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Beijing and Athens

Frank Sieren / jpJanuary 15, 2015

China has a vested interest in helping Greece's economic recovery - as long as Athens rules out a Grexit and has Brussels behind it, says DW columnist Frank Sieren.

Samaras und Li Keqiang in Peking 16.05.2013
Image: Reuters

When it comes to Greece, the Chinese are nothing if not generous. While European investors have been keeping their distance ever since the Greek government's debt crisis, the Chinese have seized the opportunity to invest in infrastructure that will help them tap new markets.

Last summer, Chinese Prime Minister Li Keqiang visited Greece to sign off on contracts worth around five billion euros ($5.9 billion). For the time being, it's a win-win situation. Even were the leftist opposition party Syriza to win the elections in late January - and it might well - candidate Alexis Tsipras has made it clear that Beijing has little to worry about.

Tsipras is generally well-disposed to Beijing. He rules out a Greek euro exit but says Greece "will lead the way in fighting against the politics of austerity ruining Europe." On both counts, he can rely on the approval of the Chinese government. After all, China would also stand to benefit if the EU increased investment in Greece. But this is also why German Chancellor Angela Merkel has her doubts about Tsipras. She firmly believes in the Greek government's austerity measures. Unlike Beijing.

Hafen von Piräus, Griechenland
Piraeus is one of the busiest ports in the worldImage: DW/J. Papadimitriou

Further investment planned

Beijing has a vested interest in a prosperous Greece in a prosperous Europe. And if it has to lend it money to reach this goal, so be it. This allows China to sell goods via Greece and keep profiting for as long as possible from the logistics chain.

Politically, China needs a strong Europe, because it helps contain US power. Beijing's strategy is to use acquisitions and investments to bolster its own interests and position itself on the international stage. Keen to avoid economic collapse, Greece is desperately seeking investors to help top up its empty state coffers.

Former Greek Prime Minister Georgios Papandreou paved the way for closer cooperation with China back in 2010. Five years on, while Germany in particular is sitting on the fence when it comes to Greece, China's investment plans are looking increasingly ambitious. Beijing hopes that the extension to Athens airport will represent its gateway to Europe's domestic aviation market. Until now, Chinese carriers might fly to Europe, but they rarely fly within it. Air China, for example, relies on its Star Alliance partner Lufthansa to take over passengers, and Lufthansa turns the profit. To change this, Beijing is planning to invest in a Greek airline whose planes will be stationed at a hub that will become as important as the one in Turkey is today.

Green light

The Turkish president wants to build the world's largest airport in Istanbul by 2017 - a hub intended to replace the Dubai and the United Arab Emirates as the major hub connecting Asia, Europe, and Africa. If such an airport could be built in Greece, it would strengthen the economy. The leasing contracts with Chinese investors covering the port of Piraeus are something of a trial run. For over four billion euros, the Chinese transport company Cosco has secured the lease for 35 years. With over four thousand containers docking daily, the investment will soon pay for itself.

Frank Sieren Kolumnist Handelsblatt Bestseller Autor China
Frank Sieren lives in ChinaImage: Frank Sieren

Piraeus is one of the busiest ports in the world, since 2008 Cosco has had a 70 percent share in it. Now the state company from China wants to buy up all the shares - at a price four times cheaper than continuing payments on the existing lease - so quite a bargain. On December 24, the Greek prime minister called his Chinese counterpart Li Keqiang to tell him parliament had given its green light in principle. Now they only have to agree on the terms.

Foreign currency reserves

For China, a port in the EU would represent an important step - as important as a hub for air transport in the Mediterranean. In total Beijing would like to invest over $1 trillion abroad over the next ten years. The current strong dollar is an added incentive, as China is sitting on over $4 trillion in reserves amassed through export surpluses, and the euro is weak.

But all this strategizing means little to most Chinese. Even if Greece is becoming an increasingly popular holiday destination, only 30,000 of the 18 million tourists who visited Greece in 2013 were Chinese. A negligible number.

DW columnist Frank Sieren has lived in Beijing for 20 years.