AIIA: China’s overseas ports acquisition program

Canberra, Australia (PortSEurope) April 11, 2023 - In recent years, increasing Chinese investments in foreign ports have attracted media attention. The concentration of these highly strategic investments has lent legitimacy to fears that the means of global trade, once decentralised, have been slowly accumulating in a handful of Chinese state-owned enterprises (SOEs), according to an article published by the Australian Institute of International Affairs, country’s longest-existing private research institute on politics and international relations. According to researchers from the U.S. Naval War College and Indiana University, Chinese and Hong Kong-based companies own or operate (via terminal leases or concessions) more than 90 ports in 53 countries. Other estimates suggest that China has investments or similar arrangements in over 100 ports with at least one in every continent except Antarctica. China’s overseas investments in ports Most of the port investments are along the National Development and Reform Commission’s three “blue economic passages”. The first links China to the Indian Ocean, Africa, and the Mediterranean; the second links China to Australia and the Southern Pacific; the third links China to Europe via the Arctic Ocean. The main Chinese investors in overseas ports and terminals are SOEs – conglomerates with direct links to and control by the Communist Party apparatus. One of the largest Chinese SOE investors in foreign ports is China Shipping Corporation (COSCO), the world’s largest terminal operator. Most of its port investments can be found in developed countries and along major global shipping routes. China Merchants Group (CMG), China’s other major port investor, by contrast has invested in emerging markets. Concerns and reactions These investments have raised concerns over Beijing’s potential to dominate international shipping and its concomitant ability to influence, and even control, important sea lanes and energy supply routes. This is alongside China’s overseas acquisitions of resources, technology, and infrastructure. Japan’s Nikkei report noted that investments in foreign ports by Chinese SOEs have allowed China to gain access to strategic maritime hubs as part of the Belt and Road Initiative’s 21st century Maritime Silk Road, an “aggressive investment campaign that has raised concerns about Beijing’s growing clout across the world.” Recently, the expansion of Beijing’s footprint at Khalifa Port (UAE), an ownership stake in a fuels storage terminal at the Port of Fujairah (UAE), and investments in the Duqm Port in Oman have further stoked fears of what this centralisation of Chinese power and presence in the Middle East means, particularly near the Strait of Hormuz, an important global chokepoint. In response, various governments have sought to block Chinese companies from gaining ownership or majority stakes in terminals and ports. This includes the U.S., but also Bangladesh, which cancelled a contract with China to build a deep-sea port at Sonadia in 2016, believed to be due to pressure from the U.S. and India. Australia also has said that it would review the 2015 grant of a 99-year lease of the Port of Darwin to the local unit of a Chinese SOE. Three main issues There are three main concerns in the West regarding investments in foreign ports by Chinese SOEs. The first is that these investments could give Beijing access to sensitive or classified information through surveillance (such as tracking the movements of communications and ships), spying, and data gathering capabilities. Recently, in Israel, the management of a new private seaport at Haifa by Shanghai International Port Group was raised in the U.S. The Haifa naval base regularly hosts American warships, and the U.S. is concerned that the port operator could easily monitor U.S. ship movements, have access to equipment moving to/from repair sites, as well as supply chain vulnerabilities. The second concern is the obvious influence Beijing can now exert through its many port investments. In Greece, for instance, COSCO has increased its stake in the enormous trans-shipment port of Piraeus to 67%. COSCO has also developed rail infrastructure reaching countries like Germany, strengthening China’s growing dominance in commercial maritime and land routes across the eastern Mediterranean. Chinese SOEs already preside over the trans-Mediterranean, commercial maritime artery linking Egyptian ports to the European mainland in Piraeus. The third fear is the potential establishment of logistics centres and even military bases next to the foreign ports its SOEs have acquired. New basing arrangements would make it easier for Beijing to service and sustain a growing blue-water navy. Beijing’s agreement to maintain a military base in Djibouti, near the commercial multi-purpose Chinese-operated Port of Doraleh, and close to the U.S. Navy’s Camp Lemonnier, exacerbates these fears. It is worth noting that ports have not been militarised, and doing so would violate legal norms around territorial sovereignty. Chinese SOE investment in overseas port facilities has not come with additional agreements that give certain rights to the Chinese military. Copyright (C) PortSEurope. All Rights Reserved. 2023.

AIIA: China’s overseas ports acquisition program

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AIIA: China’s overseas ports acquisition program

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