Is China Spying on Canada's Shipbuilding Interests?

Canadian police have arrested a Toronto man suspected of seeking to give China classified information about Canadian shipbuilding procurement policies, security officials said on Sunday.

Jennifer Strachan, a chief superintendent with the Royal Canadian Mounted Police, told a news conference that Canadian citizen Qing Quentin Huang, 53, faced two charges of attempting to communicate with a foreign entity.

"On Thursday the RCMP was informed that the accused was taking steps to pass on information of a classified nature to China," she told a rare weekend news conference.

"In these types of cases, sharing of information may give a foreign entity a tactical, military or competitive advantage by knowing the specifications of vessels responsible for defending Canadian waters and Canadian sovereignty."

Strachan said Huang, who was arrested on Saturday, had worked for a subcontractor involved in ship design. She declined to say what information Huang had tried to provide to China, but said there was no threat to public safety.

Chinese Foreign Ministry spokesman Hong Lei rejected the allegations.

"The relevant reports about a Canadian man suspected of providing information to the Chinese government are completely baseless," Hong told a daily news briefing in Beijing on Monday.

Canada has had a complicated relationship with China, with official efforts to boost trade and improve business ties at times conflicting with deep concern about the role that Chinese state-owned entities should be allowed to have in Canada.

Canada last year allowed state-owned energy company CNOOC Ltd to buy up domestic energy producer Nexen Inc, but made clear that it would not allow further purchases of domestic oil sands companies by state-owned enterprises.

Huang was arrested just days after Canada's official spending watchdog said the government has underestimated the costs of a multibillion-dollar naval shipbuilding plan and will either have to build fewer ships or settle for vessels with fewer capabilities than it initially planned.

The new ships will play an important role as Canada asserts sovereignty claims in the Arctic, a disputed region that is rich in energy and mineral resources.

The news conference announcing Huang's arrest involved officials from many Canadian security agencies, including several police forces, border services and the secretive spy agency, the Canadian Security Intelligence Service.

The Toronto resident, who police said appeared to have been acting alone, will appear in court for a bail hearing on Wednesday. The charges carry a maximum sentence of life in prison.