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'Tightening Belt & Making Inroads’: European Seaports and Chinese Strategic Influence

Written by  | Wednesday, February 5th, 2020
@Eubulletin

Chinese investments in European seaports have increased rapidly in recent years. This process has triggered a debate in Europe on the significance of, and how to deal with, growing Chinese influence in European ports. This process is part of China’s Belt and Road Initiative (BRI) – in particular its maritime component, the Maritime Silk Road (MSR) – and is among the economic and geopolitical effects of China’s growing role in global affairs. The MSR and the debate on Chinese port activities are highly relevant for Greece, Spain or also the Netherlands, which is a major hub for trade between Western Europe and the rest of the world, and hosts Europe’s largest seaport.

China COSCO Shipping is the main Chinese investor in European seaports. While its investments are motivated by commercial considerations, they take place within a framework defined by the Chinese government and the CCP. This framework combines economic and political aims. So although COSCO and other Chinese state-owned enterprises are commercial entities, in the longer run their activities are intended to be supportive of China’s national interests. These interests include geopolitical aims, in particular the long-term build-up of Chinese influence in Europe and vis-a?-vis the United States. As such, besides their economic function, they also have a supporting role as foreign policy instruments. Because of the unstable geopolitical relationship between China and the United States, and the importance of Europe within this relationship, Chinese commercial activities in European ports are likely to become increasingly politicised.

The European Commission and the larger EU member states, in particular Germany and France, are responding to increased Chinese economic influence by imposing additional EU-wide scrutiny of Chinese investments in strategically important sectors, including in seaports. After the new EU-wide investment-screening framework, other steps in that direction may well follow. While port investments in EU member states may affect their foreign policy behaviour and thus affect the EU’s overall capacity to act on geopolitical issues, it is not clear that this is specific to the port sector.

The key issue is economic dependence that leads to political leverage. Such dependence may result from a broad range, and potential combination of, trade and investment relations. A small number of very large shipping firms are increasingly able to direct cargo flows towards or away from individual ports. The result of this development is that the major shipping companies’ bargaining power in relation to port authorities has been growing. COSCO, and through it the Chinese state, is a major player in this field, but not the only one. Consequently, port investment is not the key issue when it comes to economic dependence and Chinese political influence, but rather port investment in combination with dominance in maritime container shipping.

The Chinese government’s policy towards European ports is driven by both economic and geopolitical considerations. China’s MSR aims would be best served if the Port of Rotterdam becomes a major hub in a global network of maritime trade in which Chinese entities play a dominant role. Should these aims turn out not to be attainable because of obstacles to increased Chinese influence relative to the port, the second-best outcome for China would be a recalibration of the role of European ports that favours other ports than Rotterdam. In this regard, it is relevant to keep in mind that COSCO has acquired ownership and full managerial control of the container terminal at Zeebrugge, Belgium’s second-largest seaport.

For China to achieve its economic and geopolitical aims, it may be sufficient to have a significant influence in the Port of Rotterdam’s strategic environment, rather than to increase investments by Chinese SOEs in key components of the port – such as container terminals. The importance of China’s related transit trade (for example, China–Germany trade), further consolidation in the maritime shipping industry, the increased dependence of non-PRC companies on China (such as HPH, non-Chinese terminal operators and shipping companies) and increased BRI-related investments in the Netherlands would create a considerable level of economic dependence.

As a precondition for developing the role of the Port of Rotterdam as a key hub in the MSR, the Chinese government would likely seek stable relations with the Dutch government and assurances that Dutch foreign policy would not be harmful to Chinese key national interests. In the long run, the greatest geopolitical impact for the Netherlands would result from a Chinese approach aimed at providing commercial benefits for the port to such a degree that this would compromise the Dutch government’s strategic autonomy in international political and economic affairs.

‘European Seaports and Chinese Strategic Influence’ – Report by Frans-Paul van der Putten – Clingendael / The Netherlands Institute of International Relations.

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