Institute of Development Studies

Examining China's Financial Endorsement of Greece

23 June 2010 - Vivienne Benson

As many countries shy away from investing in Greece, last week China seized the opportunity to make its mark in Europe. Swiftly following Moody's Investors Service downgrading Greece's credit rating to 'junk', the two countries have agreed on a variety of multibillion euro accords. Researchers in IDS' globalisation team have been considering what this means for China's relationship with Europe.

Culminating in the biggest single investment from China to Europe, the fourteen deals are aimed at boosting relations in several areas, from shipping to tourism and telecommunications. Greece is the latest target of China's growing international influence.

Quoted in The Guardian, Zhang Dejiang, China's vice premier explained, 'the Chinese government will encourage Chinese businesses to come to Greece to seek investment opportunities.' This is reminiscent of the past decade and China's bold policy toward investing in Africa when western counterparts were losing interest.

Research, led by IDS Fellow Jing Gu, has shown that the hard working nature and tendency of Chinese investors means that they are more willing to invest in risky business environments.

Gu explains, 'this development shows that China's power in Europe is growing. Some think that Europe should take a hard line with China, but this is not wise. In the twenty first century we need a multi-polar world not one governed by the G2 countries.' She states, 'it is important for Europe to form an alliance with China.'

The Co-Reach Project

The Co-Reach Project, 'The impacts of Emerging Power: China-EU cooperation and global governance,' is considering the impact of multi-level and multi-actor governance around three issues: cooperation with development, climate policies, and innovation and global value chains. This twenty month programme began in September 2009. It has brought together the Institute of Development Studies (IDS), the Chinese Academy of Social Sciences (CASS) and the German Development Institute (DIE).

Notably, China's growing role in the global arena was the centre of the discussion at the Co-Reach Project's mid-term workshop earlier this month. A main factor in the research is the importance of multi-level governance in addressing issues that cannot be managed on a smaller scale.

China is a rising power and is seizing the opportunity to increase its influence, not just in Greece, but on the world stage. This is important in terms of creating alliances, and in dealing with global affairs.

Vivienne Benson works in IDS' Globalisation Team.

Photograph: Yannis Kontos / Polaris / Panos

Related Projects

• The Impact of Emerging Power: China-EU Cooperation and Global Governance - This three-institution network focuses on three global governance areas: climate change/energy, innovation and low carbon development, and development cooperation. (2009 - 2011)