Wires

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

Share

* Harper says wants growing relationship with China

* Ottawa reviewing Chinese investments over security risks

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

By Joe Penney

DAKAR, Oct 12 (Reuters) - Canadian Prime Minister StephenHarper said on Friday that his country wants a growingrelationship with China, but that its investments must bescrutinized from a national security perspective.

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

from helping build a secure government communicationsnetwork because of possible security risks, and is also in themidst of reviewing a controversial $15.1 billion Chinese bid forCanadian oil and gas explorer Nexen Inc .

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

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

"The relationship with China is important, but at the sametime it's complex. It's complex because the Chinese obviouslyhave very different ... economic and political systems, andthat's why some of these particular transactions raiseconcerns," he said.

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

The Canadian government this week extended its review ofCNOOC's bid for Nexen by 30 days, shortly afterinvoking a national security exemption that would allow it toblock Huawei from its telecoms deal.

The extension, while expected, comes amid a growing furorover alleged Chinese espionage in North America. Many Canadiansalso fear that a successful bid by the Chinese state-owned oilcompany could spark a wave of mega takeovers of Canadian energyproducers by foreign enterprises.

The oil sands of the Western Canadian province of Albertaare the world's third-largest proven oil reserve. By someestimates, Canada requires more than C$600 billion ($614billion) of energy investments in the next decade, and much ofit 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 inother parts of the world.

CNOOC's proposal, launched in July, carries a higher pricetag than any other foreign takeover bid attempted by a Chinesecompany. The proposed deal is being reviewed under theInvestment Canada Act that allows the government to examinewhether a deal is of "net benefit" to the country.

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

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

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

Keywords: CANADA HARPER/CHINA