Report from European Think-tank Network on China (ETNC) says that China’s economic and political influence in Greece is growing, and the level of investment likely underreported. “Engulfed by its economic woes and disenchanted with the EU, Greece welcomes China without asking some necessary questions,” concludes a recent report on Chinese investment in Greece.

Moreover, the drivers behind growing Chinese presence in Greece most probably relate to the pursuit of objectives that go beyond Greece’s borders, among other things, looking at the construction of a cross-border transport corridor from the Mediterranean to Central Europe, improving China’s access to the European market under the framework of the Belt Road initiative.

This is the assessment of Plamen Tonchev, from the Institute of International Economic Relations, writing in a new report by the European Think-tank Network on China (ETNC), which examines these trends and their consequences for policy making and Europe-China relations, including at the bilateral, sub-regional and EU levels.

Chinese investors are making the best of Greece’s fiscal predicament and economic crisis, which necessitate large-scale privatization projects. At the same time, Chinese investment schemes are not subject to any particular scrutiny and there is no comprehensive assessment in Greece of their implications like the one currently being discussed at the EU level, according to the report.

According to Tonchev, China’s growing economic and political clout in Greece raises at least two significant questions, which remain unanswered at this stage: 1) What is the precise total volume of Chinese investment capital, which appears to be underreported; and 2) To what extent do Chinese investments influence Greece’s foreign policy?

To date, Chinese investment has largely focused on transport infrastructure, energy and telecommunications, while real estate and tourism are also becoming increasingly attractive for Chinese investors.

The largest Chinese project in Greece, COSCO’s flagship investment, was made in two steps. After signing the 831-million-euro concession agreement in 2008, the corporation purchased a 51% stake in the Piraeus Port Authority (PPA) in 2016 for 280.5 million euros. Since then, infrastructure development has been under way, with Piraeus rapidly turning into a major transhipment logistics centre and cruise hub.

The second-biggest Chinese investment in Greece took place in 2016, with the purchase of a 24% stake in Greece’s Independent Power Transmission Operator (IPTO/ADMIE) by China State Grid International Development Ltd.

The investment is worth 320 million euros and was completed in 2017. Meanwhile, a growing number of Chinese companies are involved in the area of renewable energy sources through the construction of small-scale photovoltaic parks, hydroelectric and wind power utilities.

In November 2017, Shenhua Renewables announced the acquisition of a 75% stake in four windparks which are being developed by a Greek corporation. A large-scale project on the construction of lignite mines in northern Greece, which is being considered but has not materialized to date, involves the China Machinery Engineering Corporation (CMEC).

The telecommunications sector has also attracted Chinese corporations, such as Huawei, Zhongxing Telecommunication Equipment (ZTE), the Pacific Century CyberWorks (PCCW Global) and China International Television Corporation (CITC). Apart from selling equipment and providing mobile telecom services or big data management, some of these investors seek co-operation with local software companies on the development of next-generation networks and broadband Internet backbone infrastructure.

According to the report, the rationale behind the decision of Chinese corporations to invest in Greece varies considerably, but it is clear that the growing Chinese presence in Greece aims at the construction of a cross-border transport corridor from the Mediterranean to Central Europe, within the framework of the Belt & Road initiative.

This corridor would allow China to pursue the attainment of two more strategically important goals: (i) the reduction of transportation costs; (ii) improved access to and increased presence in the European market.

At the same time, apart from the specific Greek market, it is necessary to look into the broader geographic considerations that drive Chinese investors in Greece. For instance, the magnitude of State Grid’s investment could well be seen as a door-opener for similar cooperation initiatives between Sino-Greek companies expanding into the energy sectors.

This report is the third in an on-going effort to dissect and reassemble Europe–China relations from a European country-level perspective. The ETNC was first launched on the initiative of the Elcano Royal Institute and the French Institute of International Relations (Ifri) in Brussels in November 2014. The network's main aim is to enhance European expertise, knowledge and networking capacity on China’s foreign policy and its foreign relations with the EU member states and the EU itself, by focusing on all the different levels of interaction.