China learned from the Soviet Union’s collapse. The Union of Soviet Socialist Republics could not spread communism around the world with military threats and strong-arm tactics, so the Chinese Communists have decided to do it economically.
Xi Jinping, the general secretary of the Communist Party of China, president of the People’s Republic of China, and chairman of the Central Military Commission, is paying a visit to Portugal and Spain, with a plan to spread China’s geopolitical goals well beyond their immediate sphere of influence.
Southeast Asia and some South Pacific islands have already experienced China’s tentacles weaving in and out of their economies through China-financed OBOR infrastructure projects which have recently come under scrutiny for burdening countries with enormous debts.
Now, China is reaching a little farther, beyond the confines of Asia, and over and beyond the mess they also have a hand in in the Middle East. Now, China has set its sights on Europe. Some European countries recognize the danger, and grow increasingly wary of Chinese acquisitions in critical industries such as tech and auto manufacturing. Therefore, China is pushing for economic ties with countries with a smaller footprint, such as Portugal and Spain, where there is a perceived need for partnership, and already a burgeoning socialistic attitude already in place.
Chinese leader Xi Jinping plans to visit Spain from November 27 to 29, and Portugal on December 4 and 5, according to Chinese state-run media Xinhua. The aim is to sign joint agreements aimed at exploring third-party markets in Spain, and applying programs to “boost cooperation” in a variety of sectors such as science and tech, water conservancy, energy, infrastructure, and finance, in Portugal.
Today, Chinese firms own 25 percent of Portugal’s national grid, 27 percent of its largest listed bank, and all of its largest insurer and private hospitals operator, according to Reuters.
A number of major deals related to renewable energy technology, including Chinese state-owned hydropower giant China Three Gorges Corporation’s (CTG) acquisition of Energias de Portugal (EDP) in 2011, “granted CTG access to state-of-the-art knowledge and expertise in the field,” the report said.
CTG’s purchase of one of Portugal’s largest energy operators enabled the former to expand into global markets in Africa, South America, and the United States. For example, through the partnership with EDP, CTG acquired eight hydropower stations in Brazil, making it the second-largest private energy producer in Brazil.
China is eyeing an opportunity to develop Portugal’s port of Sines as part of its OBOR initiative of creating new maritime trade routes. In a 2017 document, Beijing had called for developing three new sea passages to boost China’s trade.
European authorities have raised concerns that these companies may be allowing Chinese goods to illegally skirt import duties—as in the case of an ongoing investigation into the Chinese-owned port of Piraeus in Greece (yet another struggling economy desperate for help from the Chinese).
Nonetheless, economically struggling countries like Portugal (and Greece, and Spain) are welcoming Chinese investments.
According to the European think tank report, investments in Spain are still relatively small by volume. But they have grown exponentially as in Portugal, from less than 10 million euros (about $11.4 million) per year before 2012, to more than 1.6 billion euros in 2016, according to research by Rhodium Group.
But in 2016, Chinese firms—one of them state-owned—made two big acquisitions into Spanish engineering firms Aritex and Eptisa, indicating Beijing’s desire to acquire high-tech. Aritex focuses on aeronautics, autos, and renewable energy, while Eptisa has projects in IT and transportation infrastructure: all fields that Beijing has listed as a priority for development in the “Made in China 2025” blueprint for China to become a tech manufacturing powerhouse.
In June 2017, China’s state-owned shipping company COSCO bought majority stakes in Noatum Port Holdings, the operator of two container terminals in the ports of Valencia and Bilbao, illustrating Beijing’s hopes to pull Spain into its OBOR paradigm. Noatum is Spain’s largest maritime terminal operator.
Recognizing the potential danger of Communist China poking its nose into European economics, the European Union reached a consensus on investment screening rules that would apply to all EU member states if approved. The move was aimed at countering deals that would pose national security risks. The new rules could potentially hurt China’s investment plans in Europe.
The game, however, is not what it seems on the surface. Money buys power, and power buys allies. This is all about spreading communism, and gaining willful allies from countries that would normally be critical of Beijing’s antics.
In short, to spread their communist empire the Chinese are not wielding military might as the Soviet Union did. Instead, the weapon of choice for the Chinese is a bank account, technology, and a briefcase.