The trillion-dollar “Belt and Road Initiative” announced by the People’s Republic of China in 2013 envisioned railroads and highways linking the PRC with northwestern Europe and Scandinavia. Few noticed that the “Road” referred to a maritime road connecting ports from Shanghai to Rotterdam. Nor was it clear in 2013 that China would be investing in, or purchasing outright, European cargo terminals.
Greece Is A Test Case
Chinese companies now hold ownership stakes in 13 European ports. Three Chinese companies, COSCO Shipping Ports, China Merchant Ports Holdings and Qingdao Port International Development, have invested billions in Hamburg, Marseille, Antwerp, Le Havre, Rotterdam and Bilbao, and eight other ports that collectively control 10 percent of European container traffic. Chinese companies have majority stakes in Zeebrugge, Valencia and Genoa. In 2016 COSCO took 100 percent control of the Greek port of Piraeus. COSCO, with access to the Belt-and-Road capital budget and low-cost PRC loans, invested over $1 billion into the infrastructure of Piraeus; it is now the fastest growing port in the world, and last year booked a 92 percent increase in pre-tax profits.
Growing EU Concern Over Influence
One might expect the Piraeus investment to create gratitude but the implications of Chinese control over European ports has created nervous reactions even from the European Union authorities that encouraged Chinese investment into the bankrupt Greek economy a few years ago. It did not escape notice that last year Greece blocked an EU resolution condemning China’s crackdown on internal dissidents, or that the Chinese navy paid a friendly visit to Piraeus. In response to growing alarm over Chinese influence within the EU, the Europeans Commission advocated new screening criteria for foreigners interested in investing in harbors, energy infrastructure or defense technology companies.
Labor, Environment And Corruption Issues
Another controversy is COSCO’s opposition to trade unions, safety standards mandated breaks, benefits and other EU- labor practices. Workers complain that COSCO is trying to operate European ports by the less-generous standards of Chinese workplaces. COSCO fired potential union organizers and replaced Greek managers with Chinese managers. Greek authorities also suspect that the port managers are allowing Chinese manufacturers to smuggle goods into the port to evade the EU’s value-added-tax system. Other critics complain of bribes to local officials and a scofflaw approach to environmental concerns.
US Government Concerns
The U.S. government is also cautious, pointing to Xi Jinping’s policy of military-civilian integration. It cites a 2015 article from the Chinese Academy of Social Sciences describing the ‘first civilian, later military’ concept. The U.S. Navy complains that even if China does not establish military bases in European ports, they will be used for surveillance, cyberwarfare and the control of key waterways.
Frans-Paul van der Putten from the Netherlands Institute of International Relations notes that the Chinese have invested large sums into secondary ports which initially welcomed infrastructure expansion. Van der Putten thinks that some degree of Chinese influence is unavoidable and notes “the main issue is for Europe to decide how it wants to deal with China’s influence.”
Davenport Laroche is a shipping container investment agency.