The Greek port of Piraeus, considered the great gateway for Asian products to Europe, is one of the examples of the expansion of Chinese companies in the global network of ports.
After the Great Crisis of 2008 – 2009, Greece had to carry out reforms and privatizations to pay its debts after the international financial rescue.
The Chinese state giant, Cosco, saw an opportunity to enter the port industry of a country in crisis. This is how he acquired the 51% of Piraeus, under an agreement that would allow it to acquire the 67% five years later.
And that is what just happened at the beginning of October.
With this operation, Beijing now manages one of the most important ports in the world, located at the crossroads of Europe, Asia and Africa.
The same company is in talks to acquire a stake in the port of Hamburg, Germany. If it were to materialize, it would be Cosco’s eighth mega port investment in Europe.
And another of the Chinese giants, Shanghai International Port Group, has just taken control of the Israeli port of Haifa.
These are some of the most recent chapters in a long history of port expansion, which in recent years has taken place in the context of the so-called Maritime Route of La Seda , an initiative that is part of a broader investment plan by Chinese capital in infrastructure works around the world.
To achieve this objective, have The control of port concessions in geostrategic points is essential, according to analysts consulted by BBC Mundo.
Different estimates point to which companies in the Asian giant currently control about 100 ports on more than 60 countries.
“The Container ports with Chinese investment have experienced an increase in their maritime transport connectivity above average, ”says Jan Hoffmann, head of the Trade Logistics Unit of the United Nations Conference on Trade and Development (UNCTAD, for its acronym in Spanish).
An advantage over their competitors that allows them to advance step by step in the port industry.
This increase in connectivity, he explains to BBC Mundo, has occurred because they are usually large investments, or because Chinese companies bring their own services to port terminals.
Show muscle
From a historical point of view, Sam Beatson, professor in the Department of Finance, Risk and Banking and in Master of Business Administration programs from the University of Nottingham Business School (NUBS), UK, argues that elites Chinese politics and business understood that in the past they had missed an opportunity to explore and develop in other parts of the world.
Until a few years ago they reacted.
“On the one hand, China wants to expand, influence and compensate for this lost time. On the other hand, of course, there is a desire to show muscle, but in my opinion, there is no desire to do it in a threatening way ”, he argues in dialogue with BBC Mundo.
“The key element that drives the port strategy of Chinese companies is a greater control and efficiency in their global maritime businesses , and the search for opportunities to participate in nearby development projects ”, he points out.
Other researchers, such as James R. Holmes, professor of Maritime Strategy at the United States Naval War College, have a more confrontational on the Chinese advance in the port network.
“The objective is to create a self-sustaining cycle between trade, military power and diplomatic influence ”, tells BBC Mundo.
Access to ports abroad allows China to develop commercial networks and increase its wealth. Then, Holmes explains, the country reinvests part of these funds in its naval, land, air and missile support forces.
And by having greater economic power, Beijing achieves “a diplomatic lever to influence host nations ”, where ports with Chinese capitals operate, the expert points out.
There is, for example, the case of Djibouti, located at the entrance to the Red Sea and the Suez Canal, where a seaport became the first military base in China abroad.
The militarization of that port has been seen by some analysts as a warning against the port interests that China may have in other countries such as Tanzania , United Arab Emirates, Pakistan or Myanmar.
Stones in the way
Decades of economic growth and a strong government push have allowed China to position itself at the center of world maritime trade, according to an analysis by C hina Power Project , belonging to the Center for Strategic and International Studies (CSIS, by its acronym in English), based in Washington DC, entitled “How does China influence global maritime connectivity?”
Under the Xi Jinping government, Chinese state enterprises have participated in investment and construction projects in dozens of ports around the world .
However, many China-backed projects have not taken off as expected, the study says.
There is the case of pu erto Gwadar, a key component of the China-Pakistan Economic Corridor, which despite the announcements, has ended up being “underused”.
“ The Pakistani government had to take desperate measures in early 2019 to reactivate the port ”, says the CSIS analysis.
It also adds that some important projects They have not yet fully materialized, such as the Port of Bagamoyo in Tanzania.
Another aspect of Chinese operations in the port industry, the document adds, is related to the terms of the negotiations that will be carried out with countries indebted to Beijing.
In this context is the case of the port of Hambantota, in Sri Lanka. The country was so indebted to China that in 2017 leased the port by 99 years in exchange for a debt reduction.
