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UPDATE 2-Canada's Harper says must weigh national security in China ties

Friday, 12 Oct 2012 | 10:00 AM ET

* Harper says wants growing relationship with China

* Ottawa reviewing Chinese investments over security risks

(Adds bullet points, includes additional quote from Harper in paragraph 5)

By Joe Penney

DAKAR, Oct 12 (Reuters) - Canadian Prime Minister Stephen Harper said on Friday that his country wants a growing relationship with China, but that its investments must be scrutinized from a national security perspective.

Ottawa has indicated it will exclude Chinese telecommunication equipment giant Huawei Technologies Co Ltd

from helping build a secure government communications network because of possible security risks, and is also in the midst of reviewing a controversial $15.1 billion Chinese bid for Canadian oil and gas explorer Nexen Inc .

"We will ensure as a government that we have not only a growing relationship with China but a relationship with China that is in Canada's best interests," Harper told reporters on a visit to Dakar, Senegal.

"And of course ... there's a national security dimension to this relationship, in fact to all our activities, that we take very seriously," he added.

"The relationship with China is important, but at the same time it's complex. It's complex because the Chinese obviously have very different ... economic and political systems, and that's why some of these particular transactions raise concerns," he said.

Harper is to fly to Democratic Republic of Congo later on Friday to attend the Francophonie summit, uniting dozens of heads of state from French-speaking nations.

The Canadian government this week extended its review of CNOOC's bid for Nexen by 30 days, shortly after invoking a national security exemption that would allow it to block Huawei from its telecoms deal.

The extension, while expected, comes amid a growing furor over alleged Chinese espionage in North America. Many Canadians also fear that a successful bid by the Chinese state-owned oil company could spark a wave of mega takeovers of Canadian energy producers by foreign enterprises.

The oil sands of the Western Canadian province of Alberta are the world's third-largest proven oil reserve. By some estimates, Canada requires more than C$600 billion ($614 billion) of energy investments in the next decade, and much of it will have to come from outside the country.

Nexen's own portfolio includes operations in the oil sands, shale assets in the province of British Columbia and projects in other parts of the world.

CNOOC's proposal, launched in July, carries a higher price tag than any other foreign takeover bid attempted by a Chinese company. The proposed deal is being reviewed under the Investment Canada Act that allows the government to examine whether a deal is of "net benefit" to the country.

The government last blocked a foreign takeover deal in 2010 when it stunned markets by preventing Australia's BHP Billiton Ltd .

(Reporting by Joe Penney in Dakar and Euan Rocha in Toronto; Writing by Richard Valdmanis; Editing by David Lewis and Vicki Allen)

((richard.valdmanis@thomsonreuters.com)(+221 33 864 5076))

Keywords: CANADA HARPER/CHINA

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