November 28, 2023


Taking The Lead For Fashion Quality

Black Friday shopping amid port pileups presents an opportunity for China

Table of Contents

Black Friday has arrived and with it a record number of containerships queuing 150 miles off America’s West Coast — at least 93 at their height Balck — awaiting entry to unload their cargoes. As it happens, many of the terminals these ships are waiting to enter have been quietly bought up by the same country whose factories have filled these vessels with the toys and other gifts Santa is supposed to place under America’s Christmas trees: China.

Chinese state-owned companies have been buying, in whole or part, stakes in at least 100 ports in 63 countries, including facilities in Los Angeles, Miami, Houston and Seattle. These acquisitions are gradually giving Beijing a potential stranglehold on global shipping — with profound military as well as commercial implications. So far, it has not seen fit to exercise its power. But that could be on the cusp of changing.

For the moment, China has been content to sit quietly and benefit from the enormous profits generated by such events as the colossal backlog of freight traffic building up in the waters off California. This major logjam may not be China’s fault, but it is proving to be an opportunity. As President Joe Biden announced his victory in moving the ports’ operations to a 24/7 schedule last month, those in line to reap some of the biggest windfalls were sure to be the operators of the terminal facilities now going round the clock.

Yet China, having accumulated this unprecedented stake in global shipping and commerce, and its power and profits present ominous possibilities for the future. China’s newly aggressive expansion along the world’s commercial and military sea lanes comes just as its relations with the U.S. have arrived at a decades-low point and as Beijing is trying to challenge Washington economically and militarily.

So far, there is no indication that China is stalling freight traffic along the West Coast to interfere in the U.S. supply chain. But the mammoth congestion highlights the country’s vulnerabilities should Beijing want to cause trouble in the future. Right now, “Chinese state-owned enterprises hold ownership stakes in terminals at five U.S. ports,” according to a U.S. Naval War College investigation.

China’s Offshore Shipping Company, or Cosco, for instance, has a 40 percent joint venture stake in Los Angeles’ West Basin Container Terminal. If there was any question who pulls the strings and gets the gains from Cosco’s operation, it’s quite clearly the government of mainland China. Cosco’s parent organization is a state-owned enterprise headed by an executive with the rank of vice minister in the government, according to the U.S. Naval War College’s research. No less than Xi Jinping, accompanied by then-California Gov. Jerry Brown and Los Angeles Mayor Antonio Villaraigosa, visited the Los Angeles port site in February 2012 (a year before XI became president of China) and told the crowd that this is “a direction in which economic development is heading.”

And the U.S. is only one place where China has taken major stakes in port operations. Elsewhere, its ownership and activities are far more strategic — and potentially threatening.

Five years ago, China, through Cosco, purchased a controlling stake in the Port of Piraeus on Greece’s largest harbor — Europe’s seventh largest. Three years later, Xi and Greece’s prime minister announced another $660 million investment to develop the port, which commands some of the most strategic waterways between Europe and Asia and dominates the Eastern Mediterranean.

“The objective is to transform it into the biggest transit hub between Europe and Asia and, potentially, the biggest port in Europe,” said Kostas Fragogiannis, Greece’s deputy foreign minister. In September, Cosco also took a major stake in the container operator at the port in Hamburg, Germany’s largest.

Most of these efforts, at least for the moment, are civilian, not military. But not entirely. Not long after another Chinese company helped establish a port in Djibouti, the Chinese navy moved in and established a major base. It happens to be just down the road from America’s Camp Lemonnier, which the Pentagon describes as “the primary base of operations for U.S. Africa Command in the Horn of Africa.”

Few of these activities by China or its acolytes have posed immediate military threats to democracies. But at this time of severe strain in global logistics networks, not to mention shortages on American shelves heading into the biggest shopping season of the year, China’s port stakes are another potential pressure point as the cold war with Beijing heats up.

The consequences of doing nothing as China continues to penetrate the world’s ports and shipping are potentially catastrophic. While it may already be too late to unwind many of these Chinese holdings, actions must be taken to put a fence around Chinese ambitions.

How to do that? China must not be allowed to accumulate a controlling interest in any port facility. Even a 30 percent interest can quietly rise to 51 percent with creeping investments. There simply must be a united front by all democratically inclined countries — the U.S. and those in the European Union, ASEAN and the African Union — to monitor and restrain Chinese expansion, even civilian investments. Each bid by a Chinese unit in a global port must be perceived as the direct challenge that it is before Chinese warships begin arriving for “routine port calls.”