A Double-Edged Sword

On Sunday, Chinese Premier Wen Jiabao was in Greece for a second day as part of an 8-day tour that sees him paying visits to four nations, having already attended an EU-China summit. No doubt, economics was the principle item on the agenda when Wen met Greece's Prime Minister George Papandreou- Greece has been in severe financial difficulty in the last year as part of the global recession, to the extent that it has been forced to borrow from Eurozone governments as a temporary bridge to recovery.

Following the Chinese political habit of breaking every policy statement down into a number of distinct features, Xinhua reported today that the Premier has proposed a 'Five Point Plan' in relation to bilateral relations between Greece and the People's Republic. These include:

• China's setting up of a special fund (which will eventually total 5 billion US dollars) to promote “cooperation in maritime transportation”.

• PRC assistance in making the Greek port of Piraeus a centre for the distribution of Chinese goods to Europe.

• An increase in Chinese imports from Greece, to double trade in the next five years (in the hope of reaching a target of 8 billion US dollars).

• China's encouragement to its businesses to invest in Greece's economy.

• Cultural exchanges between the two nations, as well as co-operation in international organisations.

Wen also announced measures to revitalise Greece's struggling economy, and stated China's “positive attitude” to the subject of further purchase of Greek treasury bonds. In another speech given to Greece's parliament, the Premier was again at lengths to stress the partnership between the two nations, commenting (according to Xinhua) that “the Greek government and people have been steadfast in support to China on issues concerning its major interests.”

It used to be the case that the United States and other Western powers had the exclusive role of bailing out and assisting countries in times of need. The example of Wen's visit to Greece shows the new role the PRC is beginning to play on the world stage. Now the world's second largest economy, and on course to overtake the USA in the coming decades, China will be increasingly seen as the 'go-to guy' on the international scene, and it will be Chinese support that will make all the difference to countries in financial need.

Chinese moves (like the provision of further help for Greece) represent investments in image and diplomacy. On a simple level, having the reputation of a nation keen to help out others in need benefits China's interests enormously, especially as it is now struggling to regain the level of credibility it had before the Diaoyu Islands affair. However, as Wen also intimated, Chinese support comes with an expectation of support in arenas like the United Nations. If the PRC gains the backing of more governments through economic co-operation, this could pay dividends if the United Nations (or other such bodies) ever had to make a judgement on issues like Taiwan. Furthermore, amenable partners can also act as voices in support of China when circumstances see new disagreement between China and its neighbours. Greece will be no doubt relieved that China is keen to boost Sino-Greek ties. Nonetheless, as with everything, this will come at a price.