James Camilleri

Legal Officer, PKF Malta

James Camilleri is a Legal Officer at PKF Malta

Malta's Commerce Agreement with China

Wednesday 02nd January 2019

The 'One Belt, One Road' (OBOR) initiative is a project of the Chinese government which started five years ago under the assent of the President of the Republic, Xi Jinping. The plan is to create a roadmap of commercial activity all across Asia, Europe and Africa. The Maltese government was amongst the first European countries to cooperate in this initiative. This has been further solidified by a signing ceremony held in Shanghai and represented by Carmelo Abela, Minister for Foreign Affairs and Trade Promotion, for Malta, and Hi Lifeng, Chairman of the National Reform and Development Commission for China.

From the day of the OBOR's inauguration, the Maltese government has shown interest in developing this opportunity further. The Maltese government is presenting an image to Chinese investors of a location within the European Union (EU) jurisdiction that is well-equipped to carry out new investment ventures. It is worth noting that diplomatic relations between the two nations date back to 1972.

In the light of the accumulating US Treasury Bills' investments by Chinese venture capitalists, the Chinese government is hopeful to diversify the pool of investment alternatives, across all corners of the globe. As mentioned, Sino-Maltese trade relations go back to the 1970s, and since then, Malta's trans-shipment infrastructure has been extensively upgraded. The Malta-China Steering Committee covers extensive areas of expertise, namely energy, infrastructure construction, financial services, maritime cooperation, aviation, tourism, aquaculture, education, cultural cooperation, broadcasting and film co-production. The talks within the Malta-China Steering Committee are not only limited to bilateral diplomatic parameters but include a multilateral dimension as they are being extended to the EU-Asian perspective.

Back in July 2014, Prime Minister Joseph Muscat travelled to China on an official visit that was concluded by a five-year Memorandum of Understanding (MoU) together with the Chinese Prime Minister Li Keqiang. This MoU delineated the current developments being witnessed in terms of a Cooperation Plan between the two states that set the stage for the bilateral cooperation. The main areas of cooperation that were pointed out in the MoU were infrastructure, energy, air services, financial services and R&D. In May of 2016, the Chinese Vice-Minister for Commerce Gao Yan was responsible for a delegation in Malta. Mr Gao and the then Minister for Economy, Investment and Small Business, Dr Christian Cardona, led the 10th China-Malta Joint Commission on Trade and Economic Cooperation. This was another brick in the OBOR framework currently under review.

Another relevant milestone reached in 2013 was the paving of the Asian Infrastructure Investment Bank (AIIB), of which Malta was amongst the 57 founding members. The AIIB has its headquarters in Beijing and by January of 2016 had 87 approved members from every part of the world. The scope of the AIIB is to invest in productive sectors within the Asian region. The change in government following the 2013 general elections in Malta witnessed a bold growth in investment endeavour. One of the first successful collaborations of the Sino-Maltese deal occurred between Shanghai Electric Power and Enemalta. Both parties benefited greatly from this pact; in just a few years, Shanghai Electric Power has been able to make inroads into the European market, while Enemalta has enriched its technical knowhow and boosted its profitability levels. Enhanced knowledge and higher profits translate into added welfare for the consumer both of a domestic or commercial nature. Enemalta's main power station, the Delimara Power Station, has since undergone major upgrading, resulting in added output in a more environmentally-friendly fashion.

The energy sector was only the first area of collaboration with other major industries being in the pipeline as already listed above, notably: health and medical care, infrastructure, construction and real estate, tourism, financial services, bio-technology, air services, aerospace and aviation. A case in point, the Chinese leading global provider of information and communications technology infrastructure and smart devices, Huawei, set up an office in Malta and signed a number of MoUs with the Maltese government.

To conclude, the Silk Road Economic Belt is a route that connects China with Central Asia and Eastern and Western Europe. The objective is to have a logistics bridge that links Western Europe with China together with Mongolia, Russia, central Asia, and South-East Asia.