[ANALYSIS] Chinese money: embarrassment or badge of pride?

Despite still being officially under the rule of The Communist Party of China, the Asian powerhouse’s brand of state capitalism is taking the world by storm. However, while Chinese cash is welcomed with enthusiasm in all parts of the world – Malta included – the Red Dragon is increasingly seen as a threat to the old order.

This week, Chinese President Xi Jinping’s trip to London exposed a rift between the UK and Washington and its growing wariness towards China.

Critics fear Beijing’s unlimited financial resources will enable China to erode the competitive edge of Western multinationals, kill jobs in Europe and America and placate criticism of human rights abuses.

David Cameron’s former director of strategy, Steve Hilton, went so far as to say that Britain is being humiliated by the Tory government’s policy of “sucking up” to the Chinese regime.

But Carmen Sammut, a senior lecturer in the International Relations Department at the University of Malta disagrees.

“I do not believe that in this day and age any country can afford to consider relations with China as an ‘embarrassment.’ Despite some evident Sinophobic sentiments that sometimes resonate in the media, during the visit by Chinese President Xi Jinping in London, Prime Minister David Cameron was hoping to seal around $46 billion of deals including investment in infrastructure, nuclear power and in the transformation of northern England,” Sammut told MaltaToday. 

She added that since the 1990s when Chinese leader Deng Xiaoping modernized his country, “the Chinese communist heart has pumped blood into the arteries of capitalism”. 

Sammut said as soon as China opened its doors in the 90s, many countries clinched the new opportunities and despite the crackdown of student protests in Tienanmen Square was still very fresh in everybody’s mind, Western countries went scrambling to reach lucrative deals. 

“From time to time various players – which include European bureaucrats and human rights activists – raise their eyebrows, but the fact remains that Europeans compete to attract Chinese investment in sectors like infrastructure and utilities. Countries do what suits them best,” she said. 

And Malta is no exception. Upon being elected Prime Minister two years ago, Joseph Muscat made strengthening relations with China one of his main priorities. 

Muscat’s government has signed a number of agreements with the China and the Prime Minister has consistently highlighted Malta’s strategic position which he believes can “provide access for Chinese enterprises to both the European market, and serve as a near shore location for the African market.”

Despite Malta’s size, Muscat’s administration has been at the forefront of the race for the $500 billion outward investment that China is committed to make over the next few years and its infinite tourism market. 

Investment vs Sovereignty 

Asked whether Malta is sacrificing national sovereignty and security in striking a deal with the Chinese energy company Shanghai Electric, which acquired 33% of Enemalta, Sammut said “in small states it is easy to fear that a massive foreign investment in vital sectors might render the country vulnerable. Yet in a globalised world it is becoming impossible to retain total autonomy in all sectors, especially where state monopoly led to an economic haemorrhage”. 

Underlining the importance of the injection of €320 million into the energy sector which she said was a welcome boost to the Maltese economy, Sammut said, “Shanghai Electric became a strategic partner and it seems to me that they have put their money in Enemalta because they aim to turn it into a regional operator”.

Highlighting Muscat’s announcement this week that Enemalta’s first investment abroad will be launched in the coming days, Sammut said “his matter and its implications have never been much explored in the public sphere”.

“As expected, domestic responses to the deal with China were coloured by parochial partisan politics. The government initially framed the deal within the Chinese perspective of Confucian values of loyalty; since Malta had befriended isolated Maoist China in the early 1970s before anyone else went there. It is often hinted that these values drive Chinese good-will no matter the smallness and limited influence of our country in world affairs.” 

Sammut added that “on top of its anxieties about sovereignty issues,” the Nationalist Opposition’s immediate response to the energy deal was three-pronged. 

Firstly, the PN claimed there was something rather fishy about the Enemalta agreement because there were no prior international calls for an expression of interest. 

Secondly, it raised the repercussions of the deal with China on the country’s relationship with European partners since Malta appeared to be supporting the Chinese in their dispute on solar panels with the EU. 

Thirdly, it claimed this is not as an ‘investment’ but as a shrouded ‘privatisation’ of a vital entity, even though the previous Nationalist administrations had spearheaded Malta’s privatisation efforts.

“While Malta’s energy security must be a top priority and it is indeed a matter of great national interest, some of the criticism around this investment sounded rather hollow after decades during which Malta’s energy supply depended on a museum-piece powerhouse (I strong believe the old power station should have been preserved as a piece of industrial archaeology) and at the mercy of some corrupt players. Moreover, reliance on a sub-sea inter-connector with Sicily was not opposed by the critics of the Beijing deal,” she said. 

Investment vs Human Rights

But should Malta put investment over taking a stand against the abuse of human rights in China?

“In the last decade China acquired assets in over 120 countries. In the West, investment has always been accompanied by protests against human rights abuse but still the deals were still sealed,” she retorts. 

Pointing out that Communism in China remains strong and accusations of violations are plentiful, the media analyst and former chairperson of Labour’s think-tank Fondazzjoni Ideat said that according to Human Rights Watch, in 2013 the Chinese government issued directives warning against the perils of “universal values” and human rights, and affirmed the importance of the one-party rule.  

Human Rights Watch also reported open hostility towards human rights activists as in the case of the death of a grassroots activist Cao Shunli who was detained for trying to participate in a Review of China’s human rights record at the United Nations Human Rights Council (HRC) in Geneva.

“Nonetheless, along the years China invested in its ‘soft power’, a strategy aimed to win the hearts and minds of international publics.  Whereas in the past China employed futile ideological rhetoric to defend its political system and its human rights track record, in recent years its tends to promote itself as an alternative model to the West.”