides safeguards for Canadian investors.”

But some leading experts on national security said the risk posed by investment in Chinese manufacturers — who operate on a “highly competitive basis, far beyond global standards” and export surplus technology to less-regulated neighbours and other nations — was too great to dismiss.

“The purchase of these entities risks conflating espionage with commercial activity and the rapid technological transformation in the global renewable power sector,” said Victoria University’s Ron Heifetz, a leading expert on technology risks and vice-president of Threat Exchange.

Canada already has a double trade deficit with China — one with goods and another with services. And, one of the world’s largest economies and the world’s biggest manufacturer of goods, China is coming under increasing pressure from Washington, among other world leaders, to play by a global trading and security system.

In August, the U.S. Security and Prosperity Partnership of North America unveiled a plan to bolster its trade with Canada and Mexico, demanding that firms from those countries use North American technologies and finance to shore up NAFTA competitiveness.

Although Canada’s national security policies recommend investing in U.S. securities in times of economic crisis or war, heifetz said “against the backdrop of continued trade uncertainty and questions around China’s trade practices,” PSP Investments’ plan “raises some legitimate security concerns.”

In November last year, Canada’s National Research Council signed a research and development deal with Baosteel Solar, which it said would provide “significant opportunities for research, development and collaboration” with a technology that has been adopted by other U.S. companies.

The following month, the U.S. Department of Homeland Security and Office of the Trade Representative rejected shipments of one type of Wuxi Suntech solar panels containing “a 2 percent extruded cell from a Chinese company,” the U.S.S.M. Patriot Act said.

“We need to be very careful about our investments in Chinese solar companies — just like we should be careful about other sectors of China,” said Heifetz.

“Canadian security and trade policy measures are not based on rigorous assessments of appropriate risk of investment, but rather are based on sentiment and short-term considerations,” said Heather McCurdy, national director of the Canadian Democracy Alliance, which offers legal advice on political and electoral law.

PSP Investments, which manages more than C$300 billion, said it plans to invest in the Chinese solar manufacturers as part of a US$1.1 billion investment across the renewable and sustainable energy industry.

“In looking at strategic investments, we identify businesses that play an important role in the global power market, offer sustainable solutions and, by virtue of their size and market-leading position, are able to achieve sustainable growth,” said PSP Chief Executive Officer Jim Leech.

“We are pleased to have been granted access to markets and are open to future business discussions with further partners in the renewables and sustainable energy sectors.”

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