Greece's deal may 'open the door to China'

Brussels and Athens reached a reform-for-bailout compromise on Monday after weeks of wrangling that has eased fears of a Greek exit from the eurozone and renewed opportunities for deeper cooperation between Greece and China.

The deal has headed off the risk of fluctuations in global markets, according to Chinese and European observers who spoke of their "modest optimism" after eurozone leaders agreed to offer Greece a third bailout.

Prime Minister Alexis Tsipras said the breakthrough will enable his country to secure a "growth package" and debt restructuring after a "tough battle".

The European Council called on Athens to develop a significantly scaled-up privatization program and improve governance, and said the plan should be submitted to Brussels by July 20. Tsipras offered further privatization of ports and telecommunications companies, measures he initially ruled out.

The European Union will offer 86 billion euros ($95 billion) of financing to develop the Greek economy over the coming three years, but there was no provision for a debt reduction. No detailed agreement was available at press time.

Christos Vlachos, the managing partner at Athens-based Silky Finance, an independent financial adviser, said the compromise is "better than expected" and the Greek prime minister should "seriously consider" engagement with China.

"I believe Prime Minister Tsipras should visit China soon to discuss investments in infrastructure, transportation and energy, and an approach to Chinese banks that could provide additional financing should be in order, too," said Vlachos, who has been involved in the purchase of Greek assets by Chinese companies for many years.

"I think this should top Tsipras' agenda once the deal with Brussels is finalized."

Before Tsipras took office in January, Chinese companies participated in the bidding process for Greek privatization projects involving ports, energy facilities and airports, but the program was then suspended.

Du Mingyan, chief technical officer of a research institute run by Dagong Global Credit Rating, said the stalled privatization projects are now expected to be pushed forward.

China could benefit from the potential, Du said, adding that cooperation, especially over ports, could boost China's transcontinental Silk Road initiatives and further increase the huge level of trade between China and Europe.

But she said China should be cautious about holding Greek government bonds, and warned that the new deal remains fragile. There is a possibility of setbacks during its implementation against a backdrop of anti-eurozone sentiment among the Greek public, she added.

Cui Hongjian, an expert on European studies at the China Institute of International Studies, said that if Athens is sincere about the deal and is willing to be included in European Commission President Jean-Claude Juncker's investment plan for Europe, China could extend more support by linking its Silk Road initiatives to the plan and investing jointly in the country.

Diego Iscaro, a senior economist at consultancy firm IHS, said the agreement avoided the risk of an immediate collapse of the Greek economy.

"However, many challenges remain," Iscaro said. "First, it will be difficult for Tsipras to convince his party to back this deal, although we believe that he should be able to gather enough support to pass the required laws."

Iscaro said the implementation will be a problem.

"For example, the privatization target seems extremely ambitious for an economy that is still immersed in the worst depression of its modern history," he added.

Contact the writers through fujing@chinadaily.com.cn.