Greece - China's first European colony?
Published on : 6 October 2010 - 4:33pm | By
Johan Huizinga
Is Europe the next place set for Chinese ‘colonisation’? Some say it's already happening, in Greece. But acccording to analysts, that’s overstating the case – though Europe does need to stay alert.
While the main bone of contention for China and the European Union at their Brussels summit this week will be China’s currency, the yuan and its value - an issue that may not be directly addressed is that of Greece and fears about China moving in there as a 'coloniser'.
China is making huge investments in Greek ports and railways, and even wants to buy up Greek government bonds. Greek trade unions are up in arms. Chinese investors are taking over the port of Piraeus, Athens, while the Greek docks are losing more and more customers. China wants to bring its products into Europe via its own container port, as former RNW correspondent Garrie van Pinxteren warned some time ago.
After Africa, is Europe the next place set for Chinese ‘colonisation’? According to analysts, that’s overstating the case – though Europe does need to stay alert.
Market share
But for most analysts, that’s putting it too strongly. In Africa and Latin America the Chinese are trying to secure a supply of raw materials, says Roel Spee, senior consultant at IBM Global Business Services:
“But it’s clearly a different story in Europe. People come to Europe just because they want a share of the market. They start off with small offices. But in the 1970s and 80s we also saw from small Japanese companies that they can grow to become really big. In this sense they’re certainly valuable to the European economy.”
One-man companies
Mr Spee is referring to the kind of one-man companies that merge, set up distribution centres and eventually also switch their production to the Netherlands. But because of the low production costs in China, this is only worthwhile for certain food products that need to be produced close to the customer. Nevertheless, The Hague city council, for example, is already doing its best to attract such small-scale businesses.
Another serious concern is that Europe could become too dependent on China if Beijing makes major investments in European national debts. Jules Theeuwes, economics professor at the University of Amsterdam thinks the risk is exaggerated.
Leverage
He sees the Chinese investment more as evidence of confidence in the Greek and European economies. What’s more, China needs to spread its investments and will never buy up a majority of the European or Greek national debt. Mr Theeuwes thinks it wouldn’t be logical for China to use government bonds as leverage in a trade dispute.
“According to the very blackest scenario, there would be a dispute, then the Chinese would get cross and sell all their government bonds at once. Then they’d suffer a huge loss themselves, because the value of the bonds would fall. So it would have to be a matter for which the Chinese would be prepared to lose billions, but that’s an extremely unlikely scenario.”
Doubts
Can the US and Europe still stand up to China? Mr Theeuwes thinks they can – as long as they remain the biggest consumers of Chinese products, they can threaten to introduce high import duties on Chinese products. But at the moment trade with China is much too important for economic recovery.
You have to make a distinction between private investments and those of Chinese state investment funds, warns Haico Ebbers, director of Nyenrode Business University’s Europe China Institute.
“I think you might raise doubts about the investments by these state investment funds and the Chinese government. They’re politically rather than economically inspired. But the vast majority of investments come from private companies in China and they’re economically motivated.”
So it is wise to be wary of Chinese state investment. But as long as Europe is strapped for cash, it has little choice. The Netherlands has little to worry about. At around 1.16 billion euros at the end of last year, Chinese investments, including those in Hong Kong, represented only a fraction of the 452 billion euros of foreign investment in the country. The docks of Rotterdam are currently being extended but here, unlike in Piraeus, there are virtually no Chinese backers to be seen.
(Radio Netherlands)
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Andassero gli Olandesi ad investire in Grecia, così si tolgono dubbi e problemi.
Le porte sono aperte.
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