As Gordana Grgas/Novac.hr writes on the 1st of December, 2018, after much talk and many announcements, the official launch of the first Chinese investment in Croatia took place last week, which should reach the staggering amount of 160 million euro in two years.
This massive foreign investment is an interesting one, not only because of the amount, and not only because it’s pioneering in its nature, but because when looked at in its wider context, it’s a big part of the strategic Chinese “One Belt, One Way” initiative. It certainly ”lit up” on the ever-watchful radar of the European Commission, which overlooks investments from third countries, it also naturally drew the attention of all those who look at China’s investments in Croatia in a more geopolitical context. Croatian Prime Minister Andrej Plenković presented it as part of “project-oriented cooperation between the two countries”.
The project itself is the construction of a wind farm near Senj, which was inaugurated by a huge Chinese construction company, Norinco International Cooperation, one year after signing a contract to take over a majority stake in the Croatian company – Energija projekt. This 32 million euro transaction was also recorded in a large analysis of both realised and announced Chinese investments across Europe, which was published by Bloomberg in the spring, pointing out that over the last ten years alone, the figures of such huge Chinese investments reached an incredible 300 billion euro.
The CEO of the Peking-based Norinco International Cooperation, Wang Yitong, was present at the opening ceremony in Senj last week. Otherwise, the company is listed on the stock exchange (the Shenzhen Stock Exchange), but is actually owned by the state. The situation is rather complicated, but when it is looked at objectively, it’s clear that Norinco is part of the gigantic China North Industries Corporation, which was founded back in the 1980s and is among the largest state-owned conglomerates in terms of assets and revenues, and is the world’s best known company for the production of weapons of all kinds.
Since 1999, it has been a part of an even larger group of companies, the China North Industries Group Corporation (CNGC). It is made up of fifty companies with a total of about 280,000 employees, it accounts for more than 40 percent of its revenue outside of China, operates in 40 countries, and is engaged in research and development, as well as in the production of weapons and military equipment. It is also involved in mining and oil businesses.
This group, abbreviated as just CNGC, is on this year’s Fortune magazine’s list at 140th place on of the list of global top-ranked companies, estimated at 64 billion dollars. As was published by Jane’s Defense Weekly, CNGC has been on the list of twenty state-run Chinese firms for restructuring since last year, when the Chinese Government announced that it would accelerate a reform program to introduce “mixed ownership”. This is a measure of privatisation, and from the huge group, as was announced last year, twelve companies are listed on stock exchanges from the automotive, electronics, and chemical industries.
Owing to above, Croatia did not enter into the Senj project via a private company, but with a company associated with the very leaders of the Chinese state, which is a part of an important conglomerate. In Brussels, the somewhat expected raising of eyebrows has so far been following and challenging the major Croatian contract with the Chinese to carry out works on the long awaited Pelješac Bridge. The strategic project is cofinanced by money from the European Union budget, and Brussels isn’t happy that the Chinese will be the ones to built it.
Now, in a direct Chinese investment in Croatia, into the energy sector (several similar ones have already been realised in the EU), the Chinese will, in a period of two years, build 39 wind turbines with a total power of 156 megawatts under Velebit, while Brinje and Senj will see 5.5 million kuna a year spent on wind energy, Croatian subcontractors will be part of the construction work.
For the takeover of Energija projekt, over which the former owners have been holding disputes, the Chinese have engaged the American consultancy firm Norton Rose Fulbright, and the process was brought to an end and registered at the Commercial Court in Rijeka back in September this year. Thus, the Chinese company has also taken over the rights to build and manage the wind power plant near Senj, and the consultants’ belief is that Norinco is “taking the initial position for entering the European Union market and then expanding and increasing its market share within the EU, and obtaining references in a new business environment”. Plenković has expressed his hopes for Norinco to be the predecessor to other Chinese companies and further direct Chinese investment in Croatia, often holds talks about intensifying relations, and is preparing a meeting on the subject which will be held in Croatia in the spring of 2019.
Geopolitical experts, like one particular Berlin think tank, announced earlier this year that China’s investments, especially when they are made by state-owned companies, should always be looked at as an attempt to secure influence over European Union politics. But should Plenković really worry about that now? Probably not; direct foreign investment is not so common, and whether or not Chinese companies will appear on projects such as construction of railway lines, more specifically what will happen with the Chinese investment in the Port of Zadar and the cooperation between Chinese and Croatian construction companies and such, is yet to be seen.
During current moments on the international scene, China continues to attract large amounts of attention as a global creditor, not just as an investor, and despite Chinese investments in Croatia, the country doesn’t have such an experience under its belt. Yet.
Recently, the New York Times published a text entitled “The World, Built by China”, which analyses as many as 600 projects in as many as 112 countries worldwide which were somehow funded by the Chinese over the last decade, from gas pipelines to bridges, roads to railway lines, and many more. Many of these projects are part of the strategic “One Belt, One Way” initiative (often described as the Silk Road for the 21st Century), and in the aforementioned text, the Chinese strategy is even compared with the American plan after the Second World War, yet describing it to be ”brave, expensive, and far more risky”.
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Click here for the original article by Gordana Grgas on Novac.hr (Jutarnji)