The measure raised concerns about China’s economic influence, the CSIS argues, and the potential risks for the smaller countries of Sign expensive infrastructure development agreements with the Asian giant, adds the analysis.
What happens in Latin America and the Caribbean?
Eleanor Hadland, senior analyst of port terminals at the international consultancy Drewry, says that while the operations of Chinese companies in Latin America have increased, they are well below what the phenomenon has been in other parts of the world.
“Container terminals were among the first wave of privatizations ports at the end of the decade e 1990 and early of 2000 ”, explains the expert in dialogue with the BBC World.
In those years Hutchison Ports (subsidiary of CK Hutchison Ports), the Chinese company that currently owns the largest presence in the region. It is the Chinese giant in Latin American ports.
Years later, Cosco and China Merchants entered the market, but the pace expansion of Chinese companies was much lower than in the past.
This is how Latin America has become a secondary market, since that the Maritime Silk Road is more focused on connecting Europe with Asia, and on the development of port projects in Africa.
On the other hand, says the analyst, “the opportunity for operators to Chinese entering the Latin American market is limited by lower growth rates “, something that had been happening since before the Covid pandemic arrived – 19.
But the case of Brazil, he warns, is different.
“There is a new series of scheduled port privatizations in Brazil”, where eventually Chinese operators could enter.
However, others may win interested in project development. “We imagine that geopolitical considerations will be fundamental for the Brazilian government,” argues Hadland.
“If there is more competition, we all win”
“The best thing that can happen to the industry and users is that there are world-class port operators competing in the region’s ports,” says José Antonio Pejovés , professor of Maritime Law at the Law School of the University of Lima and founder of Estudio Pejovés Marítimo, a legal advisory company.
“If there is more competition, we all win”. From this perspective, the expert maintains in dialogue with BBC Mundo that the Silk Road initiative “is a fabulous project” .
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Pejovés explains that Chinese capitals operate under the scheme of concessions for a specified number of years. And they are concessions for public use, that is, they are obliged to provide services to all cargo ships that need to use their infrastructure.
“They are not port terminals dedicated only to Chinese interests,” he points out .
A “commercial and political” strategy
Evan Ellis , research professor of Latin American Studies at the Institute for Strategic Studies of the United States Army War College, says that China is essential to have a important role in global connectivity.
Its broader strategy, it says in dialogue with BBC Mundo, is to try to ensure its access to strategic markets to obtain raw materials and sell its products.
“Chinese companies want ports with the idea of dominating the entire supply chain ” and thus not depend logistically on other companies.
But that the objectives are mainly economic, does not make them less strategic, adds the researcher .
“Economic influence empowers you to have more political influence and then you use that political influence to get more economic advantages. It’s a cycle. ”
From that perspective, Ellis adds,“ port control is part of a economic and strategic war in which China uses its power to gain more markets and put pressure on the competition. ”
Large projects in the region
One of the large ports whose construction is progressing steadily is that of Chancay , in Peru.
Operated by the Chinese company Cosco, the total investment is expected to reach US $ 3. 000 million when works are completed in 2024.
Among the large ports with Chinese investments that operate in Latin America and the Caribbean are those of Ensenada, Manzanillo, Lázaro Cárdenas and Veracruz, in Mexico.
In Bahamas, Freeport; in Jamaica, Kingston; in Panama, Balboa and Colón; in Brazil, Paranaguá; and in Argentina, Buenos Aires.
Along with them, there are also Chinese capital in smaller ports, some private, or in different types of port infrastructure.
Without However, not all Chinese initiatives have prospered in the region.
This is the case of the megaproject promoted by the firm Asia Pacific Xuanhao, which seeks the creation of a free trade zone in the southeast of El Salvador, with access to Honduras and Nicaragua.
The development would include, as has been revealed, the reconstruction of the port of La Unión , the creation of an industrial park, a airport, and tourist development areas, among others.
“It is basically turning El Salvador into a zone for China’s commercial expansion in Central America,” says Ellis.
Although Latin America is not at the center of the Chinese strategy of Investing in ports globally, however, is an attractive market, experts agree.
And although the region is rather within the area of influence of the United States due to its geographical proximity, it is not a smaller figure than the main commercial partner of South America be China.
For now, there are several port projects with Chinese capital that are in the pipeline for the region, but negotiations usually take years considering the gigantic amounts involved and the political considerations that each government weighs when it must sign an agreement.
Ultimately, although these are trade agreements, the strategic factor is hardly out of the balance.
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