China’s “Big Fat Greek Investment”

Today’s Washington Post has in interesting article on China’s plans to invest in Greece-Greece is tapping China’s deep pockets to help rebuild its economy. China, through Cosco, a key state-owned enterprise that is one of the largest shipping firms in the world, is buying strategically and economically important shipping facilities in Piraeus, Greece. The deal has been in the works for several years, and Cosco took transitional control in October 2009.

Per the Washington Post article:

Spurred on by government incentives and bargain-basement prices, the Chinese are planning to pump hundreds of millions — perhaps billions — of euros into Greece even as other investors run the other way. The cornerstone of those plans is the transformation of the Mediterranean port of Piraeus into the Rotterdam of the south, creating a modern gateway linking Chinese factories with consumers across Europe and North Africa.

The port project is emerging as a bellwether for Greek plans to pay down debt and reinvent its broken economy by privatizing inefficient government-owned utilities, trains and even casinos. This week, the Chinese shipping giant Cosco assumed full control of the major container dock in Piraeus, just southwest of Athens. In return, the Chinese have pledged to spend $700 million to construct a new pier and upgrade existing docks…

The Greek government is also courting China for a bevy of other projects, including a sprawling new distribution center in the industrial wastelands west of Athens, a monorail line, five-star hotels and a new maritime theme park. Greek hotels, eager to fill rooms as crisis-weary Europeans cut back on travel, are also wooing Chinese tour operators as never before. The whitewashed island of Santorini has started selling itself as the ideal spot for “Big Fat Mandarin Weddings” and has seen a surge in fairytale nuptials by wealthy Chinese as a result.

“We have a saying in China, ‘Construct the eagle’s nest, and the eagle himself will come,’ ” Wei Jiafu, Cosco’s charismatic chief executive, said in a televised interview in Athens this week. A high-ranking member of China’s Communist Party, he is now so well-known in Greece that many here refer to him by his nickname, “Captain Wei.”

“We have constructed such a nest in your country to attract such Chinese eagles,” he said. “This is our contribution to you.”..

I wonder if the Greeks will eventually coin a saying like “beware of eagles bearing gifts?”

The investments here in Greece, analysts say, are part of China’s plan to create a network of roads, pipelines, railroads and port facilities — sort of a modern Silk Road — to boost East-West trade.

Forced in April to turn to the European Union and International Monetary Fund for a $140 billion bailout, Greece fits perfectly into China’s pattern of investing in challenging environments. China is building a new commercial maritime base in Greece at a time when other European nations remain suspicious of Chinese state investment. France, citing national security risks, recently blocked a bid by China to take over a French firm…

“The Chinese want a gateway into Europe,” Theodoros Pangalos, Greece’s deputy prime minister, said in an interview. “They are not like these Wall Street [expletive] pushing financial investments on paper. The Chinese deal in real things, in merchandise. And they will help the real economy in Greece.”..

Mr. Pangalos gives voice to the fact that the Wall Street shenanigans of the last few years have materially damaged the West’s standing in the world, to the almost incalculable benefit of China.

The Chinese deal was originally opposed by the Greek Communist Party on the grounds that it would harm worker interests. Perhaps the Greeks should learn from the Chinese Communists about how to work hard and manage an economy?

As part of the deal, 500 union workers at the port were gradually replaced — allowing the Chinese to bring in cheaper subcontractors. To calm the unions, the government offered 140 workers up to $2,000 a month in pension payments, while others were promised government jobs elsewhere.

The unions and the Greek Communist Party say the Chinese are hiring subcontractors with fewer than 20 workers — putting them just below the legal threshold in Greece to form organized unions. In addition, they say, the new workers are being pushed too hard, pointing to an incident three weeks ago when two new hires were hospitalized after being injured on the job.

Five years ago I doubt China’s economic and strategic planners could possibly imagined that they could buy a beachhead in Europe so cheaply. But they have, and acquisitions of desirable parts of the Old World are no doubt just getting started.

Please tell me what you think in the comments.

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4 thoughts on “China’s “Big Fat Greek Investment”

  1. I agree with the Greek Foreign minister.

    The West can only offer ‘debt’ to poorer nations.

    China offers real,tangible,’old school’ investmests…

  2. I agree with the Greek Foreign minister.

    The West can only offer 'debt' to poorer nations.

    China offers real,tangible,'old school' investmests…

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