First port of call in the West’s battle with China
Beijing’s maritime reach across Latin America and Africa has alarmed the United States and Europe
On his way to the G20 summit in Rio de Janeiro last year, Chinese President Xi Jinping met with Peruvian President Dina Boluarte to officially open a US$3.6 billion deepwater mega-port in Peru called Chancay.
China’s state-owned Cosco shipping giant had purchased a 60% stake for $1.6 billion, which gave the company exclusive use for 60 years. Days later, the first ship departed for Shanghai loaded with blueberries, avocados and minerals.
Chancay is part of Xi’s vision of a 21st-century maritime Silk Road that will connect Chinese manufacturing hubs with global trading partners. This has involved investing in ports across the world, alarming the West about Beijing’s rising influence over major shipping routes.
US President Donald Trump later highlighted these concerns, claiming China was “operating” the Panama Canal and the United States intended to take it back.
Beijing does not operate the canal, though. Rather, a Hong Kong company operates two ports on either side of it.
Energy security
The scale and scope of the maritime Silk Road is impressive. China has invested in 129 ports in dozens of countries through its state-owned enterprises, mostly in the Global South. Seventeen of these have majority-Chinese ownership.
According to one estimate, Chinese companies invested $11 billion in overseas port development from 2010 to 2019. More than 27% of global container trade now passes through terminals where leading firms from China hold direct stakes.
Beijing has aggressively entered Latin America, becoming the region’s top trading partner. Its port strategy has signalled a long-term goal to access the exports essential to its food and energy security, such as soybeans, corn, beef, iron ore, copper and battery-grade lithium.
Last year, Portos do Paraná, the Brazilian state-owned enterprise that acts as the port authority in the state of Paraná, signed a letter of intent with China Merchants Port Holdings to expand Paranaguá Container Terminal, the second-largest in South America.
China may invest in even more Brazilian ports, as 22 terminals are scheduled to be auctioned before the end of 2025.
In Africa, Chinese investment jumped from two ports in 2000 to 61 in 30 countries by 2022. And in Europe, Chinese enterprises have complete or majority ownership of two key ports in Belgium and Greece – the so-called “dragon’s head” of the Belt and Road Initiative there.
China’s emergence as a maritime power is central to Xi’s ambition for global economic dominance. For one, it requires access to key trading routes to meet the demand for Chinese exports globally, as well as the imports to keep the economy humming.
Tech superpower
Controlling ports allows Beijing to create economic zones in other countries that gives it access to commodities and products. Some fear this could allow China to disrupt supplies of certain goods or exert influence over other countries’ politics or economies.
Another key driver of this strategy is the metals and minerals needed to fuel China’s rise as a tech superpower. Beijing has concentrated its port investment in regions where these critical resources are located.
For example, China is the world’s largest importer of copper ore, mainly from Chile, Peru and Mexico. It is also a major lithium carbonate importer, mainly from Chile and Argentina. And its port deals in Africa give it access to rare earths and other minerals.
In addition, tapping into Latin America counteracts trade tensions Xi has experienced with Europe. It also preempts concerns about Trump tariffs on Chinese goods.
These moves have prompted concern in Washington that China is challenging the United States’ influence in its own backyard.
Beijing maintains that its seaport diplomacy is market oriented. However, it has established one naval base in the strategically located African nation of Djibouti. And it is believed to be building another in Equatorial Guinea.
According to a recent report by the Asia Society Policy Institute, strategy analysts believe China is seeking to “weaponize” the Belt and Road Initiative.
Military purposes
One way it is doing this is by requiring the commercial ports it invests in to be equally capable of acting as naval bases. So far, 14 of the 17 ports in which it has a majority stake have the potential to be used for military purposes.
These ports can then serve a dual function and support the Chinese People’s Liberation Army Navy logistics network and allow its vessels to operate further away from home.
American officials are also concerned Beijing could leverage its influence over private companies to disrupt trade during a time of war.
While China’s investments are raising suspicions, the West’s willingness to invest in ports at this scale is limited. The US International Development Finance Corporation, for instance, has a much slower, rigorous process for its investments.
Yet some Western companies are acquiring stakes in established and newly built facilities in other countries, albeit not to the extent of Chinese enterprises.
The French shipping and logistics company CMA CGM’s global port development strategy, for example, includes investments in 60 terminals worldwide. Last year, it acquired control over South America’s largest container terminal in Brazil’s Port of Santos.
Trump has threatened tariffs as one way of countering China’s global sea power. An advisor on his transition team proposed a 60% tariff on any product transiting through the Chancay port in Peru or any other Chinese-owned or controlled port in South America.
Regional influence
Rather than making nations reluctant to sign deals with Beijing, however, this kind of action just erodes Washington’s regional influence. And China is likely to take retaliatory measures, like banning the export of critical minerals to the US.
Host nations like Peru and Brazil, meanwhile, are using the competition to their advantage. Attracting interest from the West and China, they are asserting their autonomy and adopting a strategy of using ports to “play everywhere” on the global stage.
Claudio Bozzi is a Lecturer in Law at Deakin University in Australia.
This article appeared on January 24 and is republished from The Conversation under a Creative Commons license. Read the original article.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.