Analyzing China’s substantial port developments provides insights into its international growth objectives.

China’s rise to prominence in the world economy since the 1970s has been fueled by rapid economic expansion, heightened involvement in international trade, and extensive global investment. This growth has transformed the geopolitical and economic landscape, raising questions about China’s intentions and apprehensions about its outreach programs. To improve connectivity across the region, Chinese President Xi Jinping launched the Belt and Road Initiative (BRI) in 2013. This program has sparked speculation regarding China’s strategic aims, timing, and site choices, eliciting both appreciation and skepticism.

Maritime routes depend heavily on ports, which serve as geopolitical instruments with the capacity to promote industrial growth, satisfy trade and energy demands, and strengthen naval capabilities. By increasing their economic footprint and political clout in the host nation, investing states can use overseas ports as vehicles of economic statecraft to promote their national agendas.

Considering ports are essential to both regional and global economies, acting as important channels for both international trade and the projection of geopolitical force, China’s growing investments in other ports have garnered significant attention. Questions regarding the centralization of global trade methods have arisen amid the aggregation of these significant assets in Chinese state-owned enterprises (SOEs).

Notably, major participants in these deals include China Shipping Group, China Merchants Group, and the China Ocean Shipping (Group) Company, known simply as COSCO. The Chinese Overseas Ports database, an interactive visualization, offers information on the extent of Chinese ownership of foreign ports, considering investment types, geographical locations, and timeframes. Except for Antarctica, every continent has at least one port in which Chinese enterprises hold ownership or operating interests. The database comprises 101 port projects, nine of which have ceased operations for various reasons such as political unrest, financial difficulties, security concerns, and environmental challenges. Of these, 92 are still ongoing. Beijing has also signed maritime agreements with 66 nations and areas; among the ongoing projects, 13 have substantial Chinese ownership, and 10 include infrastructure that may be used for military purposes.

Some of these port projects have sparked concerns regarding their dual-use potential (commercial and military), raising fears about China’s possible geopolitical goals.

China’s international expansion is driven by its steady economic growth and technological advancements. Since the late 1970s, the Chinese government has prioritized economic growth as a major policy, using it as a tactic to maintain social stability and regime credibility. China’s transformation into the “world factory” stemmed from the export-oriented industrialization route of the reform and opening-up era. The launch of the Belt and Road Initiative (sometimes referred to as the One Belt One Road and the New Silk Road) highlighted the importance of commerce in providing raw materials and bolstering infrastructure projects across Asia, Europe, and Africa. Establishing and expanding economic ties through the BRI has become central to China’s overall strategy.

China’s Five-Year Plans (FYPs) demonstrate that the country’s economic goals extend beyond immediate needs, focusing on long-term objectives such as technological transformation and innovation. Projects like ‘Made in China 2025’ reflect China’s economic agenda, emphasizing technological innovation, market growth, and international competitiveness.

Stable access to ports along key maritime routes is necessary to meet China’s growing demands for both inward and outward product shipping, aligning with the country’s economic security. Consequently, China has prioritized investing in overseas ports for the 21st century, aiming to create an efficient and well-coordinated transport-trade system through outward port developments, leveraging its dominant position in international shipping.

Securing energy commodities is another crucial goal for economic security. For China’s economy to grow, energy security is essential, with supply security being just as important as profitability. China is pursuing a comprehensive energy security policy encompassing marine, continental, global, and indigenous aspects.

China faces fierce competition for energy resources, especially in the Asia Pacific region, where oil consumption is highest. Since 1993, China’s oil output has exceeded its net imports, making it the world’s top oil importer. To increase energy security, China has diversified its oil import sources, historically reliant on the Middle East and North Africa, now including Russia and Venezuela. Diversification strategies are further enhanced by investments in Central Asian republics, particularly under the BRI. Providing various transportation routes for energy supply is crucial in these conditions.

The majority of port projects align with the three “blue economic passages” proposed by the National Development and Reform Commission, linking China to the Southern Pacific, the Mediterranean, Africa, the Indian Ocean, Australia, and Europe through the Arctic Ocean. Chinese investments in foreign ports are dominated by state-owned companies closely associated with the Chinese Communist Party. Two companies in particular, COSCO and China Merchants Group, play essential roles. While China Merchants Group focuses on developing markets, COSCO concentrates on industrialized nations and key international shipping lanes.

According to a 2020 Nikkei study, Chinese companies invested nearly $11 billion in 25 port developments across 18 countries between 2010 and 2019. These investments position China advantageously to expand its global trade and maritime infrastructure footprint.

The Indian Ocean is viewed by China as a weak spot in terms of marine security, yet strategically and economically significant for the westward movement. Key ports such as Gwadar, Mombasa, Hambantota, Kyaukpyu, Malacca, and Chittagong are vital to China’s international commercial port developments.

The Indian Ocean facilitates 80% of China’s energy imports and supports essential commerce operations, underscoring China’s interest in the region. Chinese investments in the area have surged dramatically over the last three decades, making ports major hubs for political, economic, and strategic initiatives.

Chinese companies dominate the building and investment sectors for marine projects, notably China Merchants Port and China Communication Construction Company. Of the seventeen port developments in the Chinese Overseas Ports database, all but one are linked to large state-owned companies. For instance, the CSP Terminal at the Khalifa Port near Abu Dhabi saw a $300 million investment by COSCO.

