Grexit: perspectives from Beijing
Chinese premier Li Keqiang flew to Europe this week to take part in the 17th bilateral summit between the European Union and China, as well as to pay official visit to France and Belgium. During his meeting with Donald Tusk, the President of the European Council, and Jean-Claude Juncker, President of the Commission, premier Li declared China’s interest in playing a role in the European Fund for Strategic Investment, which calls for €315 billion to be invested in strategic projects around Europe. Juncker’s investment plan perfectly meshes with the Chinese Silk Road Economic Belt strategy, mainly based on investments in the infrastructure sector. Besides the talks, a “connectivity platform” was launched to enhance mutual cooperation and encourage share of expertise among the two sides. An investment platform for infrastructure an transportation projects should follow.
Certainly European leaders were not expecting to have such a tense political climate for the first visit to the EU headquarters of the Chinese premier. As predictable, the core of the meetings has focused on economic issues, however, the wider picture could not have been completely eclipsed form the talks. The referendum in which Greek people will decide whether to leave the Eurozone will keep Brussels awake at night until Sunday, at least.
The specter of a Europe without Greece is not of concern just within EU borders. As Li underlined, China and rest of the world are also worried about the possible outcomes of a Grexit. Considering that Europe is China’s major trading partner, Grexit could cause significant damages to Beijing’s already slowing economy, not to mention China’s ambitious Maritime Silk Road project. China is not an indifferent spectator in European affairs and is carefully planning how to react to the different scenarios. Li proclaimed that Europe can count on the support of China in facing the international financial crisis and the problem of the Greek debt. On Monday, Foreign Ministry spokesperson Hua Chunying said “China hopes to see that Greece will stay in the Eurozone”. China would be in a position to help Greece out, if it chose to. Europe is offering the Greek government financial tools, while China, with its stockpile of foreign reserves, could directly invest in the country. Beijing and those Chinese investors more interested to enter the Greek market are watching closely the negotiations and shaping the strategy in case of a Greek breakdown.
Experts say it is strongly unlikely that China will provide Greece with a real loan to repair its debt. As Premier Li declared, the Greek debt is, at least in principle, an internal problem of Europe, therefore a flow of yuan into Greece could be interpreted by interference in European internal affairs. Politically, China cannot afford to take a stance that might be read as hostile to the EU. China could offer its help in more indirect ways which fits its investment interests. In 2008 China Ocean Shipping Company (COSCO), a state-owned shipping giant, with a €4,3 billion deal obtained the right to operate in the second terminal of Piraeus port, as well as to rebuilt and operate the third terminal. Since 2010, the year when COSCO became operative, the number of containers passing thought Athens has quadrupled and Chinese investments have uninterruptedly risen.
Piraeus represents as a focal point of the Chinese 21st Century Maritime Silk Road, which aspires to link the country with Europe via the Indian Ocean and the Suez Canal. If China decided to turn Athens into its distribution center for the exports to the Middle East, therefore becoming the terminal point of its New Silk Road, this would provide Greek economy with a much-needed lift and also create favorable geopolitical implications for Beijing.