China’s policy towards Greece and Europe could not but be an issue of high interest for German think tanks. The German Council on Foreign Relations (DGAP) is a characteristic example as it has launched a successful China Program. In that regard, its Associate Fellow Anne-Kathrin Langhorst shares her view regarding Sino-European relations on chinaandgreece.com by talking to Stylia Kampani. She, inter alia, discusses how Europe and Germany see China’s presence in Greece, why China is interested in expanding its business activities in the country and whether Beijing’s economic power might undermine Brussels’ negotiating position.
What are China’s intentions in Piraeus?
In 2009 COSCO obtained a 35-year concession to operate two terminals of Piraeus port. Today, the Greek government is urged to sell Piraeus port to private investors, the COSCO Group has signalled interest and is likely to obtain the majority shares of the port. The Port of Piraeus is strategically well located, it is China’s gate to Europe. In line with the Chinese 21st Century Maritime Silk Road strategy framework, the Piraeus port links the Mediterranean area via the Suez Canal with the Indian Ocean. As Greece is said to be the most eastern point of Western Europe, it is of great value for China’s economic interests. It is becoming central for trade connections between Asia and Europa, especially since China has agreed on financial aid for Hungary and Serbia to improve the railway connection between the states – as part of the Silk Road Economic Belt strategy. Chinese efforts will certainly have positive effects on the damaged Greek economy as well as on economies in Eastern Europe. A well-established road/railway/maritime infrastructure usually has positive effects for investment, employment and business opportunities in the affected and surrounding areas.
Is China serving political interests?
Chinese efforts will certainly have positive effects on the damaged Greek economy as well as on economies in Eastern Europe. A well-established road/railway/maritime infrastructure usually has positive effects for investment, employment and business opportunities in the affected and surrounding areas. However, China is certainly not the altruistic Samaritarian, willing to help Greece solving its financial problems or providing development assistance to the Balkan states. Besides attractive investment opportunities, Chinese FDI are likely to be connected to the 2010 announced US-Asia-Pivot strategy. This strategy announced by the Obama government aims at strengthening diplomatic, economic as well as security ties between the US and the Asia-Pacific region. As this has prompted concern about US containment in China’s direct sphere of influence, the Chinese stretch to Europe is – besides its positive financial effects – most likely evidence of geostrategic, political realism. The Chinese move towards Europe represents the willingness to strengthen political ties as a reaction to the US bonding with the emerging economies in Asia-Pacific.
The EU member states – including. Germany – generally have a positive attitude towards OFDI (Outward-Forward-Direct-Investment) from China. In 2014, China implemented guidelines, which facilitate investments from Chinese enterprises in other countries. These guidelines are in line with the 12th Five-Year-Plan (2011-2015) of the Chinese government and aim at a deregulation of administrative barriers. The rise of China to one of the world’s most liquid capital sources is of special relevance for Europe, because after the financial crisis, incoming direct-investments have not recovered until today and remained on a very low level. This certainly has negative consequences for the EU GDP and EU welfare. FDI – from no matter which country – create and secure employment and therefore welfare and economic stability as the GDP grows.
It should be mentioned that many media negatively comment that Piraeus investor COSCO does not accept workers’ representation and seriously cuts worker rights. Another aspect, which causes some concern, is that China itself is shaken by an economic downturn. As an emerging economy, the economic volatility of the country might lead to unexpected or overhasty capital drain. However, for the EU and Germany, there is hardly room for doubt in China as an important capital source.
Can the European economy benefit?
Through the size and structure of the Chinese market, especially FDI from China have the potential to unfold positive effects on the EU Economy. The more the economies of the two global players are linked with each other, the stronger these positive effects can get. One important aspect in that regard is know-how and technology transfer. If China buys or builds enterprises in the EU, it is likely to train the European employees and thereby create positive spillover effects. This might have not been the case a decade ago, but today, the Middle Kingdom is no longer the country of low-tech industries. Concerning the EU, it is important to keep the internal market attractive for Chinese FDI. However, structural reforms are urgently needed, above all in infrastructure, which is of great value for the export industry, such as transportation hubs.
But there are also some consequences for the EU by largely co-operating with China. As financial investments in some ways always go in line with interdependencies, there is the danger, that closer economic ties between China and the European states, will undermine the EU’s ability to criticise Chinese actions on other political issues. China’s ‘One belt, One Road’ strategy is certainly a demonstration of Chinese financial power and economic influence towards the EU, Europe, the US and the rest of the world. It becomes obvious, despite recent economic downturns in China, the Middle Kingdom aims at being more than Asia-Pacific’s superpower.
Interview with Stylia Kampani