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Felixstowe is the UK’s largest container port, with about 40 per cent of market share, and it already takes in much of the trade from Asia. Photo: AFP

How two British ports owned by Hong Kong’s CK Hutchison will help UK pivot to Asia after Brexit

  • Felixstowe and Harwich, on England’s east coast, are part of the Freeport East plan designed to create low-tax, low-regulation zones
  • China has been closely monitoring the Freeport East developments as relations with London have soured
Hong Kong-based conglomerate CK Hutchison’s ports division has secured a strategic win from the UK’s post-Brexit pivot towards Asia.

Two of Hutchinson’s three ports on England’s east coast, in Felixstowe and neighbouring Harwich, were last week named in Chancellor Rishi Sunak’s budget speech among the country’s first eight “free ports”.

Free ports are low-tax, low-regulation zones where goods can enter duty-free and leave again without passing UK customs. They are a favourite project for the chancellor, who wrote a policy paper about them five years ago while still a backbench MP.

Felixstowe and Harwich are part of the regional Freeport East plan, which has been promoted as a hi-tech “global free port for a global Britain” with its own 5G network. The government estimates 13,000 jobs could be created at the site.
Britain’s Chancellor of the Exchequer Rishi Sunak. Photo: Reuters

The other free ports will be in Liverpool, Plymouth, Humberside, Teeside, Southampton, Thames near London and East Midlands airport, Britain’s busiest freight airport.

“The combination of the ports of Felixstowe and Harwich offers the UK a unique opportunity in the post-Brexit world, sitting as they do at the main junction point between the UK’s principal trade route to and from the Far East and key freight links to and from northern Europe,” said Clemence Cheng, executive director of Hutchison Ports, a subsidiary of CK Hutchison.

The UK has also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade deal that includes Malaysia, Vietnam and Japan.

Hutchison bought the Felixstowe port in 1991, its first foreign port acquisition and the first such international takeover anywhere in the world. Felixstowe is the UK’s largest container port, with about 40 per cent of market share.

The company plans to lead the way in decarbonising freight transport, and the 111-acre Bathside Bay plot, which has been unused for decades, will be incorporated into a tax-free manufacturing hub for wind turbines. Freeport East is also near the Sizewell site, which hosts two French-owned nuclear reactors, where hydrogen energy will be created.

Most people in Britain see China’s rise as a top threat to security in next decade

China has been closely monitoring the Freeport East developments as relations with London have soured after Downing Street excluded Huawei bids from its 5G network and offered support for Hong Kong’s pro-democracy protests. The UK government will this month publish an integrated security review focusing on the threat from China.

According to Communist Party membership lists leaked by the anti-Beijing Inter-Parliamentary Alliance on China, there are three party members employed by the state-owned Cosco shipping company based at Felixstowe.

Beijing will likely be watching trade flows as well as technology, particularly given Freeport East’s plans to collaborate with Cambridge University, which has been criticised in the UK for its links with China. Huawei is building a computer chip research and development factory just outside Cambridge, a short drive from the headquarters of Japan’s Arm Holdings.

Shipping containers in Felixstowe port, which is owned by CK Hutchison. Photo: AFP

The UK is CK Hutchison’s most important market, worth more in revenue than its operations in Hong Kong and mainland China combined. It is also one of the country’s largest foreign investors.

It was announced last September that Hutchison Ports had hired Chris Grayling, a Conservative MP and former transport minister, as a special adviser on a salary of £100,000 (US$138,000) a year for seven hours’ work each week.

Free ports have also become a source of controversy due to claims they will lead to increased organised crime and tax avoidance. However, the UK port sector, which is mostly private, has been neglected by successive governments and the increased infrastructure spending has been cautiously welcomed.

Hutchison Ports in 2003 applied for planning permission to convert the Bathside Bay area, on the Harwich side of the River Stour, into a new container port. It secured planning permission after a public inquiry in 2006 but work was delayed until this year.

“My concern is they will go for the quick wins,” said local councillor Ivan Henderson, a former Labour MP for Harwich, a seat now held by prominent Brexit supporter Bernard Jenkin. “I’m not prepared to raise false expectations of residents over this side of the river. They gave me guarantee of jobs but we have had promises before from Hutchison.”