Laying Anchor Into Chinese Overseas Ports
There long have been storms over the expanding footprint of China’s overseas ports. U.S. President Donald Trump’s return to the White House and rejection of China’s involvement in Panamanian ports, infatuation with Greenland, and interest in keeping foreign influences out of Western Hemisphere infrastructure and maintaining open sea lanes have whipped the froth to new levels.
This anxiety is hardly an “American thing.” Chinese companies’ role in Gwadar (Pakistan), Piraeus (Greece), and Sonadia (Bangladesh) ports raised hackles in India, Europe, and Japan. There are legitimate concerns, but conclusions drawn are often are replete with holes. These range from conjecture about the materialization of projects, to exaggerations about China’s port stakes and influence, to overreliance on the same cases (e.g., Djibouti and Hambantota).
Given the stakes, it is critical to chart a better course through China’s overseas ports presence. This piece, the first in a four-part series, discusses the bases for China’s overseas ports’ involvement, ports footprint, and the issues swirling around it.
Treatments of China’s participation in overseas ports as an investor, contractor, lender, terminal operator, and service and goods provider tend to highlight the same portfolio of goals, though Western and Indian commentators are prone to emphasize China and geopolitical motivations.
On the economic front, China is sailing for “global economic dominance,” enlarging its trade channels; securing access to energy and raw materials like oil, coal, copper, iron ore, and raw earths; ensuring adequate food supplies; and ensconcing its hardware and software standards.
On the political front, China is advancing its Maritime Silk Road Initiative (MSRI), building friendly relations with host countries, diminishing the position of the U.S. and other third parties like India, obtaining economic levers it can wield against host countries and other players, and building friendly constituencies.
It is argued, too, that Beijing has cruised into ports abroad to pave the way for naval bases or, at least, facilities that can support its military.
Commonly neglected is the fact there are sectoral dynamics and corporate interests influencing what is happening on the port’s scene. This is also not all about Beijing’s aims: Chinese companies are involved in foreign ports, terminals, and projects because host countries bring them in.
According to the Council on Foreign Relations (CFR), a U.S. think thank, Chinese firms have an active ownership or operational role in 115 ports and majority ownership in 17. Taking into account available data and excluding cancelled and paused deals, CFR data suggest China’s overall ownership stake totals $24.30 billion while the value of the ports in which it has majority ownership is $8.69 billion.
An earlier study concluded that Chinese companies have operational roles or ownership stakes in 96 ports and that state-owned enterprises are the dominant players in these ports. Also relevant is that, per AidData statistics, China has provided at least $29.9 billion in loans and grants between 2000 and 2021 to support its overseas footprint. On top of this, China has been involved in billions of contracting projects around the world in countries ranging from Cambodia and Sri Lanka to Germany and the United Kingdom, and even the United States.
Pessimists logically connect risks relating to the aforementioned objectives, albeit often amplifying them. Regarding economic risks, there are fears that China’s position in foreign ports will give it the ability to redirect, disrupt, or control global shipping including trade in vital natural resources. It can do this by exploiting a Chinese company’s position as an owner in port authorities, ports, and terminals; its role as a major provider of port systems (think: LOGINK) and supplier of critical hardware like cranes; and an owner of massive data treasure troves amassed via port involvements.
There are concerns, too, that China will exploit its port presence to gain political leverage over the foreign policies of host countries and third parties; reduce domestic policy autonomy as evidenced by Peru’s Chancay Port; and undercut traditional internal and external relationships.
There has been a tsunami of worries about the military downsides of China’s overseas port presence with critics charging it can facilitate Chinese espionage, provide platforms for interference with foreign navies and their bases, and perhaps even allow for the surreptitious injection of ammunition, military equipment, and weapons such as drones. Some posit, too, that China plans to transform select ports into naval bases à la Djibouti. Spurring relatively scant concerns are the environmental and social externalities of Chinese-run overseas ports, even though, as mega infrastructure projects, they are bound to have them.
The response of the U.S., Europe, India, and Japan has varied, with Washington lately becoming the most aggressive in its rhetoric, threats, and effort to push China out of ports in places like Panama and Greece. For the most part, though, the U.S. response as well as that of the Europeans has lacked substance, tracking its rather muted response to the MSRI. India and Japan, at least, have proposed alternatives like Chabahar (a counter to Gwadar) and Matarbari (a counter to Sonadia).
The next piece in this series will delve more extensively into the economic, political, security, environmental, and social issues associated with China’s footprint in ports abroad. The third article will concentrate on the economic results flowing from China’s role in overseas ports and the implications of these effects. The final piece in the series will take a deep dive on the political and military risks associated with China’s presence in foreign ports. The aim is to prevent businesspeople, policymakers, and researchers from running aground.
