How will the Greek referendum result affect China?

By Hou Yi
0 Comment(s)Print E-mail China.org.cn, July 11, 2015
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Nothing left to give [By Zhai Haijun/China.org.cn]



On July 6, statistics from Greek Interior Ministry showed that 61.3 percent of Greek voters opposed the proposal for a reforms-for-cash deal jointly raised by the European Commission, the European Central Bank and the IMF on June 25 in the referendum. The result of "No" means that "Greek exit from the eurozone" has somehow entered a preparation stage.

Before the referendum, the Greek government had not repaid the IMF 1.6 billion euros by June 30, and declared a default.

On June 29, Chinese Premier Li Keqiang pointed out that the Greek debt crisis is the internal affair of Europe. But whether Greece stays in the eurozone concerns not only the stability of the euro, but also the stability of global financial and economic recovery.

Indeed, the Greek crisis is no long a disaster in a remote country. Globalization has linked China and Greece as close neighbors with shared interests. Its debt and referendum will affect China's "Belt and Road" initiatives and overseas investment. Even China's macro economy will be indirectly impacted.

The "Belt and Road" initiatives

Greece, at the gateway to southeast Europe and emerging economies in the east Mediterranean region, has played an important role in the "Belt and Road" initiatives, which were first initiated by President Xi Jinping in 2013. Its developed shipping and logistics industries and good relationship with China have given the country unique advantages in the "Maritime Silk Road."

Greek largest port Piraeus is China's biggest investment and infrastructure construction project in the country. In 2008, China Ocean Shipping (Group) Company (COSCO) bought a 35-year operating license for the number two and number three container terminals in Piraeus with 3.3 billion euros. COSCO also promised to invest 620 million euros in the construction and modernization of Piraeus. Piraeus opened its land transportation routes to Central and Eastern Europe in April 2014. It has become one of the accesses to the sea for inland countries like Hungary, Serbia and Macedonia in the letter of intent for building the Budapest-Belgrade high speed train initiated by China.

The COSCO investment has made Piraeus one of the largest and fastest-growing ports in the Mediterranean. From 2008 to 2013, its container handling capacity increased from 433,582 to 3.16 million containers. COSCO has contributed to 80 percent of the growth and it has also created 1,000 jobs. According to a Reuters report, the capacity of piers operated by COSCO has increased by 1.6 percent in the first five months of this year.

Due to the debt crisis, the Greek government has re-launched the privatization of Piraeus and re-invited COSCO to buy 51 percent of the port's stock.

Therefore, the Greece crisis has not affected the progress of the Belt and Road initiatives. On the contrary, it has promoted the construction of the project to some degree.

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