Motivations, security threats and geopolitical implications of Chinese investment in the EU energy sector: the case of CDP Reti

摘要

The recent surge in Chinese outbound foreign direct investment in Europe has been met with anxiety often invoking national security concerns. Using the national security framework developed by Moran and Oldenski, we try to ascertain which transactions justify apprehension. Our case study is the acquisition by a subsidiary of wholly state-owned State Grid Corporation of China of a 35% stake in CDP Reti S.p.A. (CDP Reti) that controls Italy's electricity grid via its subsidiary Terna S.p.A. Although State Grid Corporation of China can nominate two members of CDP Reti's board of directors, we find that there is no direct threat to national security. We then tackle the geopolitical dimension of investments in electricity grids. Using the 'thought experiment' developed by Scholten and Bosman, the contribution we make is that, in a world where the importance of renewable energy increases, a framing power rather than control over the strategic development of a country's grid is sufficient to exert geopolitical power. Since State Grid Corporation of China's exponents on CDP Reti's board can at least partly influence the company's investment decisions, we conclude that the transaction grants China geopolitical influence over Italy's grid. Furthermore, in the future this type of geopolitical influence could also lead to indirect security concerns. The interconnection of European electricity flows extends this conclusion to the EU's electricity grid as a whole.