Controversial decision to sell stake in the port of Hamburg to COSCO

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Germany has reached a compromise on a controversial decision to allow Chinese shipping group COSCO to buy a stake in a terminal at the port of Hamburg, According to EuroNews.

The deal is controversial because, at a time when Germany is trying to move away from Russian energy imports, it is seen as increasing its dependence on China.

The purchase could open the possibility for Beijing to politically instrumentalize part of the critical infrastructure of Germany and Europe, assures EuroNews.

On Wednesday, Germany’s government agreed to allow COSCO Shipping to take a 24% stake, instead of the previously planned 35%.

The German Ministry of Economic Affairs said the decision was made to avoid a “strategic investment” by COSCO in the terminal and “reduces the acquisition to a purely financial investment.”

Whether the Chinese company should be allowed to participate in ownership of the port had produced a political dispute as Germany wrestled with the consequences of its reliance on Russian natural gas.

Lawmakers from the Green Party and the Free Democrats, who formed a governing coalition last year with Olaf Scholz’s Social Democrats, openly criticized the original proposal last week.

Six German government ministries initially rejected it on the grounds that COSCO, already the port’s biggest customer, might gain too much influence.

“The reason for the partial ban is the existence of a threat to public order and security,” the Ministry of Economic Affairs said.

The one-quarter threshold cannot be exceeded in future without a new investment review process, the German ministry said.

He added that COSCO is prohibited from contractually granting itself veto rights over strategic business or personnel decisions.

‘Cooperation must be beneficial’

Chinese Foreign Ministry spokesman Wang Wenbin reacted to the latest developments during a regularly scheduled press conference, according to EuroNews.

“The cooperation should be mutually beneficial,” Wang said. “We hope that the relevant party will see a practical cooperation between China and Germany in a rational way and stop unjustifiably exaggerating the issue.”

Scholz, who will travel to China early next month with a delegation of German trade representatives, was in favor of COSCO’s involvement in a deal with HHLA, German media reported.

Foreign Minister Annalena Baerbock had argued that Berlin needed to avoid repeating with China the mistakes it made with Russia.

German President Frank-Walter Steinmeier also warned against becoming too dependent on China.

“We have to learn lessons, and learning the lesson means that we have to reduce unilateral dependencies wherever possible, and that applies to China in particular,” Steinmeier told public broadcaster ARD during a visit to Ukraine on Tuesday.

German intelligence agencies said earlier this month that China’s finances could become a risk to Germany, particularly given the strong economic and scientific ties between the two countries.

In a hearing with lawmakers, the head of Germany’s national intelligence agency, Thomas Haldenwang, drew a comparison to the current geopolitical turmoil of the war in Ukraine, saying “Russia is the storm, China is climate change.”

According to Reuters, Chinese Foreign Ministry spokesman Wang Wenbin, when asked about the deal, said on Wednesday that China hoped that “relevant parties will view the pragmatic cooperation between China and Germany rationally (and) stop the gratuitous exaggeration”, without elaborating.

Supporters of the HHLA deal say it will allow Hamburg to keep pace with rival ports that also compete for Chinese trade and some of which are part-owned by Cosco.

COSCO also has interests in several other European ports, including the Greek port of Piraeus. According to MERICS, China controls 10% of the European port market under the following companies, as follows:

  • COSCO
  • China trade port
  • Port Hutchinson
Chinese participation in European Ports 2022
Chinese participation in European Ports 2022 Source MERICS

Source: DW, EuroNews, Reuters & MERICS

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