China Seeking Major Investments In Greece, But Why Now?

  • By Breffni O'Rourke

Greek Prime Minister George Papandreou (left) welcomes Chinese Vice Premier Zhang Dejiang to Athens on June 15.

China has signaled a vote of confidence in crisis-ridden Greece by signing investment deals worth billions of euros cross a wide spectrum of economic activity.

At a time when Greece is enduring the humiliation of having to accept financing from the European Union and International Monetary Fund to avoid a debt default, the Chinese have signed multibillion-euro agreements on shipping, tourism, and telecommunications.

The British daily "The Guardian" quotes Greek officials as saying the 14 agreements amount to the biggest investment package ever by China in Europe.

At a signing ceremony in Athens on June 15, Chinese Vice Premier Zhang Dejiang made overt Beijing's intention to help Athens at a time of acute difficulty. He said he is convinced that Greece can overcome its present economic troubles, and he said the Chinese government will encourage Chinese businessmen to come to Greece to seek investment opportunities.

Some of the projects agreed include the building of a series of super-size bulk carrying ships, the building of a big hotel and shopping mall complex in the port of Pireaus, and technology sharing between Greek and Chinese technology and telecommunications companies.

All this comes at a time when international market fears of a Greek collapse have undermined confidence in the whole European Union's single currency eurozone and sent the euro reeling.

And the pain goes on.

The credit ratings agency Moody's on June 14 decided to cut Greek bonds to "junk" status. It said the continuing uncertainty about the risk of a Greek default justified the rating downgrade by four notches, to a level at which some institutional investors will no longer be allowed to buy Greek debt under terms of their investment mandate.

So why is China making its move now? It fits the established pattern Beijing has used in the developing world, notably Africa, to appear as a benefactor.

It has arrived on the scene in Greece at a time when it can elicit the maximum gratitude from the Greek government and people, and at the same time can defuse possible resentment about the scale of growing Chinese economic influence.

The Chinese are hard-headed realists, and they recognize in Greece the ideal portal for exports to the whole of the Balkans. They have decided to establish a bridgehead there, at a moment when the terms are most favorable.