EU Adopts New Rules to Monitor Foreign Investment in Critical Infrastructure, as China Increases stake in European Port Investments Amidst Growing Concerns. In recent years, Chinese companies have significantly expanded their presence in European port investments, raising concerns about foreign influence and the potential consequences for European infrastructure. As of end-August, Chinese firms held investments in 31 container seaport terminals across Europe and the Mediterranean, reflecting a growing interest in Europe’s port network since 2016.
COSCO Shipping & CMPH
The most recent debate over Chinese influence, emerged following COSCO Shipping Port’s bid to acquire 35% of Hamburg’s smallest container terminal, Tollerort Terminal (CTT). Eventually, this contentious issue was resolved with the purchase of a 24.99% stake, adding Tollerort to COSCO SP’s portfolio. COSCO SP now has holdings in eleven terminals located in seven European countries, including Belgium, Germany, Greece, Italy, the Netherlands, Spain, and Turkey.
The accelerated activity of Chinese companies in Europe since 2016 is clearly visible in COSCO SP’s financial results. In 2016, the group generated $176 million, which accounted for 32% of its total revenue from European activities. By 2022, this figure had risen to $682 million, constituting 47% of the company’s total revenue.
Apart from COSCO SP, another state-owned enterprise, China Merchants Port Holdings, has investments in nine terminals, with a particular focus on southern European ports such as those in France, Greece, Malta, and Turkey. As of mid-2023, China Merchants held all of its European investments, except for Kumport Terminal in Turkey, through its joint venture with CMA CGM, Terminal Link, in which it acquired a 49% stake in 2013, with the remaining 51% owned by CMA CGM.
However, concerns about Chinese dominance in European terminals revolve around the level of control exercised by Chinese state-owned players. As of mid-2023, they held full or large majority control in only two European ports: Piraeus and Zeebrugge. COSCO SP owns 90% of CSP Zeebrugge and 100% of Piraeus Terminals 1 & 2, in addition to having a 67% stake in the Piraeus Port Authority.
Zeebrugge, although a marginal port, handles two Asia-Europe loops and an Irish feeder service of COSCO SHIPPING Lines/OOCL. Piraeus, on the other hand, represents a more significant investment, with COSCO SP credited with bringing much-needed investment to the port. In 2022, Piraeus recorded volumes of over 5 million twenty-foot equivalent units (TEUs) for the first time.
Hutchison Ports & shipping rivals
Hutchison Ports, part of the privately-held Hong Kong-based CK Hutchison Holdings, has investments in eight European terminals across five countries and is currently the largest container terminal operator in Rotterdam.
China’s increased port investments come at a time when many other carriers are also increasing their investments in ports to secure berth availability, including MSC.
EU Response to FDI
In response to concerns over foreign direct investment (FDI) in European infrastructure, the European Union (EU) adopted new rules in December aimed at ensuring the resilience of critical entities. These measures include the monitoring of potential threats posed by FDI in European assets, including ports. Critics argue that Chinese investments could potentially reduce competitiveness among European port companies, alter trade flows, provide China with access to the inner workings of European ports, and exert unwanted pressure on European bodies to maintain good relations with China.
China, once again the EU’s largest trading partner in 2022, exporting EUR 230 billion worth of goods to the bloc, and being the third largest importer of EU goods, has presented its port investments as part of its long-term ‘Belt & Road’ project, aimed at opening new global trade routes. However, practical considerations, such as securing discharge and loading slots, may also be influencing these investments.
As Chinese companies continue to expand their footprint in European ports, the debate over foreign influence and its potential ramifications on European infrastructure and trade dynamics is likely to persist. The EU’s new rules on foreign investment signal a heightened focus on safeguarding critical assets and maintaining a balance between global economic partnerships and European sovereignty.