China is purchasing stakes in strategic ports across the European Union (EU) with varying dynamics observable in each deal, including its latest purchase at Germany’s Hamburg Harbor. China Ocean Shipping Company (COSCO – one of the world’s largest shipping companies – has also purchased shares in sea ports in Belgium, Spain, Italy, the Netherlands and Greece. These maritime investments are in line with Chinese President Xi Jinping’s 2013 proposition to invest in a “21st-Century Maritime Silk Road” which forms part of the Belt and Road Initiative (BRI).
The Chinese government perceives this Maritime Silk Road as encompassing two routes. The first commences from China’s sea ports, crosses the South China Sea, the Malacca Strait, the Indian Ocean, and extends onwards to Europe. The second commences from Chinese sea ports, crossing the South China Sea and extending to the South Pacific.
After the Greek economic crisis, China saw a chance and took a risk investing in Greece’s maritime sector. After the “China-Greece Maritime Year” in 2015, just when the Troika (a group consisting of the European Commission, European Central Bank and International Monetary Fund) demanded privatization of the strategic sea port of Piraeus in Athens as a condition of a rescue plan for Greece’s economy, COSCO took over Piraeus in 2016. China initially acquired a 51% majority shareholding of this strategic Mediterranean harbor, a share that was increased to 67% in 2021. During a 2019 visit to Piraeus Harbor, Xi Jinping noted that it is “an important bridgehead and transit point” for the BRI.
Europe’s largest harbor – Rotterdam Harbor in the Netherlands – followed shortly after. After China acquired a minority share of 17.85% of the port in 2016, China Daily noted the harbour’s strategic importance, due to its location “at the junction of the land-based Silk Road Economic Belt and ocean-going 21st-Century Maritime Silk Road”, key trade routes for Europe, Africa and Asia’s population of about five billion people.
In 2023, after heated debates among the coalition partners of the German government, the country approved China’s takeover of the Container Terminal Tollerort at the strategic harbor in Hamburg as a minority shareholder. Six federal ministries, Germany’s foreign intelligence services (BND), the European Commission, the USA, and various analysts in Germany were against COSCO’s interests in Hamburg, since it forms part of Germany’s critical infrastructure. National security was cited as the key issue by German voices that were opposed to the takeover, which almost collapsed.
Across the EU, security has also been cited as a key concern, since NATO military equipment passes through some of these ports. In 2019, the EU established “a framework for the screening of foreign direct investments into the Union”. This post-Piraeus securitized framework states that the following factors may be taken into consideration by EU member states or by the European Commission:
- In determining whether a foreign direct investment is likely to affect security or public order, Member States and the Commission may consider its potential effects on, inter alia:
(a) critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure;
(b) critical technologies and dual use items as defined in point 1 of Article 2 of Council Regulation (EC) No 428/2009 (15), including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies;
(c) supply of critical inputs, including energy or raw materials, as well as food security;
(d) access to sensitive information, including personal data, or the ability to control such information; or
(e) the freedom and pluralism of the media. - In determining whether a foreign direct investment is likely to affect security or public order, Member States and the Commission may also take into account, in particular:
(a) whether the foreign investor is directly or indirectly controlled by the government, including state bodies or armed forces, of a third country, including through ownership structure or significant funding;
(b) whether the foreign investor has already been involved in activities affecting security or public order in a Member State; or
(c) whether there is a serious risk that the foreign investor engages in illegal or criminal activities.
China’s investment in Hamburg Harbor was additionally screened by the German government in line with German jurisprudence, which regulates foreign direct investment that flows into Germany. China initially wanted a 35% stake, but after various federal ministries warned against giving China too much influence in Germany’s critical infrastructure, the German government limited China’s stake to 25%.
Unlike Piraeus Harbor, where China is the majority shareholder, at Hamburg Harbor: COSCO has no power to veto any decisions; COSCO has no access to sensitive know-how of the daily running of the harbor, and COSCO officials do not participate in the daily management of the port. China’s Cosco Shipping Ports Limited (CSPL) will now control a 24.99% stake of Hamburg’s Container Terminal Tollerort. For Germany, this deal strengthens global supply chains, secures jobs at the harbor, and seals Hamburg’s importance as a strategic domestic and global port. China is Germany’s biggest trading partner and approximately 30% of the goods processed at Hamburg Harbor are exports headed to China or imports arriving from China.
A key implication of China’s successful investments in the EU’s maritime sector is the political leverage China will gain for future South-South maritime investment negotiations within the BRI. A profitable COSCO in Europe will be attractive to governments across the Global South, which will further increase China’s influence across the global maritime sector. A major risk will be that some countries might not screen China’s interests objectively due to inadequate screening mechanisms and due to influence that China already wields in these countries and regions.
Another implication will be diffusion of the EU’s institutional reactions to Chinese maritime investments, whereby China’s southern partners will develop similar screening mechanisms to attempt to secure their critical infrastructure in a similar manner that the EU has done in reaction to growing Chinese investments within its territory. Meanwhile, China will continue training thousands of maritime professionals to run its strategic global shipping interests upon graduation from specialized maritime institutions of higher learning which include: Dalian Maritime University, Zhejiang Maritime International College, Qingdao Ocean Shipping Mariner’s College, Tianjin Maritime College, Guangzhou Maritime University, Jiangsu Maritime Institute and Shanghai Maritime University.