The European Parliament has adopted a text aimed at regulating foreign investments in essential EU infrastructure, including ports.
The European Parliament adopted a resolution on the construction of a European maritime strategy.
In the sights of MEPs, thegrowing influence of China on certain critical infrastructures in Europe, including ports.
They call in particular to “set limits for foreign investments”.
China docks at the port of Piraeus
A few kilometers from Athens, cranes and gantries are busy at the port of Piraeus.
Strategically located in the southeast of the European Union, it is a gateway for goods from the Suez Canal.
Next to five million containers transited there in 2022, making it the main Greek port and the fifth most important terminal in the Mediterranean.
At the heart of the debt crisis, Athens decided to privatize it.
“Initially, the port administration granted a concession to (the Chinese state enterprise, editor’s note) COSCO to operate two terminals out of three. Later, the entire port authority was also sold, and COSCO acquired 67% of the shares”, explains Stratos Papadimitriou.
The increase in container flows, from two million per year before privatization to five million, is an “obvious advantage” of this operation, according to the professor.
He also highlights the increase in investments which made it possible to develop the port of Piraeus into a “port hub in the south-east of Europe”.
European ports in China’s sights
The port of Piraeus is far from being an isolated case.
A study carried out for the European Parliament listed 2****4 Chinese acquisition operations in European maritime infrastructure from 2004 to 2021.
Chinese investments in European infrastructure, particularly ports, have seen a boom following the euro crisis.
These acquisitions are mainly made by three Chinese giants: COSCO, China Merchants And Hutchison Port Holdings.
China Merchants Port (CMP), for example, owns shares in the ports of Antwerp (Belgium), as well as Fos and Le Havre (France).
For its part, COSCO is the majority shareholder of the ports of Zeebrugge (Belgium) and Valencia (Spain) and owns shares in the port of Vado Ligure (Italy) and Rotterdam (Netherlands).
“China needed to export its overproduction. Access to the single European market was therefore particularly important,” explains the analyst.
Risks of dependence
The researcher warns of the risks of dependence of the European Union and member states on China.
With a share of 16% in 2021, China is Europe’s main trading partner for trade in goods.
Additionally, Beijing controls approximately 10% of container traffic in Europe.
However, the extent of China’s influence over a port depends on three factors: whether the investor is a Chinese state enterprise; whether the investment aims to develop the infrastructure and not just acquire it; and whether the shareholder is a minority or majority, specifies the analyst.
Another strategic element is at play: vertical integration.
“SOEs like COSCO tend to be fully integrated in their supply chain with other Chinese companies. They therefore create a sort of closed environment where they have Chinese suppliers,” she explains.
This creates “fertile ground for the proliferation of other Chinese companies,” she says.
Investments that make waves
The researcher also notes a risk of economic coercion : China could put pressure on the EU by threatening to apply measures affecting trade through its control of certain ports.
In 2021, China had thus downgraded its diplomatic relations with Lithuania following the opening of a “Taiwan representative office” in Vilnius.
The report also identifies potential risks to security and cybersecurity of the EU, “linked for example to the proximity of certain ports in which Chinese public companies invest, with NATO or European military bases”, explains Francesca Ghiretti.
Finally, these investments could pose risks of sabotage and espionage, the report lists.
The EU on deck
The European Parliament has adopted a resolution on the security and defense implications of China’s influence over critical infrastructure in the European Union.
At the heart of concerns, Chinese military-civil fusion strategy“a program designed and implemented by the state, which plans to exploit all levers of state power and commercial power in order to strengthen and support the Chinese Communist Party (CCP)”.
Also, the MEP believes that a risk assessment mechanism in case of Chinese investment in essential infrastructure is necessary, without calling for a complete change of course.
“Chinese investments are welcome,” he assures.