By Costas Paris 

Chinese shipping giant Cosco Group plans to invest around $1 billion in Greece's Port of Piraeus to help turn the site into a main entry point for China's exports to Europe.

The investment comes on the heels of Chinese President Xi Jinping's visit this week to Greece, where he toured the port just outside Athens with Greek Prime Minister Kyriakos Mitsotakis and called Piraeus "the head of the dragon" for a new Beijing investment drive in the country.

Under the new conservative prime minister, Athens is rolling out the red carpet for foreign investors after a decade-long debt crisis that wiped out a quarter of the country's economy.

State-owned Cosco, which first entered the Piraeus port in 2009 in a bid to run a container terminal as a subcontractor, stands to benefit the most. It now runs the entire port, including three container terminals, along with cruise, ferry and car piers.

Cosco now owns 51% of the port, a stake that is set to grow to 67% over the next three years as more investments roll in.

Mr. Xi and Mr. Mitsotakis agreed at this week's meetings that Cosco would invest $660 million to develop the port and would reopen talks with authorities on a fourth container terminal, an expansion Greece's government previously rejected. Senior Cosco officials said they hope the new terminal, which will cost around $300 million, will be approved next year.

Container volumes at Piraeus have been rising as China has stepped up its investment. Piraeus handled 4.9 million containers last year, 18.5% more than in 2017, and volumes have grown more than 700% since 2008.

"Our estimate is that it will be the busiest port in the Mediterranean over the next year, with 5.5 million boxes handled," one Cosco official said. "Piraeus is growing like no other port in Europe."

The port is now the third-busiest gateway along the Mediterranean, behind Valencia and Algeciras in Spain.

Piraeus is one of Cosco's biggest port investments outside China, and it is part of Beijing's multitrillion-dollar Belt and Road initiative aimed at connecting Europe and Asia through an aggressive expansion in transportation infrastructure.

Beijing has invested in a string of ports in Europe, Asia and Africa.

The U.S. has said that Beijing uses investments, particularly large loans that create long-term financial obligations in other countries, as leverage to advance Chinese influence around the world.

"It's not the case with Greece," said a senior Greek official, who asked not to be named because he is not authorized to talk to the media. "The issue here is that Greece gets from Cosco taxes and job creation, which is important, but there is not much added value. They want to build another Cosco terminal, a Cosco-run boutique hotel and a shopping center at the cruise terminal. Everything ends up going to Cosco."

Officials announced during Mr. Xi's visit that the European Investment Bank would provide a $155 million loan to back Cosco's expansion plan for Piraeus.

A person involved in the matter said the loan is guaranteed by state-controlled finance giant Export-Import Bank of China.

Write to Costas Paris at costas.paris@wsj.com

(END) Dow Jones Newswires

November 12, 2019 13:15 ET (18:15 GMT)