The cost of trade with China

That China is a major economic power house is undeniable, as is the fact that all European nations are currently seeking to capitalise on Chinese investments and the liquidity of Chinese banks. That includes the British Tory government of David Cameron, Angela Merkel’s grand coalition in Germany and Renzi’s centre-left government in Italy.

From this perspective, it would be absurd to argue that Malta should refrain from trading with China out of sheer sinophobia alone. Simply put, we cannot ignore one in every six people on earth.

Likewise, one cannot exclude such trade agreements on the basis of the non-democratic credentials of potential partners. China is a one-party state where human rights violations have been documented and dissidents are still harassed or arrested. Yet using the same yardstick Malta should not trade with Dubai, the Gulf states or any other dictatorial country, some of which rival China in brutality.

Surely, a puritanical argument against trade and cooperation with countries which do not fit our definition of democracy does not hold water. But that does not mean that we should let our foreign policy be conditioned by commercial deals alone.

The government should in fact be wary of promoting China as some sort of development model or a source of easy money and benevolence which comes at no cost. China is known to use its financial might to gain diplomatic leverage. Ironically, it is Malta’s membership in the EU which makes it a valuable prize for the rising super power. This is why scrutiny of any agreement and its implications is vital in a democracy worthy of its name.

China does use its commercial might to silence critics. It is well-known that China uses its soft power by offering economic incentives in return for silence on issues like Taiwan, Tibet and human rights. In 2010 the Nobel Peace Prize was awarded to the Chinese dissident Liu Xiaobo. The Chinese government reacted with an unofficial partial trade embargo on Norwegian salmon, and froze trade talks. Later, in a bid to thaw relations with China the Norwegian government snubbed the Dalai Lama and no government officials met him during a three day visit.

Likewise, under both PN and PL administrations Malta has never raised human rights issues in its dealings with Chinese governments. For while Prime Minister Joseph Muscat seems to have intensified contacts with the Chinese government, high-level meetings were held in the past with former Chinese Premier Li Peng (who was in power during the Tienanmen massacre) and former President Jiang Zemin.

Yet unlike Muscat (and Eddie Fenech Adami before him), other EU nations do raise human rights while seeking trade with China. Merkel, who met Chinese premier Li Keqiang a day before Muscat, insisted that success in economic cooperation relies on dialogue on human rights and the national rule of law.

The Muscat administration could learn from this approach. Very worryingly, Malta has recently declared its support for Israel’s bid for a seat on the UN security council. This support came in the wake of a visit by Muscat to Israel, during which he refrained from condemning Israeli settlements in his meeting with Prime Minister Benjamin Netanyahu. Given the unfolding situation in Israel today, one could justifiably question Malta’s acquiescence to human rights violations in exchange for commercial deals.

The other issue at stake is the kind of agreements being proposed, irrespective of whether our interlocutor is China, the USA, Israel, Russia or other EU member states. Each agreement has to be seen on its own merits.  While there are various benefits to opening up, there are also risks.

One risk is that of corruption. While corruption exists in the most democratic countries, Transparency International lists countries like China and Azerbaijan as among the most corrupt in the world. Moreover one of the companies with whom the Maltese government is dealing (China Communications and Construction Ltd) is blacklisted by the World Bank for serious corruption in tendering.

Moreover, the environmental impact of such proposals as a bridge between Malta and Gozo and a breakwater in Marsamxett should not be conducted by a Chinese company with an interest in constructing them.

China has also bought a stake in our national energy supply. On its own, it is questionable whether a foreign state – any foreign state – should own our main power station, especially in a situation where the new gas fired power station will also be owned by a company partially owned by the Azeri government. One must question whether these agreements undermine Malta’s sovereignty in the energy sector.

Finally, one worrying aspect of our relationship with other countries is the tendency to promote our trade partners as models of development. Malta is what it is – a liberal social democracy – and can never be turned into a Singapore, Dubai or China. In fact, if we respect our Chinese interlocutors we should be proud of what we are and stand our ground, while seeking even more common ground with countries like China.

Ultimately, we must learn to deal with other states as a mature and principled democracy which is willing to engage with everyone without renouncing its sovereignty and principles.