China, it seems, never forgets a good deed. In all that has been said so far about the planned Chinese investment in Malta’s energy set-up, it would also seem that the country has not stopped to think about what has possibly led China to decide to invest so heavily in the island.
Is it meant as a good turn for Malta’s gesture in establishing diplomatic relations with it in 1972, becoming the first Western European country to have done so, or is it simply yet another move by China to strengthen its foothold in the Mediterranean?
Has not China expressed its gratitude to the island in more ways than one already, particularly in the years of the socialist administration of Dom Mintoff? Never mind the string of factories set up with Chinese assistance; most of them did not take off. But the building of a dock to take supertankers at the drydocks was of major help at the time.
It is not that China has no presence in Europe either. It has, and in a big way, too, although its target nowis definitely wider, encompassing many interests.
China, set to become the world’s largest economy in 20 years’ time, is on the march, not just in Europe but elsewhere, too. According to a study by the Rhodium Group, an advisory firm based in New York, Chinese direct investment in Europe tripled from 2006 to 2009 and tripled again by 2011 to €7.4 billion. The number of deals with a value of more than €1 million doubled, from fewer than 50 to almost 100 in 2010 and 2011.
Clearly, China is on a buying spree, looking for places where it can assert its rising power and economic strength. Energy is one line in which it is showing particular interest, looking for plum deals, either on its own or in association with giant companies, in countries interested in expanding or renewing their energy-generating base. Malta, a friendly country with a tiny economy but very politically active, might have looked, in its eyes, as yet another platform from where it could strengthen its foothold in the Mediterranean.
Political observers raised eyebrows at the size of the investment (€320 million) China is prepared to pump into the island’s energy sector. What political implications could this possibly have for Malta? This is a fair question considering Beijing’s track record of mixing money with politics.
Many fear that China’s heavy investment in such a sensitive sector as energy could possibly influence the way the island votes in international fora. Time will tell whether these fears are founded or not, but it would be wise on the government’s part not to make the island rely on one particular country, or company, for that matter, for the development and running of key infrastructural facilities.
Rhodium believes that Chinese direct investment in Europe is driven overwhelmingly by commercial motives. This may very well be so, but the arm of China’s state capitalist system can easily extend to the taking of sensitive decisions in times of political stress or circumstances considered unfavourable to Beijing.
Other than the possible political implications of the deal, the fears over the over-dependence on third parties for energy supply ought not to be dismissed outright. Enemalta may still have the sole discretion to buy energy from wherever it deems fit, but there would still be overdependence on third parties for the local generation of electricity.