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China’s Xi Jinping visits Greece eyeing deeper economic ties

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Chinese president Xi Jinping welcomes guests in G20 summit in Hangzhou.

The eurozone has emerged from its debt crisis of 2010-18 intact, but at a very high cost to the periphery. Greece exit from its third bailout in August 2018, the swan song of the crisis, is perceived as successful only from a purely accounting perspective. Of the approximately €290 billion (£248 billion) lent to the country overall by the IMF, European Commission and European Central Bank, less than 12% was spent on investment.

The remainder has been used to service Greece’s spiraling national debt, and even then, repayments are only covered up to 2022. Thanks to the government spending cuts implemented from 2010-18 in return for these loans, unemployment is still running at 17%.

Chinese financial aid for crisis-ridden Greece over the past few years has created much goodwill for Beijing. Now Athens hopes the visit of Chinese President Xi Jinping will bring more economic deals.

While trade relations between the two sides appear to be in high gear, Greece’s exports to China amount to less than €1 billion ($1.1 billion) annually. So Greek businesses say observers, have a lot of catching up to do. Greece also receives less than 1% of all Chinese investment in Europe.

Greece rolled out the red carpet for Chinese President Xi Jinping for the start of an official visit meant to boost cooperation between the two sides. In Athens, Xi is due to hold talks with Greek President ProkopisPavlopoulos and Prime Minister Kyriakos Mitsotakis.

In an article, Xi wrote that both China and Greece should take lessons from “the deep wisdom of their ancient civilizations” and jointly foster the creation of “a new type of international relations based on respect, justice, and mutually beneficial cooperation.”

Greece and Italy are attempting the fine balancing act of dealing with China without undermining the EU’s overarching external trade policy, but the EU and Americans are still uneasy. The EU, in particular, is worried about China promoting its alternative model of governance without democracy.

Xi and Mitsotakis will visit the port of Piraeus, Greece’s largest and majority-owned by Chinese state-owned port operator Cosco. It is the biggest Chinese investment in Greece and Cosco recently received approval for new development, including a new cargo terminal. Beijing has already plowed more than €800 million ($881 million) into the port and intends to invest another €600 million.

The Chinese became the port’s majority owner in 2016 and had already committed €800m towards upgrading its facilities. Now there will be a further €600m investment. This aims to turn Piraeus into the biggest commercial port in Europe while raising COSCO’s stake from 51% to 67% by 2022. The Chinese see Piraeus as a gateway to EU markets, with a strategic role in Asia-European-African trade routes thanks to its close proximity to the Suez Canal.

In truth, it looks somewhat late for the EU to be concerned about these moves by Greece and Italy. They are the direct result of the strict bailouts and the eurozone’s refusal to invest seriously in either country. Other eurozone reforms that might help these countries – a eurozone fiscal union with an unemployment insurance program; a eurozone banking union with a pan-European deposits guarantee scheme; a single European immigration policy – are also long overdue.

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