KAKISSIS: But the Greek decision set off alarm bells in Brussels, especially because China now controls 10 percent of European port volume.
THERESA FALLON: For Europeans, I think it was a wakeup call.
KAKISSIS: Theresa Fallon is a Brussels-based analyst specializing in Chinese maritime investment.
FALLON: Because they always think of China as so far away. It's not a threat to us. We can just trade with them. But when Chinese ships are coming closer and closer to them, it's a physical reminder that, wow, China might have longer-term interests in this region.
KAKISSIS: To illustrate, she traces a halfmoon on the table of the Brussels cafe where we're talking about the Chinese.
FALLON: They've invested all along the peripheries of Europe. It's like almost an anaconda strategy. Like, you surround it and squeeze it. And that way, you have some control and leverage.
KAKISSIS: Chinese shipping companies now hold stakes in at least 12 EU ports, including Europe's largest port, Rotterdam.
It is estimated that state-backed Chinese investors state own at least 10 percent of all equity in ports in Europe, with deals inked in Greece, Spain, Italy, France, the Netherlands and Belgium. This is in addition to a growing investment portfolio of at least 40 ports in North and South America, Africa, the Middle East, Eastern Europe, Central Asia, South and Southeast Asia, Australia and the Pacific.
China’s interest in European ports is defined and driven by the Belt and Road Initiative (BRI). While the BRI has both strategic and economic objectives, there is little prospect of a Chinese-invested port in Europe being turned into a military base for the People’s Liberation Army Navy in the foreseeable future. Neither a 35 percent stake in the Euromax terminal at Rotterdam, a 20 percent stake in the Port of Antwerp (Europe’s two busiest ports), nor even full ownership of Zeebrugge in Belgium is a precursor to Chinese militarism in Europe.
The more immediate concern is that Chinese interests in European ports represent but one component of a much more ambitious strategy—one designed to unfairly tilt the regional and global economic playing field in China’s favor, introduce into Europe commercial processes and standards preferred by China rather than Western liberal democracies, enhance Beijing’s leverage over certain European states to support policies favored by the Chinese Communist Party (CCP), and prevent any intra-EU consensus that might be critical of China’s economic policies and authoritarian values….
Xi Jinping’s “Made in China 2025” policy involves government subsidies and massive investment in research and innovation in sectors that fuse the physical, digital, and biological worlds, such as advanced manufacturing and materials. The aim is to lead in these future-oriented sectors and dominate global exports. For the moment, China cannot achieve this on its own and needs the technology transfers that come from joint ventures with advanced economy firms, especially from Europe. In Beijing’s blueprint, advanced European markets will be major buyers of Chinese exports in these sectors. Without bringing Europe into the Chinese economic orbit through the BRI, “Made in China 2025” cannot succeed….
Importantly, China is offering Europe a package deal of benefits under the BRI brand. Chinese-invested ports will eventually be connected to the Maritime Silk Road and have direct networks to freight lines belonging to the Eurasian Land Bridge Economic corridor. This will offer European economies the opportunity to be linked to the entire BRI economic ecosystem, which begins in China and ends at the Mediterranean. The point is that Chinese investments in European ports are explicitly linked to the BRI and all that the Initiative seeks to achieve. It is a good pitch, but there are reasons to be concerned.
First, the Chinese promises to build and expand the infrastructure around ports are made less attractive by the reality that Chinese projects tend to exclude local and international participation. According to the CSIS Reconnecting Asia database, 89 percent of contractors participating in Chinese-funded projects are Chinese companies.
Second, there is growing discomfort with the close funding arrangements between Chinese firms and government-controlled financial entities. This is at odds with the European Union’s relatively liberal notion of political economy, which depends on there being significant distance between the political and strategic objectives of the government on the one hand, and the objectives of commercial enterprises on the other.
A case in point is COSCO Shipping Corporation, which was given over $26 billion by the China Development Bank to invest in BRI-sanctioned projects in 2017. These firms are given loose lines of credit to advance government policies and not just to maximize their commercial success. …
When Chinese firms negotiate opaque deals with European ones, the former begin with the largesse and non-commercial advantages that come from state assistance. The exchange is rigged from the start.
Third, Chinese firms must ultimately obey directives from Beijing. The network of ports and other logistical facilities in Europe, Africa, and Asia provides China with a high degree of operational self-reliance and capacity. Control of international supply lines and logistical processes gives a country political leverage if that country is prepared to use these capabilities for political ends….In late 2016, China announced it had established a $11.1 billion Central and Eastern European (CEE) Fund to finance projects in the group-of-sixteen economies to support the BRI. https://www.the-american-interest.com/2018/11/29/chinas-trojan-ports/