Alberto Forchielli interviewed by Michele Arnese and Michele Pierri and published on Formiche.net
Eni, Enel, Snam, Terna, Telecom, and Fca-Fiat. Chinese investments in Italy are multiplying as part of a precise strategy Beijing has developed with respect to Italy and Europe.
Alberto Forchielli, managing partner at Mandarin Capital Partners (MCP) and founder of the Sino-European research center, Osservatorio Asia, explains his beliefs in a conversation with Formiche.net.
Forchielli, what significance would you give to these investments? Is there a premeditated strategy?
Yes, absolutely. The central Chinese bank, the People’s Bank of China, owns shares in all the major international businesses. In any case, it usually keeps a low profile, typically staying under the threshold of having to make a public declaration.
Instead, in Italy where the threshold is the 2 percent, Beijing continues to make investments that surpass it by a very small margin: Fca (Fiat), Prysmian, Eni, Enel, and Telecom. This means it wants to be noticed.
Why, and to what end?
A study published by the Pew institute last July on how public opinion in several countries views China can explain it better that I. It revealed that 70% of Italians see Beijing in a bad light. This is a staggering percentage, higher than that of all western countries. China is sending a message of friendship and power. In their view, acts like these that involve minimum investments should endear China to Italy.
Where does this anti-China sentiment come from?
There are many reasons. First, among industrialized nations, Italy has been one of the most affected by Chinese competition. Second, Italian small-medium enterprises that went to China without protection were literally massacred and plundered for their resources and know-how. Third, scams like Suntech in Puglia and permanent displays of horror like Prato represent images that are difficult to erase. And it’s not by chance that the first declared shareholdings (Eni and Enel) arrived right after the tragedy in the Tuscan textile city where seven people died.
Do you think China is focusing more on Europe and less on more financialized countries, as the economist Francesco Daveri wrote today in the Corriere? Or is it only portfolio diversification?
They can’t be that selective, the Chinese buy where they can. Now it’s easier in countries struck harder by the crisis like Italy, Spain, Portugal, and Greece. Other nations that can avoid it, like France and Germany, do. No one likes to welcome a guest as cumbersome as China.
Formiche.net has criticized the geopolitical decision to sell 35% Cdp Reti (and therefore SNAM) to China State Grid. What do you think?
There is no doubt that geopolitical motives underlie these types of investments. Beijing is aiming to break the alliance between Europe and the United States, to undermine the trans-Atlantic free trade agreement (TTIP), and to influence European processes. It does what it can, giving each country what it needs. In this moment, Italy desperately needs liquidity, and Beijing granted it. Having said this, I believe that acquiring 35% of an unlisted holding company like Cdp Reti doesn’t expose Italy to great immediate risks. Though they surely realized that the 2 billion Euros China spent equate to one week’s worth of Italy’s interest expenses, therefore we’ll have to sell the rest sooner or later. But, I think China’s entry into private companies that control the media is much more serious, like Fca-Fiat and the Corriere della Sera. Selecting those investments was also part of a strategy aimed at improving China’s image in Italy.
Do you think this kind of intervention is preparing China for a potential investment in public utilities?
There’s no precise plan, but China is present and where there’s the possibility of investing, it does, even in public utilities. In itself, if it were only a matter of single cases there would be nothing wrong with it, but the exceptions have multiplied. And the implied message is: Italy is ours.