China Claus is coming to town! For better or for worse, Chinese companies are replacing traditional European investing partners — namely Italy and Turkey — and helping to develop a country in dire need of modernization, particularly if it wants to move from its European Union candidacy status to a full blown member in the foreseeable future.
But, like everything involving China, when the world’s No. 2 economy comes knockin’, they are trying to bring a few hundred Chinese personnel waiting to be let inside. Moreover, the companies investing in strategic assets are often government owned, which should raises eyebrows in the halls of power throughout Europe, particularly in Brussels.
There is concern among some leading Albanian politicians that when China invests, it does so to export its own labor into the foreign market. This is particularly worrisome in the case of Albania that has a 17.1% unemployment rate, and where jobs are badly needed.
For now, China has become a leading trading partner for Albania, a small, mountainous Balkan state on the Adriatic Sea. Chinese investments are relatively new there, so for companies like Geo-Jade Petroleum, this is a whole new world.
“China is an important economic partner to Albania, but we need to ensure we are getting a fair deal that generates economic growth…and creates more jobs here in Albania, for Albanians,” says Ilir Meta, the country’s former Prime Minister and now Speaker of Parliament since 2013. Meta has been involved in Balkan politics since the implosion of Yugoslavia in the 1990s and remains a popular and influential figure in the country decades later.
What is China up to in this small lower-middle income nation of over 3 million including a large diaspora? The second poorest in Europe after Moldova, it has an economy that’s smaller than many Chinese companies.
On June 6, the Albanian government said that it was ready to ink a deal with China State Construction (CSC) to build a 200 million euro, 16-mile stretch of road to neighboring Macedonia. The so-called Arber Road project has been partially built by the Albanians, but parts of it are still a cobbled stoned street that dates back to the Roman Empire, while most of the road is a two lane pothole riddled, slow moving, road that hinders efficient transportation and needs to be turned into a modern highway. The Chinese will pave the way into the 21st Century, creating an important transportation route for Albanian commerce.
In March, China’s Geo-Jade Petroleum, a publicly traded oil company listed in Shanghai, bought controlling rights in two Albanian oil fields then controlled by Canada-based Banker’s Petroleum for a cool $442.3 million. Albania’s Patos-Marinza is the largest onshore oil field in Europe and several international companies have signed exploration contracts with the government, including Royal Dutch Shell in 2012. Those two China deals alone account for nearly 5% of the country’s 2015 nominal GDP.
In April, state-owned asset manager China Everbright and Hong-Kong based Friedman Pacific Asset Management announced they were buying Tirana International Airport in a concession deal that has the Chinese co-owning Albania’s only commercial airport for the next 10 years. The move is consistent with China’s strategy of buying stakes in major transportation hubs along the Mediterranean, including Cosco’s April purchase of Greece’s Piraeus port and Shanghai International’s March 2015 successful bid to operate the new Haifa port in Israel for 25 years.
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