Beyond construction, China is directly involved financially, with Chinese businesses holding stakes in various projects through loan or equity agreements. For example, China Merchants Port has invested in the management of ports like the Doraleh Multipurpose Port in Djibouti. Other Chinese enterprises have leased ports or terminals in Pakistan, Sri Lanka, Australia, and the UAE under concession agreements. Situations like Hambantota, where debt relief was obtained in exchange for strategic positioning, raise concerns about nations becoming indebted to China.

Chinese enterprises exert wider economic influence by participating not only in port operations but also in the growth of free trade zones and industrial parks. The China Merchants Group, leveraging Shenzhen’s Shekou Industrial Zone as a model, is linking the development of modern trade centers with basic infrastructure projects in BRI areas. An example is Port City in Colombo. Although Gwadar represents a greenfield project, Chinese businesses have also acquired stakes in existing ports. For instance, in 2016, Abu Dhabi Ports and COSCO agreed to a concession arrangement for managing 90% of Khalifa Port’s second-phase container terminal. Additionally, some investments come with management rights, as seen in the port of Hambantota, controlled by China Merchants Group.

International concerns are also raised by China’s military installations near crucial seaports such as the Red Sea, the Persian Gulf, the Strait of Hormuz, and the Suez Canal.

By August 2023, Chinese enterprises had made significant investments in 31 container seaport terminals across Europe and the Mediterranean, from Malta and Greece to Germany and Sweden. Notably, these include key ports such as Valencia, Hamburg, and Rotterdam. Chinese corporations hold complete or substantial majority ownership of only two terminals, located in Zeebrugge, Belgium, and Piraeus, Greece.

Since 2016, China’s state players have increased their involvement in Europe’s port network, with stakes in eleven terminals across seven European nations. There was a significant rise in investments by Chinese companies in Europe, with European terminals accounting for 47% of COSCO’s total income of $682 million in 2022, up from 32% in 2016.

Besides COSCO, China Merchants Port has invested in nine terminals, focusing on ports in France, Greece, Malta, Turkey, and the Netherlands. By mid-2023, China Merchants Port held 49% ownership in Terminal Link, a joint venture with CMA CGM, a French shipping and logistics company, managing its European assets.

In 2023, there was greater discussion about Chinese involvement in Europe’s transportation infrastructure, especially regarding COSCO’s proposal to acquire 35% of Hamburg’s Tollerort Terminal. Despite concerns about potential Chinese dominance, by mid-2023, Chinese state-owned companies controlled the majority or complete authority at only two European ports: Zeebrugge and Piraeus.

Zeebrugge handles less traffic compared to Piraeus, which has seen significant investments from COSCO, resulting in container volumes exceeding 5 million TEUs by 2022. Although part of the Belt and Road Initiative, Chinese port developments have prompted Brussels to implement additional regulations in December 2022 due to concerns about Chinese influence. Critics worry about changes in trade flows, the competitiveness of European ports, and undue pressure on European companies to maintain positive relations with China.

Despite these concerns, China remained the EU’s biggest commercial partner in 2022, exporting goods worth $247 billion to the EU and ranking third in imports.

Chinese legislation blurs the boundaries between local and foreign authorities by requiring international transportation enterprises to support military activities. This raises concerns over Beijing’s control over international energy corridors, maritime lanes, and infrastructure projects.

Chinese companies influence political decisions in host nations by holding ownership stakes in various ports. Case studies show how Chinese funding has impacted policy changes and diplomatic positions, such as COSCO’s growing involvement in Piraeus and rail infrastructure projects bolstering China’s supremacy in the Eastern Mediterranean. The Chinese investment in Piraeus reportedly persuaded Greece to soften its stance on port restrictions against Russia.

Espionage risks arise from China’s control over port infrastructure and data management systems. Control over logistical data and insight into international commerce activity offers several benefits. China’s extensive network of ports provides unmatched access to international trade data, offering insights into trade trends and shipments. The implementation of the LOGINK System has further changed the issue’s dynamics. Agreements to adopt LOGINK, which improves data management through China’s National Transportation and Logistics Public Information Platform, have been signed by 24 foreign ports.

Beijing can leverage its economic clout stemming from control over port assets to obtain concessions, posing a difficult problem for states balancing political sovereignty and economic development. China’s ownership of port assets overseas forces host nations to balance commercial and political autonomy. China holds assets in 191 ports across 88 countries, raising concerns about economic pressure in many Latin American countries.

China’s investments in dual-use assets like ports pose particular threats to host nations. The possibility of military engagement and conformity with Chinese strategies creates challenges for port states. Political pressure funding can lead to oversupply, burdening finances, and lowering performance, as seen in Sri Lanka’s Hambantota Port. Control over foreign ports enables espionage and military use, affecting geopolitical disputes and international security.

China’s advancement in the global economy, characterized by robust economic growth, extensive engagement in international commerce, and worldwide acquisitions, has transformed the geopolitical and economic landscape. China’s rise mirrors that of historical powers expanding into distant geopolitical regions as they ascend to prominence. Analyzing China’s substantial port developments provides insights into its international growth objectives. Examining Chinese investments in Europe and the Indian Ocean underscores its ambitions for global maritime power. Investments in Europe, particularly at Piraeus and Zeebrugge, indicate a growing presence in key global commercial hubs, while ports like Gwadar and Hambantota reveal strategic interests in energy corridors in the Indian Ocean.

China’s maritime influence brings challenges related to economic coercion, geopolitical ramifications, and security. Global stability and safety are threatened by the blending of military and civilian activities, the influence of Chinese state-owned companies on host countries’ policies, the potential for dual-use assets, and espionage risks.