What can be learnt from China's investment in Europe?

In 2008, the Chinese state-owned enterprise called China Ocean Shipping (Group) Company (COSCO) acquired part of the port. By 2021, the company had increased its stake, and now controls over 60 per cent of the port.

It is already evident that some entities are benefitting more from the investment than others, and a lack of regulatory enforcement is hurting the local community.

Who benefits and who doesn’t?

Shipowners are a major source of national revenue in Greece and thereby represent one of the most powerful lobbies in the Greek economy. Their interest in COSCO’s investment and the extent to which they have benefitted has been significant.

Improved port infrastructure has meant greater economic opportunities at home and abroad (especially in China), and a more favourable financial situation – due to their deals with China on loan policies and shipbuilding.

The main critics of COSCO’s presence, however, have been the port workers and local businesses in the area. The environmental externalities and COSCO’s refusal to organise any kind of public consultation or meet with civil society representatives has alienated the local community.

The port workers, meanwhile, have complained about low pay, overtime and lack of enforcement of safety regulations. They have repeatedly staged rolling strikes and overtime bans that obstruct the port’s operations, thus being a significant hindrance to COSCO’s profitability.

What about the benefit to government?

Another significant beneficiary of COSCO’s investment has been the Greek government. While the relationship between the two sides has evolved alongside shifts within government, China and Greece have arguably built a transactional relationship that has benefited both sides in spite of a lack of oversight or implementation of certain regulations.

In 2010, the Greek government was in the midst of a financial and economic crisis, reliant on loans from the European Union and International Monetary Fund (IMF). As part of their repayment plan, the Greek government was required to privatise some of its assets, including the Port of Piraeus (Law 4336/2015). China’s investment of hundreds of millions in the port presented a valuable lifeline.

Greece’s official rhetoric on China stresses much more engagement and good relations than most of its European counterparts and it is on this political positioning – a constructive relationship with Greece – that COSCO also arguably depends on and vice versa.

The so-called “red tape”

The European Union (EU), on the other hand, requires specific and arguably stricter environmental and safety conditions. COSCO was unfamiliar with these conditions, and unprepared. It approached it all as red tape and matters for bilateral negotiation.

This is specifically concerning because diluting EU regulatory standards has a negative impact on local populations. This is especially salient in a context of growing ‘securitisation’ of investment in Europe, and of an increasingly negative perception towards China amongst EU populations in general.

What is needed?

So far, discussion around the threat that COSCO poses for Europe’s security and sovereignty has revolved around the fact that it is a Chinese state-owned enterprise and China’s shipping industry is highly controlled by the state.

Instead, the focus should be on the lack of enforcement of EU regulation and better engagement of local stakeholders, especially small businesses and civil society.

That is, the problem is not necessarily that better regulation is needed, but that better mechanisms should be put in place so that the existing regulation is enforced and properly overseen. This would help ensure a better balance between economic growth and local stakeholders.

This could come in the form of increased regulation, where there is a regulatory gap and regulatory overseeing, so that labour conditions, security and climate adverse consequences are avoided.

Systematic dialogue with civil society organisations and labour unions could also lessen any confrontation towards Chinese investment.