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Janus Faces of Chinese Investments

Janus Faces of Chinese Investments published on

Last year was the next in row marked by rapidly growing Chinese investments in European Union member countries. Mercator Institute for China Studies (Merics) and Rhodium Group in the joint report, published in February, estimate that Chinese investments in 2015 reached 20 bln EUR. It’s 20% year-on-year growth. Beginning of this year has brought new wave of planned acquisitions topped by valued at 43 bln usd take over of Swiss Syngenta by the state-owned Chem-China. Chinese officials announced that this was just the beginning of the coming overseas buying spree. Recent acquisitions and bids made by Anbang confirm those promises.

Analysts expect that inclusion of One Belt One Road initiative and Chinese outbound investments in the new Five-Year Plan will trigger yet bigger wave of Chinese capital flows, both private and state owned, seeking investment opportunities abroad. Chinese official announced, that total amount of outbound investments in the next 5 years will reach 1 trln usd. They also declare, that Chinese companies will increase their activities in Europe and China will participate in the implementation of the Juncker plan.

European Union faces challenges of proper reception of the coming inflows of Chinese investments, which can bring enormous benefits but are also accompanied by significant threats and risks for EU member countries. Merics and Rhodium Group made an attempt to analyse the opportunities and threats in their report published in June last year (including data from period 2000-2014) and in already mentioned February’s update (data from 2015)

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Kashagan Deal Inked

Kashagan Deal Inked published on

Xi Jinping’s visit to Kazakhstan has contributed to closing the deal on the Chinese participation in the Kashagan project (our previous articles on Kashagan here and here. On Saturday Reuters reported the deal and provided some details of the transaction. Kazakh sources like Tengrinews.kz and Newskaz also informed about the sale of the shares in Kashagan project to China National Petroleum Corp (CNPC) but without elaborating on the conditions. Astana TV today informed that details of the whole transaction would be announced later. According to Reuters KazMunayGas JSC (KMG) will resell ConocoPhilip’s shares for around 5 bln USD, amount, that is slightly lower than expected. CNPC however will pay up to $3 billion to cover half of Kazakhstan’s financing of the second phase of Kashagan’s development which was one of the additional costs to be paid by the Chinese buyer I wrote about in the previous articles. Another part of the deal is the agreement that would guarantee loans from The China Development Bank and The Export-Import Bank of China – worth respectively $3 billion and $5 billion – to Kazakhstan’s state holding firm Baiterek. Official version of the terms and conditions will be revealed later and transaction will be probably fnalized in October but as deal was supported and announced both by Xi Jinping and Nursultan Nazarbaev and other Kazakh officials it’s hardly possible that it would not be. It’s worth mentioning that the agreement on Kashagan is only a part of the whole set of projects worth 30 bln USD that were inked during Xi’s visit.

Chinese in Kashagan

Chinese in Kashagan published on

Several weeks ago we wrote (here) about the complex situation resulting from ConocoPhillips’ decision to exit the North Caspian Operating Company B.V. (NCOC) and its intent to sell stake in the consortium to the Indian company ONGC Videsh Limited (OVL). In the previous article we also mentioned the possible reactions of the Kazakh government, which was considering blocking the deal and purchasing ConocoPhillips shares only to resell them to a Chinese state-owned enterprise. On July 2 the Ministry of Oil and Gas announced on its official website that state-owned KazMunayGas JSC (KMG) would purchase ConocoPhillips shares in the consortium on behalf of the Republic of Kazakhstan. On the same day on the sidelines of energy summit in Moscow, Lyazzat Kiinov, KMG’s head at that time, was reported saying that China National Petroleum Corporation (CNPC) would pay more than US$5 billion for the shares (US$5 billion was the amount agreed between ConocoPhillips and OVL). Replacements and demotions in the Ministry of Oil and Gas and state-owned companies followed the government’s decision and Kazakh media were flooded with speculation about the possible terms under which the government had agreed to resell shares to a Chinese company.

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China eyes Kazakh oil

China eyes Kazakh oil published on

In last six months attention of many observers was focused on the events in Kazakhstan connected to the activities of the Chinese companies from the energy sector. In November last year one of the shareholders of the consortium, that manages development and extraction of oil in one of the richest oil deposits in the world – Kashagan, ConocoPhilips took a decision to sell its stake to the Indian company ONGC Videsh. Transaction has not been finalized yet as it is subject to the obligatory approval from the government of The Republic of Kazakhstan. The approval is still pending. The Kazakhstan government is entitled to the preemptive purchase of the shares and considers to use its right to purchase the ConocoPhilips stake, however not for Kazakhstan but for a third party – one of the Chinese state owned oil companies. Kazakhstan’s government plans have led to the new wave of discussion concerning share of Chinese companies in the Kazakh energy sector and increasing Kazakhstan’s dependency on the mighty neighbor.

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Chinese BGI obtains advanced genome analysis technology in US takeover

Chinese BGI obtains advanced genome analysis technology in US takeover published on

At the end of December 2012, the Committee on Foreign Investment in the United States approved the takeover of one of the leading American human genome sequencing companies, Complete Genomics, by the American subsidiary of the Chinese corporation Beijing Genomics Institute. As of February 10th 2013, the transaction had already received approval from the Chinese National Development and Reform Commission. Still pending is only an approval regarding compliance with antitrust laws. Considering a relatively small share of CG and BGI in the American market, dominated by giants like Illumina, this approval is expected to be granted easily. The CFIUS decision, however, was criticized by some analysts as posing a threat to national security as well as to the competitiveness of American companies in the field of DNA sequencing.

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