When China’s $27.69 billion Three Gorges Dam Project began in 1993, it was lambasted by a host of critics, from engineers who thought that a hydroelectric facility of such magnitude was beyond Chinese expertise, to environmentalists who feared its climatic impacts. While construction finished in late 2008, the Three Gorges’ final six additional turbines only started generating electricity last year.

Now it seems that Beijing is having the last laugh. The Three Gorges Dam is the world’s largest water control and hydropower project, pumping out 20,300 megawatts, and its output is only exceeded by Brazil’s Itaipu dam.

The Three Gorges Dam electrical output is exceeded by the cash that it has generated for China’s state-owned Three Gorges Corp., the operator of the Three Gorges Dam, which is now beginning to show its clout in the global financial market.

Responding to environmental concerns, in 2011 the Chinese Academy of Social Sciences’ published its “Green Book of Climate Change: Annual Report on Actions to Address Climate Change (2011).”

The “Green Book” essentially absolved the Three Gorges Dam from any wide-scale environmental impact.

The study proclaimed that research has determined the radius around the dam within which environmental conditions have been impacted by the development is less than 12 ½ miles. The study reported that no direct link had been determined between the dam and regional severe droughts and floods in recent years, with the report instead suggested that the extreme weather conditions were caused by abnormal atmospheric circulation and air temperature resulting primarily from changes in ocean temperature and snow conditions on the Qinghai-Tibet Plateau.

The results of the study were the first to be released publicly since controversy over the dam grew in 2011. The 2011 regional drought was the worst in five decades, and as water levels in the Yangtze and the bodies of water linked to plummeted the Three Gorges Dam came under greater scrutiny as Chinese authorities ordered the release of five billion cubic meters of water from the facility to alleviate downriver drought.

Obliquely acknowledging however that in fact the Three Gorges Dam might have some environmental climactic impact the report recommended that, “the authorities strengthen monitoring, evaluation and research of the climate condition in regions around the dam.”

But having seen off those pesky environmentalists, China’s state-owned Three Gorges Corp., the operator of the Three Gorges Dam, is on a foreign investment spending spree, with the global recession providing fire sale prices.

Since China’s entry into the World Trade Organization in 2001, the country’s outbound direct investment (ODI) has been on the rise, especially after the outbreak of the global economic crisis in 2008. In 2010 China’s ODI was $68.81 billion, absorbing 5.2 percent of global capital flows, with China’s ODI funding exceeding the ODI of both Japan and the United Kingdom for the first time, becoming the fifth largest ODI capital flow in the world. As regards the global economic recession, China Chamber of International Commerce deputy secretary general Lin Shunjie noted simply, “The debt woes indeed provide Chinese companies with good business opportunities.”

And what assets has China’s Three Gorges Corp. set its eyes upon? Last week Three Gorges Corp. won a public offering bid to buy a 21.35 percent state-owned stake in the Portuguese utility Energias de Portugal (Electricity of Portugal, EDP), beating out Germany’s E.ON and  Brazil’s Eletrobras and Cemig utilities.

The cost?

A mere $3.42 billion. The deal has wide ranging implications, as it marks the first time that a large Chinese firm has bought into the privatization of Eurozone countries amid the continent’s worsening debt crisis. Sweetening its offer, China Three Gorges Corp. in addition to its bid presented an investment plan of an extra $2.54 billion to finance the Portuguese utility and the possibility of an additional $2.54 billion.

And how does the Portuguese government view the Chinese offer? In announcing the sale Portuguese Secretary of State for the Treasury and Finance Maria Luis Albuquerque, announced that the offer made by Three Gorges Corp. was “the strongest in overall terms” of the four bids received, remarking, “When assessed in overall terms, the offer from Three Gorges Corp. is the best in financial terms and it is also a very strong offer in other aspects.”

Three Gorges Corp. CEO Cao Guangjing said after hearing the news that the decision was “very wise and fair. I am very happy… the Portuguese government’s decision is good for the future of EDP and for better relations between our two countries.”

The fact that Lisbon would favor a Chinese entity over its fellow EU member Germany, the continent’s economic powerhouse and Brazilian firms, from a country with which Portugal has longstanding ties going back centuries is hardly insignificant, but the cash on the table was ultimately the deciding factor over all else.

And more such deals may be in the works, as according to Lison’s Publico newspaper, the Portuguese government has encouraged Chinese interest in the Banco Comercial Portugues, the nation’s largest private bank, which has already made first contacts with Chinese banks.

Chairman Mao Tse Tung once proclaimed, “The East is red.” Now apparently, so is a part of the Iberian peninsula.

By. John C.K. Daly of Oilprice.com

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