At the start of 2014, the world greeted the New Year with the news that China had become the largest trading nation in 2013, surpassing the US. Today, China is on its way to becoming the world’s foremost industrial superpower.

Does it make sense to have a superpower like China investing in all aspects of Malta’s economy? Of course it does, especially in the short term, but stopping the conversation there, without any form of scrutiny is a dangerous stance.

China has an abysmal track record when it comes to human rights and democracy. On July 1, tens of thousands of people took to the street to protest against increasingly oppressive mainland Chinese rule and 500 demonstrators were arrested for illegally “occupying” a street.

The country has one of the strongest firewalls in the world, blocking anything that is deemed objectionable by the Chinese government. The other day, China blocked Microsoft and Yahoo from their internet, a very ironic move, especially considering this is a country which wants to build a knowledge economy and, yet, it is blocking some of the largest IT firms in the world.

With such a track record it is only fair to question the increasingly close ties a small country like Malta has to such a superpower, especially since this is a superpower that does not care about or even bothers to look as though it is playing by the rules.

It is worth noting the implications of the memorandum of understanding between the governments of Malta and China, which was recently publicised with such fanfare by the Prime Minister, and which involves sectors like health, tourism, sport and energy. This will not be an investment in various sectors by foreign companies who happen to be Chinese but an investment by the Chinese government in Malta, a government with no respect for democracy.

The Maltese want to understand why it is suddenly so worthwhile for the Chinese government to invest in Malta

If we take the deal between Shanghai Electric and Enemalta as a concrete example of investment in Malta by the Chinese government, we find that what was initially publicised to be a minority shareholding (of about 20 per cent) in the State utility is now a very significant 33 per cent stake. Not only this but Shanghai Electric is also buying Enemalta’s newest and most efficient generating plant, a facility which has been saving Enemalta €1.5 million weekly in fuel costs since its commissioning: the 150MW power station built by BWSC.

Needless to say, the Chinese are looking for a return on their investment and buying the BWSC power plant was a very good move for them. Selling part of Enemalta was also a good move by the Maltese government because if the State utility is made to be more efficient, then this will reflect positively on Malta’s economy. Enemalta is in dire need to be put back on track after decades of mismanagement by previous governments. If it is not Shanghai Electric, another company would have had to come in and put Enemalta on a solid commercial footing.

It does make sense for Enemalta to be partly managed by people who have a commercial interest at heart. However, the question still remains: what does the Chinese government want from Malta? We all know there is no such thing as a free lunch and, surely, they are not here to rescue Enemalta out of the goodness of their own heart.

Shanghai Electric will be looking at profits come the end of the year and these profits may not be as easy to come by if the Electrogas 200MW combined cycle gas plant, now in the works, commences operation as promised by the government early next year.

So far, the government has not been forthcoming with much detail about the Shanghai electric deal. Nobody knows the cost of electricity but it is likely to be more expensive than the reported power purchase agreement with Electrogas since the plant is smaller and less efficient. From published literature, an advanced Siemens combined cycle gas turbine of the type said to be used in the Electrogas plant has a minimum efficiency of more than 52 per cent, while the BWSC plant’s efficiency stands at 47 per cent.

The electricity from the BWSC plant will most likely have to cost more than the 9c5 per unit that was quoted for the Electrogas plant. If one considers that the Electrogas plant will be running at base load, this means that the BWSC plant will have to operate in what is known as a shifting mode, stopping and starting as and when required, which will make it even less efficient, increasing the cost of electricity.

The 200MW Electrogas plant running at base load also means that the BWSC plant will be shut down during the night for most of the year. Enemalta has already started to reduce its tariffs by 25 per cent and more reductions are expected with the operation of the Electrogas plant next year, so with such costings how will Shanghai Electric be turning a profit at the end of the year?

China and Chinese investment should not be a dirty word but the Maltese government should be more forthcoming with information.

China does have a lot to offer apart from direct investment. You do not become an industrial superpower without operating commercially in a very pragmatic and disciplined way. Chinese investment and management may be just what is needed to turn around and breathe new life into the Maltese economy.

The government is right to pursue this but it should exercise caution because, although the potential benefits are great, there can be a downside too.

Improving and making the health sector more sustainable is a very laudable aim but will we have to accept a two-tier public health service and sacrifice part of our much vaunted free health service?

The Maltese want to understand why it is suddenly so worthwhile for the Chinese government to invest in Malta. We all know we have a lot to offer, including access to the EU market, but the Chinese could have easily bought into this by investing in European companies elsewhere in the EU.

It’s very unlikely this is just brotherly love and we are not a mineral-rich country like most of the African and Latin American countries China invests in. This is where the paranoia starts to seep in and many start questioning whether the Chinese are also trying to buy political influence.

While the paranoia might be just that, the government has every duty to be as transparent as possible when it comes to dealing with China. Coming out with a press release saying that a memorandum of understanding has been signed and then simply giving out a bullet list of the sectors this is going to cover does not suffice. The Maltese citizen deserves more.

In the 21st century blind faith in the government is simply not an option, unless, of course, you live in China and, then, you’re living in a country where you have no right to question your government.

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