Sat, Dec 01, 2018 - Page 9 News List

Beijing making new friends in Europe’s former crisis nations

By Xiaoqing Pi, Carolynn Look and Ruth David  /  Bloomberg

The US is refusing Chinese capital and the EU is imposing a continent-wide vetting process for Chinese investments. Southern European nations that were close to insolvency a decade ago are much more welcoming.

Investments in and takeovers of Spanish, Italian, Portuguese and Greek businesses by Chinese companies have outpaced those in the US and in the rest of Europe this year, according to data compiled by Bloomberg.

While the increase is driven by China Three Gorges Corp’s pursuits of Portuguese utility EDP and its Spain-based renewables unit, there have been 23 other proposed or completed deals, investments and joint ventures across the four nations since the start of the year.

China’s interest was on display starting on Wednesday, when Chinese President Xi Jinping (習近平) visited Spain on the way to the G20 summit in Buenos Aires, Argentina. He is to visit Portugal next week.

The trip marks Xi’s first official state visit to the two nations, which offer what Beijing thirsts for: technology, brands and friendly governments.

“In terms of long-term strategy and long-term presence, these places are attractive to China,” said Philippe Le Corre, a senior fellow at the Harvard Kennedy School of Government and the author of China’s Offensive in Europe. “These countries are becoming soft supporters of China on the international stage.”

Greece last year vetoed an EU condemnation of China’s human rights record in the UN. Spain, Italy, Greece and Portugal were not among the signatories to a letter from at least 15 Western ambassadors over the treatment of the Uighur minority in China’s Xinjiang region, Reuters reported. Italy’s populist government says it wants to be a EU partner in the Belt and Road Initiative, China’s massive infrastructure plan.

China was snapping up assets from the cash-strapped nations as long ago as the European debt crisis, which began in 2009. Both state-owned enterprises and private conglomerates have joined in.

Chinese companies now own large or controlling stakes in the Greek port of Piraeus; Portugal’s largest insurer, Fidelidade; Italian tiremaker Pirelli & C SpA.; and Spanish oil major Repsol SA’s Brazilian arm.

The plethora of transactions has spawned European concerns about possible intentions to steal technological know-how. Propelled by growing political unease over Chinese acquisitions, EU negotiators last week approved the first bloc-wide rules to screen foreign investments from outside the bloc.

While the new law does not grant members the right to veto deals in other EU countries, it would allow them to seek information and provide comments on transactions elsewhere in the union. Member states receiving comments would have to take those reactions into account when making a decision. The rules are to enter into force at about the end of 2020.

Politicians from Italy and Portugal had initially expressed concerns about the rules, arguing they should not become an excuse for protectionism or encroach on national interests.

Germany, Europe’s biggest economy, has taken a harder stance on China after seeing national champions, such as automaker Daimler AG and robot maker Kuka AG, become targets.

German Chancellor Angela Merkel’s government decided for the first time this year to veto a possible Chinese takeover, of machine tool manufacturer Leifeld Metal Spinning AG. The German Ministry for Economic Affairs and Energy is also considering lowering the threshold at which the government can investigate or intervene in response to foreign investments.

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