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.
“The pushback is now increasingly coming from the core,” said Guntram Wolff, director of Bruegel, a Brussels research institute.
Chinese investment in technology-intensive industries “has not gone unnoticed,” he said.
European nations are also concerned that Chinese capital focuses on strategic sectors and is driven by the state. Nor has China offered equal access to European investors in many sectors.
Another worry is that some investments seem to misfire, with large Chinese firms seeing a string of divestment this year amid a need to pay down overseas debt.
Dalian Wanda sold a 17 percent stake in Spain’s Atletico Madrid soccer club this year after acquiring it just three years earlier and HNA in recent months sold its position in NH Hotel Group.
In the US, the interagency committee that reviews investment from overseas strengthened its power to block or force changes in deals earlier this month and a new law passed by the US Congress makes such review mandatory. Even before that, the committee last year blocked the sale of Lattice Semiconductor Corp to a Chinese investor.
Cash-strapped nations in southern Europe see another side.
Javier Fernandez, a regional government leader in Spain’s northern region of Asturias, where EDP operates hydroelectric, coal and gas-fired power plants, earlier this year said that the Three Gorges bid “isn’t worrying.”
The Chinese company would be less likely to intervene in operations or cut jobs than a local competitor, he said.
The deal is worth a combined 16 billion euros (US$18.2 billion).
Rui Lobo, a digital communications professional in Lisbon, counts his country a winner.
China’s bet on Portugal “stirs our economy,” the 26-year-old said while waiting for a bus in Lisbon.
Even if it makes Portugal more dependent on Chinese growth the risk is worth taking, he said.
China is not actively targeting investments in southern Europe as opposed to other regions and the motivation is entirely economic, according to its diplomatic mission to the EU in Brussels.
“Investment is based on business-oriented activities, and the direction of investment depends on factors such as the company’s own advantages and market conditions,” the mission said in a statement responding to questions. “There is no such thing as strategic considerations or political intentions.”
The fight in Brussels aside, Xi was warmly greeted by a gala dinner, medals and a golden key in Madrid.
“Within the framework of the visit, some activities of an economic-corporate nature will be held,” the Spanish government said in a statement.
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.
Since the Russian invasion of Ukraine in February 2022, people have been asking if Taiwan is the next Ukraine. At a G7 meeting of national leaders in January, Japanese Prime Minister Fumio Kishida warned that Taiwan “could be the next Ukraine” if Chinese aggression is not checked. NATO Secretary-General Jens Stoltenberg has said that if Russia is not defeated, then “today, it’s Ukraine, tomorrow it can be Taiwan.” China does not like this rhetoric. Its diplomats ask people to stop saying “Ukraine today, Taiwan tomorrow.” However, the rhetoric and stated ambition of Chinese President Xi Jinping (習近平) on Taiwan shows strong parallels with