Interpac Business and Migration Solutions Melbourne Australia

（October 04 2010）

CHINESE Premier Wen Jiabao has pumped $US5 billion into the Greek shipping sector as China doles out aid to widen its global influence.

The fund is designed help Greek shipping firms buy Chinese ships.

On a visit to the debt-ridden European nation at the weekend, Premier Wen also said China will continue to buy Greek bonds.

That assurance and the $5.14bn financial program for the shipping sector represent some of China's most substantive support for the euro zone amid the region's debt troubles, and reflect the Asian giant's growing willingness to wield its economic clout to obtain wider international influence.

Mr Wen's Athens visit kicked off a week of intensive Chinese-European diplomacy, as the Premier also heads to Italy and Turkey for summit meetings with European Union leaders in Brussels.

China’s Premier told the Greek parliament overnight: “We hope that by intensifying co-operation with you, we can be of some help in your endeavour to tide over difficulties at an early date.

Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
“China will not reduce its euro-bond holdings and China supports a stable euro.”

China has long had economic interests in Greece, primarily in its shipping industry, and it runs a substantial trade surplus with the European country. China's relations with Greece have come into focus in recent months as Greek officials actively lobbied the Asian nation to support its economy. Athens is desperate for investment as the country claws its way out of a deep recession and a debt crisis that drove it to the brink of bankruptcy in May.

“These agreements and the announcement of China's intent to continue to invest in Greek bonds are seen as a vote of confidence for our economy, which is going through a difficult time,” said Greek Prime Minister George Papandreou. “As we say in both Greece and China, it is in the tough times that you know who your friends are.”

Commercial officials from both nations exchanged visits in June, promising to boost trade and economic ties, and Beijing has said previously that it supports Europe's efforts to deal with its financial woes. Those promises were repeated and expanded with the state visit by Mr Wen that started Saturday.

“With its foreign exchange reserves, China already has bought and intends to buy new Greek bonds,” Mr Wen said.

Greece needs to dramatically lower its bond yields - meaning its borrowing costs - to return to international-market borrowing next year, and the Chinese leader's comment was seen as boosting confidence in Greek government bond prices.

Mr Wen also said China is encouraging its companies to invest in Greece, and predicted that trade between China and Greece likely will double in five years to $US8 billion annually. Last year, China's exports to Greece totalled €3.04bn ($4.3bn)), compared with €93m of Greek imports to the country, according to EU data.

After overseeing the signing of agreements in shipping, construction and technology with the Greek PM on Saturday, Mr Wen announced China's intention to invest in Greek bonds, as well as the creation of a substantial fund to finance the purchase of Chinese ships by Greek shippers.

“China will undertake a great effort to support euro-zone countries and Greece to overcome the crisis,” Mr Wen said. “We hope the EU recognises as soon as possible China's full market-economy status, and will relax restriction on high-technology exports to China and oppose trade protectionism.”

Support from China could be crucial for Greece, which is looking to return to borrowing in international debt markets next year. While the bulk of China's foreign-exchange reserves of $US2.454 trillion are held in US debt, numerous companies and governments have been looking to take advantage of Beijing's push to diversify into other currencies and assets. China bought €400m of Spanish government debt earlier this year.

Mr Wen also said that China would support the further development of Greek shipping companies with a new $US5bn fund. “That is an offer to support the purchase of Chinese ships by Greek shipping companies,” the Chinese Premier said.

The financial crisis could be the start of a turning point in economic ties between China and Greece, which has for years sought Chinese investment with the pitch that the country's location offers a strategic springboard for trade between Asia and southern Europe.

With Athens now preparing to sell state assets to raise desperately needed cash, officials argue the crisis makes Greece a good bargain for Chinese investors. As part of the bailout it sought from the EU and International Monetary Fund, Greece has imposed unprecedented austerity measures and vowed to privatise €3bn in government assets over three years.

“Greece is an opportunity because it has undervalued assets due to its systemic crisis,” Greek Investment Minister Haris Pamboukis said. “When there is a crisis and risk, there is a very significant profit margin.”

Greece is hoping to build on the success of China's existing investments. The flagship project is the 35-year concession that Chinese state-controlled shipping giant Cosco Shipping won in 2008, to run the two main container terminals at Piraeus port, just outside Athens. The deal, valued at €3.4bn, could more than triple capacity.

Cosco chairman Wei Jiafu, who accompanied Mr Wen on the visit, has said he sees the port as the base to seize other opportunities in Greece's privatisation drive.

Cosco's shopping list includes a goods warehouse at Thriassio outside Athens, port installations in Thessalonica and a new airport at Kastelli in Crete. The Chinese company also would like to develop shipping-repair at the Perama yard outside Piraeus.

(Source:theaustralian)