Madagascar coup worries Chinese investor

The Canton-based Yangcheng Wanbao 羊城晚报 reports that Hui Chi Ming 许智明, chairman of the board and shareholder of Sunpec, is concerned concerned about stability in Madagascar, where there has been a military coup this week. Sunpec is listed on the Hong Kong stock exchange, and according to the website, it is mainly active in distributing petrochemical products. Hui, who was born on the mainland, is also, according to the company website, a member of the

National Committee of the Chinese People’s Political Consultative Conference, [...] standing member of All China Federation of Industry & Commerce, honorable [i.e. honorary] president of Beijing Federation of Industry & Commerce, president of Hong Kong Association of International Investment [etc]. He has been awarded the Humanity & Peace Promotion Award (推動人類和平進步獎) by the United Nations and accredited as Top Ten Poverty Alleviation Contributor (全國十大扶貧狀元) by the government of the PRC. In honor of Dr. Hui’s contributions to humanity, the International Minor Planet Nomenclature Committee permanently named the minor planet no. 5390 the “Hui, Chi-Ming Planet”.

Sunpec’s board members, including Hui, appear to have lots of Russian connections (honorary doctorates and medals, including from the Institute for Far Eastern Studies in Moscow, an outfit I am familiar with).

Sunpec owns four oilfields in Madagascar, which, according to the article, makes Hui is the first Chinese national to hold a 100% stake in an overseas oilfield.  He is also the controlling shareholder of Madagascar’s second-largest bank, the Madagascar Industry and Trade Bank (this is a translation of the Chinese 马达加斯加工商银行), and Madagascar’s honorary consul in Hong Kong. In the article, Hui describes himself as a friend of both the deposed president, Marc Ravalomanana, and the opposition leader, Andry Rajoelina, and says he had tried to mediate between the two parties (Ravalomanana told him that “his bottom line was the presidential palace”). Although the Antananarivo office of Sunpec’s local venture, Madagascar Energy International, has been looted during the protests, Hui reassured readers that his bank’s headquarters were being guarded by twenty military police.

Sunpec’s fields have not yet started production. Chinese investment in Madagascar has grown rapidly under Ravalomanana’s pro-business presidency. The article notes that Chinese aid to Madagascar has totaled 500 million yuan, most of it since 2006.

More energy investments by China

The weekend’s New York Times (David Barboza, “China gets a warmer welcome for its cash”) reports on further Chinese energy investments abroad following the Rio Tinto and OZ Minmetals deals. Venezuela got a $6 billion loan and agreed to increase oil shipments to China; this brings Chinese investment in the country to $12 billion. Brazil signed a $10 billion oil-backed loan agreement with China, and Russia’s state-owned Rosneft and Transneft oil companies got a $25 billion loan in exchange for 15 million tons of crude oil in the next 20 years.

So the question whether the recession will speed up or slow down Chinese involvement abroad seems to have been answered in favour of the former. It is possible, though, that as Chinese companies now find easier access and better deals in larger, richer countries, some of the traditional client states like Laos and Cambodia will receive less attention.