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Chinese Investment in Greece and Sino-Greek Relations

China’s growing presence in Greece through major investments and the purpose of this large scale initiative, is the subject of a new report by the Institute of International Economic Relations (IIER).
The report, titled “Chinese Investment in GreeceĀ andĀ the Big Picture of Sino-Greek Relations”, was released on December 4, presenting the investments China has made in Greece in recent years.
To date, Chinese investors have targeted transportĀ infrastructure, energy and telecommunications, the common denominator of theseĀ sectors arguably being the ambitious Belt and Road Initiative (BRI). Chinaā€™s flagshipĀ project in Greece is the investment made by COSCO in the Piraeus seaport,Ā one of the fastestĀ growing sea ports in Europe, and worldwide.
The second biggest ChineseĀ investment is the purchase of a 24% stake in Greeceā€™s Independent PowerĀ Transmission Operator by China State Grid.
At the same time, a growing number of Chinese companiesĀ are involved in the area of renewable energy sources and telecommunications. Tourism and real estate are also becoming increasingly attractive forĀ Chinese investors.
The goals
According to the IIER report, “the growing footprint of Chinese investors in Greece aims at the attainment of at leastĀ one significant goal – the construction of a cross-border transport corridor from theĀ Mediterranean to Central Europe. This would then allow China to meet two moreĀ strategically important objectives:
(i) the reduction of transportation cost; and
(ii)Ā improved access to and increased presence in the European market, but also to theĀ south of the Mediterranean.”
However, Chinaā€™s presence in Greece isĀ conditioned by the country’s financial woes. While Chinese investors took advantage of the liberalization of the Greek market dictated by the country’s creditors, some investment plans failed to come to fruition, due to political instability, legal uncertainty,Ā red tape or EU rules on competition.
Case in point isĀ TRAINOSE, the national railway operator. COSCO refrained from purchasing TRAINOSE due to the above reasons.
A noteworthy aspect of Chinese investment in the country, is the close cooperation
between different Chinese companies. The vast majority of Chinese investors present
in Greece are subsidiaries of big state-owned enterprises, i.e. entities with a ā€˜commonĀ parentā€™. It is clear that an informal web of Chinese companies centred around PiraeusĀ is taking shape, with a considerable potential turnover which is not easy to record.
Cooperation strategyĀ 
Future Chinese investment projects are now being discussed in the framework of the
2017-2019 Action Plan, signed by Greece and China in May 2017. However, while
China has a long-term vision, “Greeceā€™s strategy vis-Ć -vis Chinese investment
seems to be half-baked at present”, as AthensĀ sees immediate financial benefits such as stock sale, fees, taxation and contributions to the national socialĀ security system.
Also, in cooperation with China, Athens seems toĀ count on political dividends in its tense relations with the international creditors.
The current government has swerved from adamantly opposing privatisationĀ projects to a pro-investment narrative. “Therefore, three crucial questions that GreeceĀ needs to answer are whether:
(i) there is sufficient political will and administrative capacity, so that hurdles to foreign investment in Greece are effectively abolished;
(ii)Ā the potential impact of foreign investment, including Chinese projects, is properlyĀ monitored and assessed by the Greek state;
(iii) Chinese investment capital alone canĀ ensure the boost needed by the Greek economy, so that it can crawl out of its currentĀ quagmire.
Notably, while a strict interpretation of the FDI definitions may lead toĀ Chinese economic presence in Greece being under reported, China has yet to join theĀ list of the most important foreign investors in the country.”
Greece, Brussels and Beijing
Greeceā€™s debt crisis has definitelyĀ contributed to the rapprochement between Athens and Beijing, and the politicalĀ implications are significant.
Greece has nowĀ become a prospective member of the China-led Asian Infrastructure Investment Bank, and expresses a willingness to start talks with the New Development Bank.
InĀ addition, Athens is considering becoming more actively involved in theĀ 16+1 platform for cooperation between China and countries in Central and EasternĀ Europe.
In what has caused undisguised irritation in the EU, Greece has sided withĀ China on sensitive political issues.
Furthermore, amidst the turmoil in theĀ Mediterranean and the Middle East, geopolitical considerations are also sneaking intoĀ the big picture of Sino-Greek relations.
On an array of issues, not least of all theĀ ongoing European debate on screening foreign investment, Greece is walking on aĀ tight rope between EU membership and flexibility with regard to China.

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