By Megha Rajagopalan and David Ljunggren
BEIJING/OTTAWA (Reuters) - Canada is set to sign a deal with China to return ill-gotten assets seized from those suspected of economic crimes, the official China Daily reported on Monday, as Beijing works to track down corrupt officials who have fled overseas.
China, the world's second-largest economy, has vowed to pursue a search, dubbed Operation "Fox Hunt," beyond its borders for corrupt officials and business executives, and their assets.
But western countries have balked at signing extradition deals with China, partly out of concern about the integrity of its judicial system and treatment of prisoners.
With the deal, Canada, one of the top two destinations for suspected economic fugitives from China, would become the third nation to agree to help Beijing deal with such offenses, following offers this year from France and Australia.
Canada's Department of Foreign Affairs referred inquiries to the Public Safety Ministry, which oversees the agency that handles deportation cases. Public Safety Minister Steven Blaney's office said it could not immediately comment.
The pact will cover "the return of property related to people who would have fled to Canada and would have been involved in corrupt activities," the China Daily reported Guy Saint-Jacques, Canada's ambassador to the country, as saying in an interview.
China and Canada announced the deal in July 2013 but both nations are still in the course of ratifying it.
The China Daily quoted Saint-Jacques as saying Canada had returned more than 1,200 people to China in the past three years, including more than 60 who were sought for criminal reasons. He did not give details.
Chinese President Xi Jinping has vowed to go after high-ranking "tigers" as well as lowly "flies" in his campaign against corruption.
China this month asked the United States to help it track down more than 100 people suspected of corruption. At least 428 Chinese suspects were captured abroad by the end of October under the "Fox Hunt" campaign, state media reported.
Some observers suggest the campaign could be linked to infighting inside the Chinese Communist Party.
Former Canadian diplomat Charles Burton, who served two tours in China, said the deal on assets was problematic.
"These requests to Canada to strip the assets of Chinese people in Canada and repatriate them to China may be more informed by political factors related to factional struggle(s) within the Chinese Communist Party than purely legal claims," said Burton, who is now a Brock University professor.
China has extradition pacts with 39 countries but not the United States or Canada, the two places suspected economic fugitives are most likely to go, the Foreign Ministry says.
"No country should become a haven for the corrupt to seek refuge from the law," Chinese Foreign Ministry spokesman Qin Gang told a daily news briefing but gave no details of the pact with Canada.
China's Foreign Ministry has said it is considering suing people suspected of financial crimes who have fled abroad.
Rights groups say Chinese authorities use torture and that the death penalty is common in corruption cases.
Canada has a policy of not sending people to countries where they might face execution. Two former Canadian diplomats said it was likely that the majority of people sent back had overstayed their visas.
"I think given the flows, which are still increasing, those numbers (of people sent back) will increase," said Gordon Houlden, who served three terms in Beijing.
The Washington-based Global Financial Integrity Group estimates that $1.08 trillion flowed out of China illegally from 2002 to 2011.
(Additional reporting by Ben Blanchard in Beijing; Editing by Clarence Fernandez, Amran Abocar and Lisa Von Ahn)