Xi Jinping in Athens: why China continues to cajole Greece

Back to the first loves. Chinese President Xi Jinping on Monday (November 11th) began a three-day visit to Greece, historically the first European country in which China has invested heavily. This was in 2008, well before the official start of the Silk Roads - this big investment program in infrastructure outside of China - and Beijing had taken advantage of Athens' financial turmoil to acquire part of the port of Piraeus.

Eleven years later, Xi Jinping came to celebrate in Athens "the deep collaboration between two ancient civilizations" by signing a dozen new contracts. They focus on Chinese control of Piraeus, cooperation in the energy sector and the opening of subsidiaries of two Chinese banks in Greece.

Red carpet for the Chinese big money maker

The new Greek Prime Minister Kyriákos Mitsotákis rolled out the red carpet, rejoicing at the "renewed partnership" between the two countries. The conservative, who came to power after the early parliamentary elections of 7 July 2019, wants to make foreign investment the main engine of economic renewal in the country, recalls the British newspaper The Guardian. In this capacity, he is particularly courting China: he went to Shanghai last week and plans to make another trip to Beijing in April 2020.

He hopes that China will continue its spending momentum in Greece, which is struggling to regain sustained economic growth. Beijing has already invested more than one billion euros since 2008 in Greece, according to estimates. Not to mention the real estate investments made by the Chinese which amount to more than 500 million euros since the beginning of 2010, according to the Greek Institute of International Economic Relations.

But the new Conservative government would be wrong to bet on Beijing. "China has slowed down the pace of its foreign loans and, more importantly, it is no longer investing at a loss as it was able to do at the start of the new Silk Roads program," says Jean-François Dufour, director from DCA Chine-Analyze consulting firm, contacted by France 24.

For this expert, Xi Jinping went to Athens, in part "to check if the investments already made start to bring money". In addition to managing part of the port of Piraeus, China has invested heavily in the energy sectors and, to a lesser extent, in Greek telecommunication companies.

Reassure European countries

Beijing has also achieved its strategic goal in Greece. Piraeus was to serve as a gateway to the European market for a portion of Chinese products and, in 10 years, the Chinese giant Cosco - which manages the Greek port - has ensured that nearly 10% of Chinese exports to the country. Europe pass Piraeus. "It has become the main Chinese logistics hub in the Mediterranean basin," says Jean-François Dufour.

China has also set its sights on other European countries to expand the canvas of its new Silk Roads. In March 2019, it announced a strengthening of economic ties with Italy, increased investment in Portugal and in Central European countries such as Hungary. Greece may seem to be ancient history in the eyes of Beijing.

However, Xi Jinping still needs Athens, according to Jean-François Dufour. "The Chinese president has also made the trip for political reasons: he seeks to reassure the European countries at a time when states, starting with France and Germany, take more cautious positions with regard to Beijing and to its program of Silk Roads ", assures this expert.

Greece showcases China in Europe

While the trade conflict with the United States weighs on the Chinese economy, the country needs the European market more than ever to sell its products. "Xi Jinping wants to prove that when his country invests abroad, he also ensures follow-up," said Jean-François Dufour. Examples such as Sri Lanka may have given the impression that Chinese investments only served Beijing's interests and could leave the countries that benefited from the loans in a state of economic dependence that deprived them of a portion of their sovereignty.

Greece must, in this regard, serve as a "showcase of what China can bring to a third country," said the French specialist in the Chinese economy. A dynamic that serves the interests of Kyriakos Mitsotakis' government.

But this demonstration of Chinese goodwill also represents a risk for European unity. Indeed, the message of Xi Jinping to other European countries that might be tempted by the Chinese loans is, filigree, "that in the face of European political and economic shortcomings, there is a Chinese alternative," decrypts Jean-Francois Dufour.

Chinese money can also weaken the coherence of European foreign policy. In 2017, a European motion at the United Nations (UN) to denounce human rights abuses in China was blocked by Greece. Athens probably did not act on direct order from Beijing, but "Greece no longer feels it has the same freedom to criticize China as it did before Chinese investments," Jean-François Dufour summarizes. What would be the consequences if more influential countries, such as Italy, made even greater commitments to economic cooperation with China?