Sunday, June 20, 2010

Of Investment and Hard Power.

Two recent events have lead to questioning China’s influence -- the investment in Greece and the Kyrgyzstan crisis.

Two days ago, Greek prime minster George Papandreou and Chinese vice-premier Zhang Dejiang signed a several billion Euro deal to lease a Greek port and to invest in tourism, shipping and telecommunications. Most outside reaction regarding this deal has been negative -- Sydney Morning Herald (here) labeled it “a force intervention in the Greek debt crisis” and warned “Europe, like the US, must prepare for a day when China seeks physically to protect its burgeoning interests with 'hard power.'" The normally left-leaning Guardian warms to the Chinese investment in Greece as a case-in-point arguing that the Chinese behemoth awakens (here). It cites a bunch of non-economic related subjects to support their assertion. WaPo is alarmed that “China's plans will flood Europe with cheap Asian imports” because now the Greece gate is open. (here)

Could it be that China is simply looking for ways to invest its foreign reserves? While China is guilty of selling cheap plastics, projecting hard power to Greece hardly seems imminent for the PRC.

On the same day as the Greek investment was announced, an article on China's role in the Kyrgyzstan crisis came to a different conclusion in regards to China's influence. Here are two interesting quotes: “Rather than cavalry troopers and spies, China has deployed intrepid traders who have established a thriving commerce in everything from fruit to car parts, electronics to textiles.” It continues: “..but now, Beijing finds itself shut out of the primarily political and military solutions being offered by the Russia and the U.S.”

It seems that a world that is safe for Chinese investment is a stable world -- after the first shot is fired, it is those with boots on the ground that enjoy real influence. No amount of cheap plastics can replace that. (here)

Now, with the investment to Greece in place, the continuing unrest will hurt the PRC just as much as Germany. After all the political juxtapositioning, at the end of the day, they still want a world that is safe for capitalism.

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