Author: Ioannis Michaletos
Over the past two years, the economic crisis has badly affected most states in the world and has caused quite a few financial hurdles for economies in transition, such as the ones in Southeastern Europe.
In parallel, a notable development that is being formatted is the importation of Chinese capital through bilateral loans, investments and share placements into these countries through a long-term strategy of Beijing to gain a considerable foothold in one of the most strategic placements of the European Continent.
Recently, Chinese construction companies have agreed with Belgrade under a 200 million USD contract to built a bridge over the river Danube, a deal that was further strengthen under a 150 million USD ,loan from China to Serbia with an incredibly low interest rate of 3% and repayment period of 15 years. That is one third of what Serbia currently pays as an interest when borrowing from European or American banks and for a significant less period of time.
Moreover, Chinese corporations were procured by the Serbian state, to modernize electricity power stations, under a one billion USD contract and in parallel a substantial investment for a Chinese shopping center is being developed in the capital of the country.
Further, Chinese automobile companies are in talks with Serbian firms in order to create joint ventures for the creation of factories that will assemble trucks and tractors for agricultural use.
According to a Serbian businessman, the relations between the two states “Become stronger day by day in the economic field and Belgrade is seriously considering of requesting for greater amounts of loans from China, something that is feasible judging by the fact that bilateral agreements go ahead as envisaged”. Moreover, “There is increased interest by Chinese companies relating to land and real estate ventures and tourism projects”. Last year the Serbian government announced that its foreign policy has four main pillars “EU, USA, Russia and China”, certainly a statement that reveals the dynamic entrance of China into the heart oft he Balkans.
Greece is another country that has recently experienced a significant entrance of Chinese capital. Piraeus port, the Country’s main sea gateway has formed a strategic partnership with the Chinese commercial-shipping giant COSCO that took the management of a significant portion of the port and has agreed to invest 400 million Euros as well as pay 2.5 billion Euros as a lease for the next 30 years.
Tourism from China increases by 20% per annum, reaching some 300,000 high-income tourists for 2009, whilst brands such as Huawei have made a dynamic entrance in the telecommunication market and supply with equipment major Greek companies in that sector. Athens was also considering of requesting loans up to 25 billion Euros from the Chinese state, a plan that has been abandoned to an extent and in the midst of the country’s financial crisis, although local pundits are more than certain that a lesser amount will be made available from China to Greece by mid-2010.
In addition a vibrant Chinese community has been established in Athens that has opened more than 1,500 commercial outlets and Chinese merchants invest heavily in real estate in tourist regions of the city. Lastly Chinese state power companies were recently in talks with the Greek power company in order to acquire the modernization scheme of an electricity factor that could be worth more than 500 million Euros.
In Moldavia, China lent 1 billion Euros, almost a quarter of the country’s GDP that will be used in order to create infrastructure programs. This is by far the largest investment this small country has ever received from abroad.
In Bulgaria, Albania, Montenegro, Chinese officials have held talks and signed lesser deals regarding shipping and industrial projects, whilst in Turkey, Chinese commercial businesses have grown especially strong and the bilateral trade between China and Turkey is booming.
In all of Southeastern Europe, it is becoming clearer that Chinese capital is available in certain investment opportunities and most countries have begun sending trade missions to Hong-Kong and Shanghai in order to hold negotiations with their Chinese counterparts.
Further, it can be said that the decrease of the value of most companies in the region due to the low stock market performance and depreciation of capital value as a consequent of the economic crisis, has raised the interest of the Chinese that seek to maximize returns on investments by placing their capital in a high-potential and strategically located region of Europe, in between the Continent, Middle East and Russia.
Lastly, all the above, will most certainly result in an increased interest of China in European affairs, a sector that has been ignored by the mainstream media, but it will become more evident in the years ahead.
In short a reconstructing of the established economic order is taking place, and the recent developments in Southeastern Europe are just a manifestation of a wider global trend, that will certainly result in political upturns as well.