November 6, 2014 / 6:04 AM / in 4 years

Canada's Harper, in China, under pressure from all sides

HANGZHOU China (Reuters) - Canadian Prime Minister Stephen Harper arrived in China on Thursday, facing the delicate task of improving economic ties with a major trading partner without sparking voter backlash or a revolt within his own party a year ahead of an election.

Canada's Prime Minister Stephen Harper and his wife Laureen wave while boarding a Royal Canadian Air Force plane before departing for China, in Ottawa November 5, 2014. REUTERS/Chris Wattie

Dogged by low approval ratings, a cabinet divided on China policy and popular opposition to closer ties with the Asian giant, Harper needs notable victories, such as the release of a detained Canadian couple, to be able to count the trip a success.

Whether he can achieve those ends depends on Beijing, which is unhappy about Canadian accusations of cyber hacking and what it considers a less-than-welcoming investment approach.

The stakes are high for Harper, who last went to China in February 2012 and ended a successful visit by promising Ottawa would do all it could to meet the Chinese appetite for oil.

Little has gone right since then, and he is now under pressure from the business community to boost ties with the superpower to help a struggling Canadian economy.

“China represents tremendous opportunities for Canada,” Harper said last week, adding he wanted to help business “truly take advantage of China’s large, diverse and dynamic economy”.

Canadian officials see China as an obvious source of much of the C$650 billion ($570 billion) of investment they say is needed to develop Canada’s resource sector over the next decade.

But pleasing corporate leaders and business groups risks alienating those voters who view China with suspicion and Chinese foreign investment with hostility.

The concerns derive from restrictions on religious freedom and human rights in China, as well as practical worries about Chinese state influence in Canada’s resource sector.

Chinese oil giant CNOOC made a bid for Canadian energy company Nexen in 2012, prompting unprecedented unrest among legislators in Harper’s Conservative Party, who said they feared Beijing wanted to gain control over what are the world’s third-largest crude oil reserves.

Harper approved the CNOOC purchase but banned future takeover bids for Canadian energy companies by foreign state-owned enterprises. Before the new guidelines, Chinese companies had invested about C$25 billion in Canadian oil sands producers and other oil and gas companies.

Since the restrictions were put in place, no Chinese companies have made acquisitions in the Canadian oil patch.

The friendly tone of Harper’s recent remarks contrast with Canada’s public denunciation in July of what it said was an attempt by Chinese hackers to break into a key computer network.

Days later, Chinese security authorities detained a Canadian Christian couple, Kevin and Julia Garratt, near the North Korean border.

One well-placed Conservative source said influential Employment Minister Jason Kenney, a major opponent of rapprochement with China, had made it clear he did not want the visit to go ahead as long as the Garratts were still in jail.

Rob Anders, another Conservative legislator who has been highly critical of China, added to the pressure by making clear he wanted Harper to raise the case of the Garratts.

“I always have concerns with regard to Chinese human rights issues and I hope they get raised. We always have hope that that regime will change its policies,” Anders told reporters on Thursday when asked about the imprisoned couple.

The sensitivities surrounding the trip are reflected in the careful way it has been constructed.

The business itinerary of the five-day visit comes first, with Harper spending two days in the industrial center of Hangzhou before traveling to Beijing, a departure from the pomp and circumstance that would normally greet the start of a state visit.

Harper is “keen to avoid the photos of flags and handshake, the bad visuals of an overly cozy relationship”, said Brock University professor Charles Burton, a former Canadian diplomat who served two tours in China.

The trip may present “more downside than upside” for Harper, Burton said.

($1=$1.14 Canadian)

Additional reporting by David Ljunggren and Randall Palmer in Ottawa; Editing by Ken Wills, Peter Galloway and James Dalgleish

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