The economic success achieved by China in the past decade is driving Chinese businesses to expand their activities westwards in Europe and beyond. Although there are some who see a threat in this rapid expansion that they suspect hides political ambitions, others welcome this inflow of investment when the economic mood in most Western economies is not exactly optimistic.

Malta, like most major EU economies, has seen some quite beneficial inward foreign direct investment from China in the form of a joint venture to rescue Enemalta from its sad economic situation. A Chinese chemicals company is on the verge of taking over the Italian tyre manufacturer Pirelli. So China’s shopping list is quite extensive and well diversified.

The latest expression of interest from Chinese entities to invest in Malta comes from the largest privately-owned Chinese airline, Hainan. China’s ambassador to Malta, Cai Jinbiao, confirmed that “Hainan Airlines managers were in Malta recently to discuss the possibility of direct flights to China”. However, the ambassador “declined to say whether the discussions were with the Maltese government or with Air Malta”.

Hainan has 500 domestic and international routes but only a few of these reach European countries, which means a strategic partnership could be of considerable benefit to the Chinese airline.

There are obvious advantages for Hainan having access to a hub in the EU through which it could extend its routes to most European as well as African destinations. Most major Middle East and European airlines already have an effective hub that helps them optimise their route network. So it would be quite challenging for Air Malta to enter into a viable partnership with these established airlines.

Air Malta’s main competitive advantage is its strategically important base in the middle of the Mediterranean near to both the European and North African markets. The national airline’s main challenge is achieving economic viability by the end of March 2016 as envisaged in the restructuring plan agreed with the European Commission.

The Tourism Minister was arguably being bullish when he forecast that Air Malta would achieve economic viability in the coming year after registering a loss of €16 million in the financial year ending in March 2015. The tough and sobering realities that the national airline will face in a year’s time if the EU agreed targets are not achieved are undoubtedly on the minister’s mind as the day of reckoning approaches.

It would be unrealistic to conclude that Hainan’s interests are solely directed at attracting tourists from China to Malta.

Similarly, Air Malta’s role would have to change if it is to continue operating in the long-term.

The most effective business model for both airlines would be one that combines their resources to establish Malta as an aviation hub. This would enable the Chinese airline to gain a better foothold in North African and European markets. At the same time, Air Malta would be guaranteed a sustainable flow of passengers to ensure its routes remain viable.

The Prime Minister has denied that the Hainan officials’ visit to Malta has anything to do with Air Malta’s search for a strategic partnership. Is this a tactic to avoid speculation at this critical stage of discussions with the Chinese airline? Strategic partnerships between airlines are often achieved after a period of “cooperation to achieve mutual interests”, so this seems to be very much a case of ‘watch this space’.