Select Page

Beijing’s Minions Don’t Belong on Canadian Stock Exchanges

By Fergus Hodgson, Frontier Centre for Public Policy


The Chinese economy is growing and surpassing the U.S. economy in size. That stature, with its consequent soft and hard power, means opposition to the Communist Party of China (CPC) regime needs to be multilateral. No matter how much unipolarity the U.S. has enjoyed in recent decades, it cannot go it alone and would benefit from Canadian support.

Not only is Beijing’s economic might ominous, the regime’s illiberal and seemingly boundless control freakery is becoming more glaring by the day. Even the Taliban have concerns about the CPC’s human rights record. Enough said, really.

Canada has for the past three years been locked in an international relations confrontation over the potential extradition of Huawei executive Meng Wanzhou from British Columbia to the United States. Corrupt CPC bullies have detained three Canadians in China—one sentenced to death—as part of what has become known as hostage diplomacy.

China is Canada’s second largest trading partner and Canadians do not deserve to be punished for CPC wrongdoing. However, now is the time for Canada to take a stand, draw on its own bargaining chips and reduce dependence on commerce with an antithetical regime.

Once Canadians and their elected officials acknowledge the profundity of the CPC problem, there are many options on the table and allies eager to have support. Taiwan, in particular, merits more trade and healthier relations. An end to wage subsidies for Chinese state-owned enterprises, paid for by Canadian taxpayers, is another no-brainer. 

The shrewd policy-maker, though, looks at the source of the problem. One of the paradoxes of the CPC’s rise is that the regime has used both North American-educated talent and North American capital. In other words, Canadian and American institutions have trained the planners and bankrolled much of China’s economic growth. New Chinese stock listings in the United States this year reached $12.8 billion market capitalization, but that is the tip of the iceberg of North American investment in China.

The thinking over the decades, especially early on in the opening of China, was that economic freedom would generate a sufficient middle class to demand political freedom. Sadly, that assumption has proved mistaken, but one need not make the mistake all over again. Canada can scrutinize and, if necessary, impede precious capital from building an economy and regime that is an arch-enemy of Western civilization.

In 2020, the U.S. federal government under then-president Donald Trump passed the Holding Foreign Companies Accountable Act. This required publicly listed Chinese companies to disclose their legal structures—shining a light on shell companies—and report their risk of interference from the CPC regime.

The U.S. Securities and Exchange Commission is still mapping out how to enforce this. However, a July crackdown by the CPC on Didi Global Inc., the largest ride-sharing app in China, hastened regulatory activity on this front. Less than a week after Didi’s initial public offering on the New York Stock Exchange, the CPC’s Cyberspace Administration ordered Didi delisted from app stores. The company consequently lost half of its $10 billion value.

The CPC apparently did not want a firm so powerful and with so much information that it could threaten regime insiders. The CPC’s actions against Didi pose the question: amid flagrant intimidation and cronyism, which Chinese companies are not CPC surrogates?

Sunlight is often the best disinfectant. Mere scrutiny from the SEC has led to a “serious pause” for Chinese IPOs on U.S. exchanges, according to Doug Guthrie of Arizona State University.

Of Canadian exchanges, the TMX Group in Toronto (TSX and TSX-V) is one of the 10 largest in the world with more than $2 trillion in market capitalization. As confirmed by TMX Group via email, there are 19 Chinese firms (including a handful with headquarters in Hong Kong) listed on the two exchanges. Their market capitalization is pushing $3 billion.

Listing on the TSX or other Canadian exchanges is not a crime. However, the CPC has blocked efforts by the Canadian Public Accountability Board to audit Chinese companies publicly listed in Canada. Only three other countries have made the same denial: Bermuda, Tunisia and Mexico.

The provinces have jurisdiction over Canadian capital markets, although handling Chinese companies could fall under national security concerns. Whether the initiative comes from the provinces or the federal government, it would serve to further establish Canadian exchanges as trustworthy and subject to the rule of law. As it stands, there is a vulnerability: firms that act as conduits for the CPC can lean on Canada’s hard-earned, positive reputation. That merits resolving, as the Americans are well on the way to doing.

This particular step makes sense because it would stop rejected firms from simply moving north. It would also amplify the actions taken by the United States, by encouraging other nations, such as Germany and the United Kingdom, to follow suit. As former Foreign Affairs Minister Peter MacKay stated in a recent radio interview, Canada must lock arms with countries of shared values.


Fergus Hodgson is a research associate at the Frontier Centre for Public Policy.