Don’t Quote Me (On Trojan Horses & ODI)

Related entries: General, Investment, News

Plenty of people (from Africa to America, and Australia, to get the list started) have questioned the resource and security implications of China’s overseas direct investment “ODI” (not to mention technology sales from the likes of Huawei and TCL).

But others have been keen to attract investment – especially in these difficult economic times. Which brings us to a nice quote from Greece (via China Economic Review). Greece is, of course, a recent recipient of a lot of Chinese investment. The article notes: “Haris Pamboukis, Greece’s Minister of State, on China’s recent investments in Europe:”

“I don’t think China is coming in here as a Trojan Horse.”

Some would beg to differ. The New York times has suggested that “Greece is one foothold for China’s broad, strategic push into Europe…Ultimately, analysts say, Beijing hopes to achieve not just more business for its own companies, but also greater influence over the economic policies set in the power corridors of Brussels and Germany.”

Of course there is a strategy at work here – one that will extend Chinese economic (and other) influence in the region, obtain technology and market access for its companies, and help secure its resource supply chain. Just take a look at China’s recent shopping basket, as listed in the NYT piece:

• “Greek, Spanish and other downgraded government debt”

• “ports, highways and industries in troubled countries on Europe’s eastern and southern edges…ports in Greece and Italy and highways that link Eastern Europe to Germany and Turkey…”

• “billions of dollars in state financing for key public works projects that support Chinese state-owned companies and Chinese workers.”

• “$4.5 billion credit line that troubled Greek shipbuilders could tap — but almost exclusively to purchase Chinese-made ships. A

• “$5 billion is flowing to Greek coffers from China’s state-run Cosco shipping company, which is leasing Piraeus, the port of Athens, to transform it from Europe’s largest passenger port to a much bigger hub for cargo, with aims to more than double traffic to 3.7 million containers in 2015.”

• “ Cosco is expanding the port of Naples”

• “HNA, a logistics, transportation and tourism group based in Hainan Province, China, is in talks to build a giant air terminal north of Rome for cargo arriving from China”

As we reported in an earlier post “’There is little doubt that the nation’s ODI in 2010 will climb up to $60 billion’, said [Liu Zuozhang, director general of the Investment Promotion Agency of MOFCOM] adding the year-on-year growth could range from 15 to 39 percent.” And elsewhere we also noted more innovative approaches to M&A.

Watch this space. Trojan horse or not, Chinese investment in Europe (and from time to time in Euros) is set to continue – and it may be a bumpy ride. The hope is that this will integrate, not alienate, local interests. Interesting then to see whether China has learnt lessons from the US, Africa and elsewhere, including, at the moment, Peru (Bloomberg video)….

Trojan Horse
Sources (via Twitter):

China no Trojan horse… RT @chinaeconreview: Greece’s Minister of State on China’s “discreet” investment strategy…

More on ODI RT @raykwong: Eyeballing: “Looking for Investments, China Turns to Europe.” (NYT)

Chinalco, ODI RT @reportfromchina: China’s ever growing need for resources meets resistance in a Peruvian village

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