Known as China’s “Gateway to Europe”, Greece is vital to China’s expansion of the Belt and Road Initiative (BRI). Since the BRI was first announced in 2013, the Port of Piraeus has been designated by China as one of the BRI’s key projects in Europe.
Specifically, China intends to shorten travel times for Chinese goods by expanding Greek port infrastructure and then connecting those ports to key European cities. To date, the majority of Chinese investment projects have targeted specific sectors of the Greek economy — transportation, energy, and telecommunications
infrastructure. Indeed, the vast majority of China’s investments were in companies previously owned by the Greek government.
The Sino-Greek relationship has been characterized by a large number of official state visits in recent years, which have culminated in signed agreements and memorandums of understanding (MOU) covering economic, cultural, scientific, and trade cooperation agreements.
In the last five years, Greece has also become increasingly involved in Chinese institutions. In August 2018, Greece officially joined the BRI. In April 2019, Greece became a member of the Cooperation between China and Central and Eastern European Countries (also known as 17+1). Finally, in August 2019, Greece joined the Asian Infrastructure Investment Bank.
China is investing heavily in Greece, with over $3.0 billion in investment projects since Greece joined the BRI. Despite heavy investment, Sino-Greek trade is quite moderate albeit with a high growth rate. In 2021, trade between the two countries stood at $12.1 billion, an increase of 55.6% from 2020.
This report will detail specific BRI projects financed by China in Greece as well as discuss the implications of those projects on the Greek economy, people, and government.
A Timeline of the Greek Financial Crisis and Chinese Investment
Before discussing individual Chinese investment projects, it’s important to first understand the Greek economic climate that allowed for significant increases in Chinese investment.
In 2009 amidst the global financial crisis, Greek Prime Minister George Papandreou announced that Greece’s budget deficit would exceed 12% of GDP. In other words, the Greek government was spending 12% more than it earned — four times more than it was allowed to spend by the European Union.
Already facing questions over whether or not it could pay back its existing debts, the Greek government's problems were compounded when global credit agencies downgraded Greek sovereign debt. What followed were three successive bailouts of the Greek government by the European Union and the IMF; these bailouts totaled over $375 billion.
One of the key conditions instituted by the EU and IMF as part of their bailouts was a massive privatization program. The third bailout signed in 2015 obliged the Greek government to sell a number of state-owned enterprises in order to boost economic growth and reduce budget deficits.
Directly after the third bailout agreement was signed, China ramped up its involvement in the Greek economy. In August 2016, a Chinese state-owned enterprise (SOE) paid €280.5m for 51% of the shares of the Piraeus Port Authority (PPA).
In June 2017, a separate Chinese conglomerate spent €320 million for the purchase of a 24% stake in Greece’s Independent Power Transmission Operator. These deals, which will be discussed in detail later in this report, were just the beginning of billions in Chinese investment intended to acquire majority stakes in a number of formerly nationalized Greek companies.
Key BRI Infrastructure Projects:
The Port of Piraeus
Located in the southeast of Greece, the Port of Piraeus is the main port of Athens. Piraeus is not only the largest port in Greece, but it is also one of the largest passenger and container ports in the world. For decades, Piraeus was a port of significant value, but by the early 2000s, it had fallen into decline. Hastened by the 2008 financial crisis and Greece’s subsequent debt crisis, the Greek Government decided to launch an international tender inviting companies to upgrade and run commercial facilities at Piraeus.
In June 2008, the China Ocean Shipping Company (COSCO) was announced as the winner of the tender to operate the Port of Piraeus’s container facilities for 35 years in exchange for $5.9 billion in payment to the Greek government.
COSCO sought to revitalize the port, starting repairs on existing piers and beginning construction on a third pier to expand port capacity — investments
worth over €230 million. COSCO quickly improved port traffic, which encouraged China to increase port ownership in Europe. In August 2016, COSCO paid €280.5 million for 51% of the shares of the Piraeus Port Authority (PPA) giving them majority ownership.
Crucially, from 2016 onwards, China has viewed its business in Piraeus as a model for future European investment. COSCO publicly focused on labor and environmental guidelines and has ensured that Piraeus employees remain Greek. In fact, only eight Chinese employees have been appointed in the PPA while all 1,087 Greek employees have kept their jobs.
Following the 2016 takeover of Piraeus, COSCO embarked on a multi-million investment project to turn the port into a hub for cruise ships, turning it into the center of nearly all cruise activity in the Mediterranean. Indeed, the PRC embassy in Athens has claimed that COSCO intends to invest over $1 billion more in Piraeus infrastructure in the next few years.
In October 2021, China’s acquisition of the port continued, with COSCO acquiring an additional 16% ownership stake in the Piraeus port. This increased acquisition has led to additional investments in Piraeus, with COSCO pledging a further $300 million in construction.
Ultimately, China’s investments in Piraeus are key to the BRI. Through Piraeus, China gains access to Central Europe and shortens the delivery time between China and Europe by 10 days.
Greece’s Independent Power Transmission Operator (IPTO)
In June 2017, China’s State Grid, the world's largest utility company, purchased a 24% stake in Greece’s national power operator for $330 million. Not only did Chinese banks offer to lend money to IPTO at half the rates of European lenders, but IPTO also secured the know-how for its most technologically complex project yet — adding Greek islands to its power grid.
Over two decades ago, Greece began building a complex underwater power transmission network across the Aegean Sea in the hopes of providing power to its islands. Greece’s island chains — key to the Greek tourism industry — account for just over 25% of GDP. Powering Greece’s islands is therefore vital to growing tourism in the country.
