Back in 2008 the Three Gorges Dam was completed becoming the world’s biggest hydroelectric dam. Naturally for the state owned company responsible for its construction it marked a major milestone, but this was not the end of the eponymously named firm’s ambitions who have since expanded abroad in a bid to become one of the world’s premier energy groups, but not without controversy as allegations of bribery recently tainted the firm’s operations.
In 2013 the Three Gorges Corporation brought a 21 % stake for USD 2.7 billion in Energias de Portugal (EDP) the then cash strapped Portuguese energy company, as well announcing that the two would form a partnership to invest in projects across Africa. This has manifested itself in hydro power and renewable energy projects in Portuguese speaking Africa – Angola and Mozambique, as well as Peru.
Three Gorges Corporation was facing a saturated home market and so looked like many other Chinese firms looked to the Belt and Road Initiative and has major plans for hydroelectric projects in Pakistan along the China Pakistan economic corridor.
Three Gorges Corporation is expanding at a boom time for renewables globally as new investment into these technologies now outweighs those going into traditional sources – the Chinese firm’s success in carrying out large projects and the deep pockets behind State owned firms is a major draw for other countries.
The company have been mired in controversy as a 2014 report initiated by President Xi’s anti-corruption drive found multiple instances of nepotism and fraudulent bidding procedures in the Three Gorges Dam project as well as many other examples of graft. The accusations made a big impact in the public consciousness as every Chinese citizen had to pay a special tax to pay to help build the dam. Senior figures including the chairman and CEO were forced to step down as a result of the scandal and the whole affair was widely discussed and condemned on social media.
None of this has stopped the firm’s attempt to go global, Three Gorges recently broke ground in a developed market, announcing a USD 1.8 billion deal to buy Meerwind a German offshore wind project in the North Sea. This deal has compounded German fears about Chinese influence in their economy, as it came on top of an ongoing attempt by Midea (a Chinese appliance maker), to take over Kuka (an advanced Germans robotic firm). For many years Western firms lobbied for access to Chinese markets so they could make acquisitions, now the boot is on the other foot, fears are rising and protectionist instincts are growing.
Merlin Linehan has worked in development finance within Eastern Europe and Asia, and spends much of his time investigating the risks and opportunities that are created from the ongoing expansion of Chinese businesses that invest overseas in emerging markets.