China’s Stake in World Ports Sharpens Attention on Political Influence

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Inching upthe Elbe river to the German port of Hamburg at the beginning of September, the Libra appeared to be any other enormous ship navigating the world’s oceans, with multicoloured containers stacked on deck like enormous pieces of Lego. She wasn’t just a ship looking for a port, though as reported by News Week.

Floating fortresses

As well as the containers, the Libra carried a branch of the Communist Party of China (CCP), its political commissars, and a crew who must pledge loyalty to the party and to increasing China’s economic power and national strength.

The party calls them “floating fortresses.”

These mighty vessels are at the forefront of long-term efforts by the CCP to strengthen a hold on global shipping and logistics, prompting concerns in some Western countries over risks ranging from espionage to economic coercion, digital domination and military expansion.

Ships like the Libra belonging to China COSCO Shipping Corporation are increasingly evident at nearly 100 ports where it and other Chinese companies have stakes.

These include five ports in the United States: in Miami, Houston, Long Beach, Los Angeles and Seattle.

“Trade is the circulatory system for the planet,” said Isaac B. Kardon, a maritime specialist and Chinese linguist at the U.S. Naval War College on Rhode Island.

Sailing for the Motherland

Newsweek’s reporting, and an internal COSCO publication, show how the Communist Party operates inside a company that presents itself as a modern business partner abroad but proclaims at home it “follows the party’s direction and sails for the motherland.”

Although COSCO is not the only company strengthening China’s maritime presence, it is the biggest.

COSCO did not respond to Newsweek’s requests for comment.

“Cosco is really the only shipper in China,” said Rolf J. Langhammer, an economist at the Kiel Institute for the World Economy in Germany.

This gives it tremendous control over Chinese exporters – and in foreign ports.

Rare Glimpse of Communist Party On Ships

The Central Committee of the CCP set up COSCO in 2016 in a “major strategic move” to build a dominant position in global trade.

As a state-owned enterprise, the party’s powerful Organization Department appoints senior officials.

COSCO chairman Xu Lirong is also company party secretary.

Below decks piled high with containers, in low-ceilinged cabins, photographs show political commissars gathered with sailors and officers in “special party branches.”

It rattles off obscure but important dogmas that permeate life in China, such as “enhance the four self-confidences,” before concluding the ship’s party branch is “a core for uniting the masses and a fortress for overcoming difficulties.”

“Party members are bound by party discipline to carry out whatever tasks the party might require,” Hala said.

Germany’s Biggest Port in Chinese Sights

One of COSCO’s latest targets is a 35-percent share in operations in the Tollerort terminal where the Libra docked in Hamburg in early September.

If it succeeds, Hamburg will be the 96th port around the world where Chinese companies are known to have a stake, according to maritime security and economics researchers.

“There is a high strategic dimension to taking a stake in a terminal,” says Jan Ninnemann, a logistics professor at the Hamburg School of Business Administration.

Such as having a say over which ships come and go, when cargo is loaded and unloaded, where it goes, Ninnemann said.

Other analysts highlight that port and logistics operators handle large amounts of company, transport and personal data in increasingly digitized supply chains, may instal China-built internet communication technologies to work these and even access local government administrations.

A Growing Hold on North Sea Ports

Last year, when COSCO Shipping Ports Limited struck a deal with the Hamburg port authority Hamburger Hafen und Logistik AG (HHLA) for a stake in the Tollerort Terminal, it marked a major shift by a port that had previously resisted shippers owning terminals.

HHLA told Newsweek its agreement with COSCO was “strictly confidential.”

Hamburg would be the last of seven North Sea ports in the so-called “Nord Range,” which is important to transatlantic trade and communications, to get a China stake.

Zhang Dayu, managing director of Cosco Ports, said Hamburg was “a keystone of logistics in Europe and has excellent future development prospects.”

Zhang promised more business for Hamburg if the deal goes through.

China’s ‘Port-folio’ in Europe and the Mediterranean

Some businesses may already be aiding surveillance in China.

Human rights organizations say China’s Public Security Bureau engages in mass surveillance of citizens.

“It’s true that the container port Tollerort is only a small part of the entire port of Hamburg, yet through this part China can influence the trade and the political direction of Hamburg port,” Habeck said in September. 

Habeck also singled out concerns over human rights as a reason to nix the deal.

Yet the city’s shipping and business communities – and, government sources say, the Chancellery of German leader Olaf Scholz in Berlin and the influential Finance Ministry – are in favor, citing commercial gain.

Growing Global Networks

Germany’s place as the world’s third biggest exporter gives it particular importance.

About 300 Cosco ships pass through yearly, the company says.

Significantly, it connects to a large logistics park in Callao port in Lima.

Illustrating that, when COSCO bought a Hong Kong shipper, Orient Overseas International Limited, in 2018, the departments of Homeland Security and Justice obliged Orient Overseas to sell a terminal it owned at Long Beach port as part of a national security agreement – so COSCO would not acquire more infrastructure.

Across the Atlantic, activity is more intense.

Chinese companies have stakes in 61 port facilities in 30 African states.

China’s Global ‘Port-folio’

One of COSCO’s greatest coups was securing majority control of Piraeus Port Authority in Greece as well as its terminals and operations.

COSCO is already among the world’s top three or four shippers and it’s normal that Chinese companies want to gain port and logistics facilities, they say.

“It’s easy to over-interpret Chinese investments,” said Charlie Du Cane, a British shipping executive. 

China is becoming a larger piece of world trade, and the supporting logistics puzzle behind it.

And those have been raised by another investment in Germany.

A New Power in Kaiser Wilhelm’s Haven

About 80 miles southeast of Hamburg in the naval town of Wilhelmshaven, named by Prussia’s Kaiser Wilhelm I after himself in 1869, state-owned China Logistics Group has acquired a 99-year lease to build a logistics center in a new commercial port.

Ships arrive from China and, since 2021, so does a goods railway, all the way from Hefei in Anhui province.

It’s home to Germany’s international fleet.

There were also tactical risks and the possibility of human intelligence gathering, he said.

“We generally do not comment on questions of military security at individual sites, including any agreements with the authorities,” a spokesman said in an emailed statement. 

Heading off Sanctions

Yet physical acquisitions – even of different kinds – are only part of the story.

China is also moving fast on the digital front.

China’s Ministry of Transport offers a state-subsidized “one-stop-shop” platform called Logink to manage digitally global logistics, shape international trade flows, and, potentially, identify supply chain weaknesses, analysts say.

At least 20 ports have joined and many companies.

China has long threatened to invade Taiwan, which it claims.

But there is the harder line which is, ‘I am heavily invested in your country and you wouldn’t want me to pull out or hurt you, would you?

PLA Navy Visits in China-owned Ports

Chinese military strategists see commercial and military strength as entwined, as an image in the COSCO in-house publication suggests.

Importantly, People’s Liberation Army Navy (PLAN) ships have made port calls or “technical stops” in 32 ports where Chinese companies acquired commercial infrastructure, Kardon and Leutert’s research shows.

Du Cane, the shipping executive, says China is following a different path from the U.S. and other countries that broadly keep commerce and political power apart.

“The U.S. is surprisingly small in the global shipping industry.

And in terms of ports, their military is completely separate from their economic activity.

Foreign shipping companies such as Maersk, the market leader, have operations in China in joint ventures as a minority partner, Du Cane said.

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Source: News Week

 

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