YANIS VAROUFAKIS, the well-known Greek anti-austerity economist and academic, who served as the minister of finance in the left-wing Syriza government from January to July 2015, has had some interesting things to say about China, both in its relations with Greece and in its role in the wider world economy after the 2008 financial crash.

At the same time as he was leading the fraught negotiations with Greece’s creditors, Varoufakis was also negotiating a deal with China. 

His experiences with the Troika — the European Commission, the IMF and the European Central Bank — on the one hand and with Chinese officials on the other could not have been more different.

No lover of China himself and critical of its “political illiberalism,” Varoufakis, in an interview with Project Syndicate last month, gives an account of the Sino-Greek deal which should help to dispel the many myths, fears and misconceptions about Chinese overseas investment as “neocolonial expansion” and “resource-grabbing.”

With Greece left facing serious recession, possibly the longest in post-war global history, Varoufakis was able to make a deal with China which would have been “absolutely, astonishingly good” for the country. 

“The experience,” he said, “tells me that they are immensely self-serving.” But this means that to get the deal they want, they come up with proposals that are also beneficial for their partners.

What they have to offer, according to Varoufakis, is something that is much-needed everywhere, that is, patient capital. 

“They don’t come in to grab an asset for speculative purposes, they come in to create a base on which to build and build and build … and their horizon is 20 to 30 years.”

The Syriza government was indeed originally against the presence of the Chinese shipbuilding company Cosco in Greece’s major port of Piraeus.  

Not only was it against any future privatisation but it was also against the previous privatisation agreement. However, rather than cancel this, Varoufakis was able to renegotiate the deal on very different terms.  

The new proposal was for China to invest in railways, technology parks, shipbuilding and tourism and at the same time to ensure secure employment, accepting collective labour agreements with the trade unions. There were also to be profit-sharing agreements with local governments. 

And it was not just a matter of money — the EU had already been lending money to Greece. China came with investment, ready to share technological knowledge as well as create jobs. This was just what Greece needed.

Meanwhile, European leaders were insisting that Greece continue to cut pensions, food and medical care in order to pay back the very banks responsible for the financial crisis.

However, although initialled, the Sino-Greek deal was never signed. Top figures from the EU, especially from the German side, blocked that. Apparently the EU wanted to get Greece on its knees first.  

In its hour of need then Greece received more solidarity from China than from its fellow EU members, whose attitude, according to Varoufakis, was “paternalistic.” They blamed Greek laziness to cover over the roots of the problem in dodgy finance and then feigned to offer a helping hand. 

This experience of China probably helped to explain the positive attitude adopted by the Syriza government towards it. For example, in June 2015, Greece opposed a European declaration on human rights against China in the United Nations. 

Despite the EU’s obstruction, parts of the win-win contract between Greece and China have subsequently been realised. Sino-Greek relations have improved dramatically over the last two years under the Tsipras government.

China has committed considerable sums in investments, helping to create jobs and to lift the country out of economic depression. 
Plans to make the country a shipping hub between Asia and eastern Europe are advancing but this is not the only aspect of the relationship.

At a major international summit on the Belt and Road Initiative in China in May, Xi Jinping, speaking of the two countries’ increasing co-operation, also announced a $3 billion green energy project.

While Varoufakis’s account of his dealings with China helps to shed light on the fast developing China-southern European link, in another interview last year, he also expressed positive views about China’s role in the wider world economy since the financial crisis.

“The Chinese have been very sensible,” he says. “After 2008 they played a very significant role in stabilising the West, enabling Germany to maintain its export drive while the European periphery was collapsing.

“The Chinese government understood at the time that to stabilise their own economy it was necessary to boost [domestic] investment. Germany did very well out this. China tried to play role of stabiliser whilst both the US and Europe were recovering. But Europe then did not do its part. Without China, Germany now would be in a great depression.”

Varoufakis makes the point that these huge efforts on China’s part to not only stabilise its domestic economy but also that of global capitalism were driven by the aim of maintaining its own social stability. 

What China fears most of all, he argues, is a crash like the one that occurred in Russia under Boris Yeltsin.

Asked whether he had any concerns about a Chinese-dominated world order, Varoufakis was quick to assert that the Chinese “do not have a hegemonic streak.”  

Rather it is the US corporations that want to set the laws, regulations and standards for global industries and impose them to subordinate China.  

From an economic point of view, in Varoufakis’s opinion, China has been “very enlightened” — it “does not wish to dominate but just wants to be allowed to develop.”

Videos of these interviews can be found at www.yanisvaroufakis.eu and on Project Syndicate  www.project-syndicate.org. Project Syndicate involves prominent figures to provide commentaries for a global audience. The article above draws in part on one written for the Belgian website Chinasquare by Dirk Nimmegeers.