Fact check: Has Europe surrendered its south to China?

French President Emmanuel Macron delivers a speech during the annual French ambassadors conference at the Elysee Palace in Paris, France, 27 August 2019. [EPA-EFE/YOAN VALAT / POOL]

According to French President Emmanuel Macron, Europe has made the mistake of systematically handing important European infrastructure in southern Europe to the Chinese. EURACTIV has done a fact-check.

Speaking to French ambassadors on 27 August, Macron said China had a “diplomatic gift” for dividing the EU.

“Europe, in its treatment of the economic and financial crisis, has pushed several states to forced privatisations without a European option and has decided, methodically, to reduce its sovereignty by delivering a number of essential infrastructures in Southern Europe to the Chinese. We will not blame the Chinese for being smart, we can blame ourselves for being stupid”, Macron said.

Indeed, during the Greek crisis, the EU and the IMF pushed Greece to sell its family jewels, and key infrastructure, such as the port of Piraeus, went to Chinese hands.

However, there are also those who claim that the role of China is exaggerated and that, when compared to other states, Chinese investments represents a small fraction. One of them is Greece’s former Finance Minister Yanis Varoufakis, who is criticising Europe for demonising the Middle Kingdom.

Stop demonising China, Varoufakis tells Europe

Greece’s former finance minister, Yanis Varoufakis, now standing as a leftist candidate for the European Commission presidency, told the EU on Tuesday (26 March) to stop blaming China for an unbalanced economic relationship because the playing field “was never levelled in Europe”.

According to James Moran from Brussels think-tank CEPS, there is no doubt that the EU needs to be wary of investments that may have a negative impact on its control of strategic assets and internal security.

“Chinese investment in the EU has certainly risen in recent times but is still dwarfed by FDI from the US, Canada, Japan and other ‘traditional investors’. One should also recall that when it comes to operations like Piraeus, there was not a viable European alternative available. Moreover, Chinese investment in that port is considered by most observers to have been beneficial, in terms of efficiency gains for Greece,“ he told EURACTIV.

According to statistics, Chinese FDI in Europe is only 2.2% while the leader is the US with 38%. Although Chinese investments are low, they are evolving rapidly. Total Chinese investment in Europe now amounts to $348 billion.

Greece’s largest port in Piraeus is not the only port that China owns in Europe. Chinese companies have majority stakes or have taken over companies which had owned terminals in the port in Constanta, Romania or two ports in Spain.

When it comes to other key infrastructure points, the airports in Frankfurt, Tirana or Hellinikon airport in Greece are controlled by the Chinese as well.

The nature and volume of investments is different in every region of Europe. China is involved in investments into infrastructure and mines, mainly in southern and eastern Europe, and high-tech companies, petroleum and football clubs in the West.

Sven Biscop from Brussels-based think-tank EGMONT – The Royal Institute for International Relations – is convinced that the amount of Chinese investment in Europe should not be overstated.

However, he explained to EURACTIV that “China very smartly picks high-profile projects and highlights them through prominent bilateral visits by senior leaders, hence Chinese investment gets a lot of visibility whereas European investment is somehow seen as normal.”

Biscop suggests that the EU and its member states should think about increasing the visibility and prominence of their own investment.

Macron also came up with the role the EU should play. “If we want to be respected by China, we must first have a European approach. We must revisit this region first by acting as a power of it and developing an alliance. Our partners are India, Australia, Japan, Indonesia, Singapore, each on different axes according to logics that are complementary.”

EU tells China to rebalance relations as it's no longer a developing nation

The leaders of France, Germany and the European Commission called on Tuesday (26 March) for more reciprocity in trade relations with China, in a sign that the EU no longer considers China a developing country and is increasingly concerned about its growing influence.

Biscop has already described the practical policy that the EU is taking against the Chinese strategy in his own article.

“First, the EU is strengthening its home base, by safeguarding its decision-making against undue influence by outside powers. A new screening mechanism obliges member states to report foreign investment in critical sectors to the European Commission for advice,” Biscop wrote.

Furthermore, he added that the EU had adopted a strategy to promote its connectivity with other Asian countries and the purpose is to convince them that their interest is trade and investment in the EU.

“Finally, the EU message remains that it prefers to work with and not against China. The EU approach can be summarised as: cooperate when you can, push back when you must,” concluded Biscop.

[Edited by Georgi Gotev]

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