Despite the importance of such a project, it wasn’t until State Grid got involved that true progress began. Greece’s IPTO is now rolling out more than 300 kilometers of cable at depths of up to 550 meters, linking dozens of islands.
China’s involvement with the Greek power sector doesn’t stop there. A growing number of Chinese companies have begun to invest in renewable energy in Greece. Chinese conglomerate Sky Solar Holdings has invested tens of millions in building solar parks throughout Greece. Moreover, Shenhua Renewables has signed deals worth over $3 billion to build and operate wind parks in southern Greece.
Athens Airport Hellenikon
Chinese companies have also been at the center of a massive development project — rebuilding Athens Hellenikon Airport. In 2014, Chinese company Fosun International won a public tender for a €7 billion project to develop Athens’ former airport at Hellenikon.
Hellenikon Airport, formerly Greece’s largest airport, had been abandoned in 2001 and converted into a resort complex in preparation for the 2004 Olympic games. Years of neglect followed as disagreements over the redevelopment of the airport plagued the Greek government.
Fosun claimed that the complex it wanted to build there, known as the Hellenikon, will revitalize the Athenian economy. They believed that Hellenikon would attract a million tourists a year and create 10,000 jobs in the construction phase, plus 75,000 when it was fully operating.
Despite the profits Fosun stood to make from the redevelopment of Hellenikon, the firm announced in 2019 that it had withdrawn from the project due to years of delays resulting from bureaucratic red tape and the country's economic crisis.
Implications of the Belt and Road in Greece
1. Economic Outcomes
Economists tend to agree that upgrading Piraeus and its connection to the BRI’s European Southeast Corridor remains essential for the future of the Greek economy. COSCO’s investments in Piraeus have been key to turning the port into a logistical hub and improving Sino-Greek economic cooperation. Indeed, China has invested so heavily in Greece that Chinese investment is already approaching 18% of Greece’s GDP.
Crucially, expansion at the port of Piraeus has aided in Sino-Greek trade. China has become Greece’s third-largest trading partner and its largest trading partner outside of the EU.
From an economic perspective, BRI investment has been quite positive, creating tens of thousands of jobs, increasing trade, and helping Greece to recover from its financial crisis.
2. Public Response
Reactions to Chinese involvement with the port of Piraeus have been mixed. Athenian locals living near the port of Piraeus have had a rather negative reaction to Chinese investment. For years, locals have led a movement known as No Port in Piraeus against the transformation of the port into an industrial park.
On a number of occasions, Chinese investment in Greece has been met with suspicion and resistance. Chinese investors have not been spared the anger of Greek protests, many of which involve trade unions. That’s because companies like COSCO either don’t allow unionization or respond poorly to attempts at collective bargaining.
Worse, the construction of the port has been damaging to the environment. An investigation by Greek journalist Myrto Boutsi for Reporters United found that hundreds of thousands of tons of waste from dredging in the port of Piraeus have been dumped in nearby fishing grounds by port manager COSCO with permission from the Greek Environment Ministry.
Ultimately, Pew Research found in a poll of Greek citizens that just 44% of Greeks hold a favorable opinion of the Chinese government. While this number is seemingly low, it is important to note that Greece’s population holds a more favorable view of China than any other country in Europe. Yet, when it comes to BRI projects, Greek public opinion has gone from euphoria to mild opposition. Because many Sino-Greek business deals have been interrupted or outright canceled, the Greek public has become increasingly skeptical of any benefits arising from Chinese investment.
Thus, despite the perceived macroeconomic benefits to the Greek government described above, it is clear that China and its investors have a lot of work to do before it gets the Greek people back on its side.
3. Political Change
Despite significant economic gains, the political implications of increased Chinese investment in Greece are becoming increasingly difficult to ignore. In 2016, President Xi Jinping referred to Greece as “an important strategic partner and China’s most reliable friend in the EU”. This statement has largely rung true. Athens has been seen by many in the EU as explicitly supporting China in exchange for increased trade and investment.
In 2016, Greece was one of just three states which opposed the adoption of a joint-EU statement condemning China’s actions in the South China Sea. Worse, in 2017, the Greek government blocked an EU statement to the UN on China’s human rights record. This was the first time the EU had failed to make a statement to the UN Human Rights Council.
China has also engaged in a number of operations in an attempt to influence Greek voters and shape domestic politics. China has been increasingly employing diplomacy at the local level. As of 2021, China has set up over 20 partnerships between Chinese and Greek cities and established dozens of cultural and educational exchanges. In doing so, China hopes to cultivate a more favorable image with the Greek public.
Additionally, China has repeatedly targeted Greek media outlets as amplifiers of its message. In May 2016, Greece’s official Athens Macedonian News Agency (AMNA) signed a cooperation agreement with China’s state news agency, Xinhua. In April 2017, the leading Greek daily newspaper, Kathimerini, signed a cooperation agreement with Xinhua. Agreements with China have caused a large increase in reporting on China. In 2020 alone, for example, Kathimerini republished 66 Xinhua reports for its Greek readers. These reports ranged from praising the BRI to backing China’s position on European and domestic political issues.
These cooperation agreements have allowed China to push two key narratives into Greece. First, that China is a benign superpower promoting harmonious international relations through cooperation. Second, they hope to persuade Greek citizens that China is a true friend of Greece and offers significant amounts of generous assistance.
Notably, China’s media strategy in Greece does not seem to be aimed at the general public — rather they use cooperation agreements to target Greek political and economic elites. Despite all of these measures, the most recent Greek government — led by Prime Minister Kyriakos Mitsotakis — has attempted to distance itself from China in favor of the U.S. Just last year, for example, Athens refused to host China’s 16+1 Summit.