Ports in a storm: Chinese investments in Europe spark fear of malign influence
- Cosco stakes in Belgium’s two largest shipping ports and one in Germany renew scrutiny of Chinese ownership of critical EU infrastructure
- The company’s assembling of such stakes makes governments less willing to speak out against China when necessary, analysts say
Earlier this month, Belgian officials were visited by furious Chinese diplomats who warned that negative comments from the country’s foreign minister could jeopardise bilateral trade.
They demanded that Foreign Minister Hadja Lahbib retract interviews she had given to local media, in which she described Beijing as “a potential enemy”, according to a diplomatic cable seen by the South China Morning Post.
Lahbib had been asked about an academic report on Chinese investments in Belgian port infrastructure, titled “Every Ship a Warship”.
The report, written by Brussels-based academic Jonathan Holslag, raised alarm about the “growing politicisation and militarisation of China’s civilian maritime sector”.
State-owned China Ocean Shipping Company, better known as Cosco, owns minority stakes in the Antwerp and Zeebrugge ports on the North Sea coast, a fact that Lahbib said she was uncomfortable with.
“I believe above all that in the current context, our eyes are turned to China, which is a partner, a rival and a potential enemy,” Lahbib said. “Civilian ships are being modified to potentially become military ships. We have to think about it and be very careful.”
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Her comments struck a nerve. Wu Gang, minister-counsellor at the Chinese embassy in Belgium, demanded a meeting with Belgium’s top official for Asia.
At a meeting on October 14, according to the cable, Wu warned that the minister “must be careful not to listen to irresponsible academics who peddle baseless rumours to harm China”.
“Maritime trade and economic activity between our ports is a lucrative activity for Belgium which must be respected if it intends to continue,” said Wu, according to the cable.
If there is a dependence on a Chinese party that’s so intimately linked to the Chinese state, just the threat of it already will influence your policymaking
The Chinese embassy to Belgium did not respond to a request for comment.
The incident, first reported in Belgian media, has added fuel to a fiery debate in Europe about Chinese investments in critical maritime infrastructure.
The cable was leaked in the same week that Germany approved a 24.9 per cent Cosco investment in its busiest container port terminal in Hamburg – despite warnings from six ministries and the European Commission that it could be a national security risk.
Defenders of the deal point to the reduced ownership stake Cosco was permitted to take. At less than 25 per cent, German corporate law dictates that it can have no voting rights.
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As well as its assets in Belgium and Germany, Cosco, the world’s third-largest shipping company and fifth-largest port terminal operator, also holds minority stakes in ports at Las Palmas in Spain’s Canary Islands, Rotterdam in the Netherlands, and controlling stakes in container terminals at Bilbao and Valencia, also in Spain.
As an example of conflicted policies, Xiaoxue Martin, a China researcher at the Clingendael Institute, a Dutch think tank, cited Greece’s opposition to European Union actions on China after Cosco first took a stake in Pireaus port in 2009.
Athens objected to a statement criticising China’s response to an arbitration ruling on the South China Sea in 2016. It vetoed an EU criticism of China’s human rights record at the United Nations in 2017, and opposed the EU’s inward investment screening mechanism later that year.
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“If there is a dependence on a Chinese party that’s so intimately linked to the Chinese state, just the threat of it already will influence your policymaking,” Martin said.
“So just knowing that as a government, we are really dependent on the Chinese party will mean that country’s autonomy is really limited. And the Chinese government doesn’t even have to start doing anything, it doesn’t even have to say anything,” she continued.
“But just the fact that the dependency is there will mean that your strategic autonomy is limited.”
Other Chinese state companies also own port assets across Europe. Through a joint venture with the French shipping giant CMA CGM, the state-owned China Merchants Group (CMG) owns stakes in 13 terminals worldwide. These include Antwerp (Belgium), Montoir (France), Dunkirk (France), Le Havre (France), Fos (France), Thessaloniki (Greece) and Marsaxlokk (Malta).
But CMG is not a container shipper, and thus cannot direct container traffic in the way Cosco can.
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In the debate over the port of Hamburg, critics noted Cosco’s double role as a shipping line and port operator. At points of geopolitical friction, could those ports reliant on Cosco’s traffic be vulnerable to a redirection of trade?
Holslag cited the meeting about Lahbib – essentially the foreign ministry being warned that criticising China could affect Belgium’s trade – as exactly that sort of scenario.
“We have to be cognisant of making the same mistakes as with Russian gas,” he said.
Holslag noted that the debate comes as the EU calls for its member states to reduce their dependency on China.
“We have to be aware that every single container that comes into European ports is contributing to that reliance. Now that we still have some resilience we must do something about it,” he said.
Hamburg port officials have argued that it should not be disadvantaged because of the prevailing political winds when their Belgian rivals had already seen significant investment from Cosco.
To block Hamburg from seeking the same would be unfair, Axel Mattern, the chief executive of Port of Hamburg Marketing, said.
Wang Yiwei, a professor at Renmin University’s School of International Studies, said the pushback reflected a “contradictory” element in European mindsets.
“In fact, it is completely fair and the Chinese companies follow the rules of the market,” Wang said. “[The concerns] reflect the contradictory mentality of Germany or Europe towards China’s rise. They both need things from China but they are also afraid of it.”
There is a danger of port operators thinking purely in commercial terms, Cind du Bois, a professor of defence and peace economics at the Royal Military Academy in Brussels, said.
“We should balance the longer-term risks with the short-term commercial benefits. Costco is not just a commercial player, it’s a state-owned company, there are no purely commercial objectives there,” she said, calling for more cooperation between EU hubs.
“China has already proven with Lithuania, for example, that they will use our economic dependency as a geopolitical instrument. And that is, I think, also a very important risk and a very important thing to take into account when thinking of these ports.”
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Shi Yinhong, professor of international relations at Renmin University, said European doubts over China would continue to linger, given the growing difficulties in China-EU relations.
“It’s impossible for them not to have any concerns [over Chinese investment], but these are exaggerated,” Shi said. “The deal itself is good for both China and Germany.
“The EU countries are opposed to China’s position on many major issues. Additional security concerns sparked by the Ukraine war and dissatisfaction with China’s position means their concerns will persist.”
Additional reporting by Echo Xie
