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Chinese port operators are rapidly expanding their presence in Europe

Maritime News October 9, 2017

Chinese port operators

Chinese port operators are rapidly expanding their presence around the world. In recent months, reports of the Chinese purchasing another port in Europe or Asia appear regularly. In a number of countries, port expansion provokes protests. Many people from European Commission also express same opinion. But is the EU afraid of Chinese expansion?

In just five years, Chinese largest port holding companies – Cosco Shipping, Shanghai International Port Group (SIPG) and China Merchants Port Holdings (CMPort) – increased their presence in other countries fourfold, and in terms of investment – three times. Before, the number of foreign ports, where these three players invest, did not exceed ten. Now they are already forty.

Moreover, during the past year, the volume of Chinese investments in foreign ports has doubled , as plans are totaling 20.1 billion USD.

In particular, in June Cosco acquired 51% of the shares of the Spanish port holding Noatum Port Holdings for 200 million EUR, and recently announced the purchase of a 100% stake in the container terminal in the port of Zeebrugge (Belgium) from the Danish APM terminals for 42 million USD. Also in the “collection” of European assets Cosco added 51% stake in the administration of the port of Piraeus in Greece, 35% of the terminal Euromax in Rotterdam and several terminals in Italy.

And one of the main events of the past summer in the port industry was the victory of the consortium China Communications Construction Company in the competition for the right to build a new container terminal in the port of Hamburg – one of the oldest in Europe. The deep-sea terminal project will be able to service the largest modern container ships.

Outside Europe, the list of Chinese port acquisitions is even more impressive. “This is only the beginning,” said SIPG vice president, when in late 2015 his holding won a contract for the construction and operation of the Haifa port in Israel. At that time, the Chinese announced their intention to invest about 2 billion USD in the project, making this port the largest in Israel with a volume of container handling of 1.86 million TEU per year. Haifa was considered by the leadership of SIPG as a transfer point between Shanghai and other ports along the Sea Silk Road.

For Hong Kong’s CMPort, Latin America became the new growth point, where 90% of the container terminal in the Brazilian port of Paranagua was bought in early September for 920 million USD. The new Chinese owner plan to increase its capacity from the current 1.5 million to 2.4 million TEU in just two of the year. Another important point of expansion was Sri Lanka, whose government approved the sale to the Chinese of an 85% stake in the port of Hambantota for 1.12 billion USD. Under the terms of the transaction, CMPort acquired the right to operate the port and adjacent territory of 11.5 sq km for 99 years and with a number of exclusive conditions. In particular, the Ceylonese authorities promised that within a period of 15 years within a radius of 100 km from the Hambantota no new tender for the construction of stevedoring assets will be announced. At the same time, CMPort already has a container terminal in the Sri Lanka capital Colombo and expects to achieve a synergy effect thanks to the development of the Hambantota.

It was in Sri Lanka that Chinese investors faced serious opposition from the local population, led by Buddhist monks. As early as the beginning of the year, the leader of their community, Mahanama, said that for 99 years – and this is at least two generations – the Chinese will be allowed to leave roots on the island and the land will not be returned. The authorities of Sri Lanka explained that they had to go to such conditions to get rid of the debt to the Chinese, whose loans the port was built. However, mass protests could not be avoided, because of which the signing of the concession was postponed for several months.

Defense from Chinese expansion was also held in the port of Hamburg, where the largest container operator HHLA and the employers’ association of the UVHH port opposed the project of the SSSC consortium, saying that it was necessary to use the capacity reserves of existing terminals.

The EU leadership also does not welcome the growth of Chinese investments in the port industry and other key segments of the EU economy. In mid-September, the head of the European Commission, Jean-Claude Juncker, speaking in the European Parliament, suggested limiting Beijing’s ability to buy European companies in infrastructure, high-tech production and energy.

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