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Section: Daily Dispatches

China Set to Buy Up Canada's Resources;
Noranda Takeover is Just a Start,
Foreign Minister Tells Geoffrey York in Beijing

ByGeoffrey York
The Globe and Mail, Toronto
Thursday, Oct 21, 2004

http://www.theglobeandmail.com/servlet/story/RTGAM.20041021.wchina21/B
NStory/International/

China's Communist rulers have a blunt message for
anyone who frets about the planned Chinese takeover
of Canada's biggest mining company: Get ready for
more to come.

In an exclusive interview with The Globe and Mail in
Beijing this week, Chinese Foreign Minister Li
Zhaoxing made it plain that the controversial $7-billion
takeover of Noranda Inc. is just a small element in a
much more ambitious strategy of investment in
Canada's resources sector to feed China's voracious
appetite for raw materials.

"Given our rapid economic growth, we're facing an
acute shortage of natural resources," the foreign
minister told The Globe.

"No matter how plentiful our natural resources, when
you divide them by our population of 1.3 billion, the
figure will be very small," he said.

"The Chinese government is encouraging Chinese
enterprises to make investments in Canada,
particularly in the field of resources exploitation."

It is the first public comment on the Noranda issue by
a senior Chinese leader since the controversy over the
planned takeover erupted last month.

Though the minister did not identify any specific targets
for future Chinese buyers, it is known that two of
China's biggest state-controlled oil companies are
considering major investments in Alberta's oil sands.
In other potential billion-dollar deals, Chinese oil and
mining companies are looking at lucrative assets held
by Canadian companies in Ecuador and Mongolia.

The proposed takeover of Noranda by state-owned China
Minmetals Corp. has shocked many Canadian observers,
but it is a potent symbol of China's sudden emergence
as a powerful global investor and a massive consumer of
commodities. China is hungry for supplies and expertise
in the natural resources sector, and Canada has both.

The Noranda takeover -- which is expected to be finalized
by mid-November, becoming the biggest overseas
acquisition by a Chinese corporation -- has sparked
questions by several MPs who have raised human-rights
concerns. Some say the deal should be blocked because
of reports that China Minmetals has been linked to the
use of forced labour in the Chinese prison gulag.

China's Foreign Minister vigorously rejected the
human-rights concerns.

"You can tell your readers that they needn't worry at
all about China's development," he said.

"In the international arena, we act in accordance with
international law and international practice. We will
act in accordance with the rules of the World Trade
Organization, as a member of WTO."

He insisted that human rights are fully protected by
the Chinese constitution, and argued that China's
human-rights situation is not too different from that
of Canada.

"On human rights, I believe, our two peoples have a
lot in common," he said.

"Liberty, democracy, freedom, and whatever, we share
a lot. What is democracy? Democracy is a way in
which people enjoy their rights according to law. If
the Chinese people and government are working in
accordance with our constitution and law, why do
people in Canada worry about this?

"I don't think there is anything to give a reason for
those people to worry about China's human-rights
record. Perhaps those people have not read at all
the Chinese constitution. Perhaps they have not
been to China and also perhaps they don't know
history."

He invoked the memory of Norman Bethune, the
Canadian surgeon who became a Communist martyr
after he died in 1939 while tending to wounded
Communist soldiers on the battlefield after the
Japanese invasion of China.

"When the Chinese fought against foreign aggression,
it was a very progressive and friendly Canadian who
came to help us," he said. "That was a real help to
the Chinese people. If you have any questions, any
doubts or suspicions, tell them that all of our
Canadian friends are welcome to come to China to
see for themselves."

He also revealed that Prime Minister Paul Martin will
visit China within the next few months.

It will be Mr. Martin's first visit to China since becoming
prime minister, and it could provoke further questions at
home about the Noranda deal and the human-rights issues.

(The prime minister's office has not yet announced the
China visit, but Mr. Li confirmed that the Prime Minister
will visit China early next year.)

On the economic front, he noted that the two-way trade
between Canada and China in the first eight months of
this year was nearly 60 percent above the level of last
year. He wants still closer links.

"The two economies are highly complementary, and are
yet to tap their tremendous potential, especially in
resource and energy co-operation," Mr. Li said in
response to a supplementary list of questions from The
Globe.

China's dramatic rise on the world stage has triggered
anxieties in the West and in Asia, where observers have
worried about its fast-growing military budget, its
expanding nationalist movement, and its territorial
disputes with some of its neighbours. Nobody should
fear China's rising influence, the foreign minister said.
China's own development will, in return, contribute to
world peace, he said.

"China's development will not threaten anybody or
compromise their interests," Mr. Li said. "China's
peaceful development serves not only the maximum
interests of its people but also the common interests
of people around the world."

Despite the double-digit annual growth of its military
budget, China's defence spending remains "at a low
level" compared with the United States, he said. The
sharp increase this year is "mainly intended to ensure
that the livelihood of service personnel improves."

Even as China becomes a global economic powerhouse,
Mr. Li insists that it is merely a "developing country"
with a "weak economic foundation."

The country will "concentrate on its own development" in
the future, he said. "It will take a long and arduous journey
and require generations of hard work before China can fully
develop itself."

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