Firm came out of nowhere to buy a $9.1 bn Rosneft stake

CEFC China Energy will aggravate Western paranoia over Beijing’s investment intentions. The private company came out of nowhere to buy a $9.1 billion stake in Russian oil giant Rosneft — the sort of deal once reserved for state energy champions. It has raised eyebrows by trying to invest in U.S. brokerage Cowen . Now Reuters reports the enigmatic firm might bid for Time Warner’s stake in a central European media group. The company is acting as if it has a permit to deal issued from President Xi Jinping himself.

China hawks argue that there is no real difference between Chinese companies, state-owned or private, since they all operate at Beijing’s behest. That exaggerates, but CEFC exemplifies much of what critics complain about.

 Conspiracy theory

Like telecommunications giant Huawei, CEFC’s behaviour lends itself to conspiracy theory. It operates in the strategically critical energy sector, and does business in risky markets like Russia and Africa, with help from policy banks. The FBI recently accused Patrick Ho, deputy chairman of a CEFC-linked non-governmental organisation, of bribing African leaders; CEFC denies involvement.

The company also does deals sure to irritate state-owned rivals, which suggests that it has high-level support of some sort. Oil flows from Rosneft, for example, will be sold on to private “teapot” refineries that PetroChina and Sinopec want to squash. Local media have reported that CEFC founder Ye Jianming’s family was involved in politics in Fujian province, and Mr. Ye probably knew Mr. Xi when he served there. This would give the company a superb political pedigree. Communist party-building activity features prominently on the Chinese website.

At the same time the energy trader exhibits eccentricities similar to those found in other private firms like HNA, which has also been an energetic foreign acquirer. For example, it says it is collectively owned, and it espouses an internal philosophy combining Taoism and Confucianism.

It’s all very confusing. Securing energy supplies is clearly strategic for Beijing, so letting CEFC do this makes sense, but stakes in Czech beer brands, soccer teams and hotels are not. It is not clear if CEFC is prioritising profit, or extending Chinese influence in the European Union. China has just reined in a previous wave of ambitious dealmakers. But if this is the new model for Chinese outbound investment, more misunderstandings are bound to result.