OTTAWA - Opposition MPs believe when Canada's spy agency warns that foreign, state-owned companies taking over strategic sectors of the economy could pose a threat to national security, the government should listen.

"When I read that CSIS is concerned about foreign companies and their investments in Canada raising security risks, I want to know more,' said Liberal MP Geoff Regan.

In its annual report, the Canadian Security and Intelligence Service (CSIS) concluded that if alien state-owned companies have too much control over elements within key sectors, "the foreign entities might well exploit that control in an effort to facilitate illegal transfers of technology or to engage in other espionage and other foreign interference activities."

While the CSIS report does not mention China or Nexen - the 12th largest oil company in Canada - by name, many MPs interpreted it to apply to the debate to allow the government-owned China National Offshore Oil Corporation to buy Canadian Nexen, a deal many parliamentarians worry has security and sovereignty implications.

NDP House Leader Nathan Cullen said the CNOOC-Nexen deal represented a "test case" for the government and expressed concern that if it is allowed to happen, Prime Minister Stephen Harper would sell off even bigger assets next time.

"With a commodity as important as oil, if that's the big card we play in international development and international trade, why is this government giving that card away without any consideration for security or sovereignty?"

National security expert David Harris said Chinese industrial and competitive espionage is a "major and building threat" to Canada.

"It is no exaggeration to say that its potential to inflict damage - and to undermine the capacity of Canadians at large to remain competitive and earn a living - is monumental."

Industry Minister Christian Paradis takes the time required to carefully examine proposed transactions to determine whether they are likely to be of net benefit to Canada based on the factors listed in section 20 of the Investment Canada Act, a spokesman said in a statement.