China bought most of Greece's main port and now it wants to make it the biggest in Europe

A view of COSCO owned dock and yard in Piraeus on March 4, 2015. China Ocean Shipping Company, known as COSCO (COSCO Group), is the company in charge of transportation services in the biggest Port of Piraeus in Greece. COSCO undertook handles those operations in 2008. The deal between COSCO and the Greek government is one of the most controversial among privatizations that happened during Greece's debt crisis.

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China is looking to transform Greece's Piraeus port into the biggest harbor in Europe — making it the most crucial transit hub for trade between Asia and Europe.

In 2016, China's shipping firm Cosco purchased a majority stake in Piraeus port. Situated in the Saronic Gulf, Greece's largest harbor — and Europe's seventh biggest — is at a strategic location between the Asian and European continents. Chinese President Xi Jinping and Greece's Prime Minister Kyriakos Mitsotakis announced earlier this week that Cosco would be investing about 600 million euros ($660 million) to develop Piraeus further.

"The objective is to transform it into the biggest transit hub between Europe and Asia and, potentially, the biggest port in Europe," Kostas Fragogiannis, Greece's deputy minister for foreign affairs, told CNBC Wednesday.

Rotterdam's port, in the Netherlands, is Europe's biggest harbor. It saw more than 8.6 billion containers (incoming and outgoing by sea) in 2018 — an increase from the previous year.

"The geographical advantages of Greek ports can be utilized for facilitating and increasing transfer flows from China and the Far East to the European Union, the Balkans and the Black Sea region, and vice versa," Fragogiannis told CNBC.

Since the Greek financial crisis, Beijing and Athens have deepened their links. Greece announced in August last year that it was formally joining China's Belt and Road Initiative (BRI) — the ambitious investment plan of Xi that connects Asia, Africa and Europe.

President of the Republic of China Xi Jinping (L) and Greek Prime Minister Kyriakos Mitsotakis (R) shake hands as they visit the cargo terminal of Chinese company Cosco in the port of Piraeus, Greece, on November 11, 2019.

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During a visit to Athens earlier this week, Xi said: "We want to strengthen Piraeus' transshipment role and further boost the throughput capacity of China's fast sea-land link with Europe," according to Reuters.

China has made different investments in Greece, including in energy and the real estate markets.

"With his visit in Athens, the Chinese President Xi Jinping reaffirmed his commitment to strategic infrastructure investments in Greece, as part of the Belt Road Initiative," Athanasia Kokkinogeni, Europe senior analyst at DuckerFrontier, told CNBC via email Thursday.

"Chinese investments have risen quickly, underpinning growth in the energy, telecommunications, and real estate sectors. Western firms should plan for intense Chinese competition in Europe in 2020 across most industries," she added.

Greece's Fragogiannis also told CNBC that Greece and China could announce further investment deals.

"The two parts should examine investment prospects for the Chinese companies in port development, operation and combined transport in Greece," he added.

China is the EU's biggest source of imports and its second-biggest export market. China and Europe trade on average over 1 billion euros a day, according to the European Commission.

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