Sunday

3rd Jul 2022

Chinese business worried by risk of euro volatility

  • Port of Piraeus, which China sees as a gateway to Europe (Photo: Aleksandr Zykov)

The talk of the town in Brussels on Monday (29 June) is the grave uncertainty about the future of the eurozone and the place of Greece in it.

But at the morning plenary session of the EU-China business summit, held ahead of a political meeting, the topic was notable by its absence.

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The only effect the weekend's Greek drama has had on the event, was that European Commission head Jean-Claude Juncker was no longer scheduled to speak in the morning, but was postponed to the afternoon.

However, in the margins, several members of the Chinese business community expressed concern with the situation.

“It really worries everybody”, said He Lian Mingli, vice-president of electrical equipment manufacturing company XD. He urged the EU to “deal well with this challenge”.

Harsh as it may sound, to many Chinese companies and investors whether Greece remains a member of the eurozone is not that important.

According to research by Deutsche Bank the value of Greek and Chinese trade in 2013 was €1.6 billion, while the trade value for the entire EU was €428 billion.

More significant is the effect on the euro the events of this week will have.

Tian Guoli, chairman of the Bank of China, one of the five largest Chinese banks, is worried.

“Recently, the Greek debt crisis and the unstable exchange rate of the euro have raised our concern again”, Tian said, according to English-language newspaper China Daily on Monday (29 June).

“We sincerely hope the euro, as well as the financial markets in Europe, can be stabilised”, he added.

“We only focus on the consequence”, said Wang Xin of Westlake Europe, a company in the automotive spare parts sector.

“Politically, it doesn't matter if Greece stays [in the eurozone], but for our business we need a stable euro”, Wang told this website, adding that whenever the euro depreciates, Westlake has to increase its prices.

“But some customers pay with US dollar, and they then say the price is too high. We are in the middle”.

Guo Taicheng, chairman of the logistical Shing Kee Group, said volatility of the euro “will slow down commerce between EU and China”.

If the euro goes down further, it may have one positive effect, noted Oxford University researcher Lucie Qian Xia, however.

“More Chinese people will travel to Europe”, she said.

Geopolitically, China has an interest in a strong euro, because that way the balance of power moves more towards a multipolar world, as opposed to the US-led unipolar world, noted lawyer Haibin Xue, also present at the event.

“China would like to see a sustainable eurozone”, he said.

Port of Piraeus

While Greece may not account for large volumes of trade with China, it does appear to be of strategic interest to the Chinese government.

Chinese shipping company Cosco obtained a concession for the Greek port of Piraeus in 2009, and is hoping to buy the majority share in the port from the Greek government.

When Chinese prime minister Li Keqian visited the port in 2014, he said it could become “a Chinese gateway to Europe”.

Although the Greek governing party Syriza initially announced halting the privatisation, according to Reuters, the Greek government has now invited Cosco and two other interested investors to submit a binding bid by September.

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