Chinese Port Projects in Africa: Creating an ecosystem

While some of these Chinese businesses operating in Africa are privately held, others are entirely or partially owned by the government [1]. Within this environment, Chinese businesses enjoy a high degree of market-based independence in Africa, as well as the favorable terms of Chinese investment funds.

Chinese port projects:

China has been able to take a leading role in global maritime trade as a result of years of economic growth and government emphasis on the sector. Enhanced maritime connection has provided Beijing with more control over global trade and brought about significant economic gains for China. Chinese policymakers are pushing for greater use of the country's resources to improve connectivity, with a focus on port infrastructure development. China has built some of the biggest and busiest ports in the world to ease the movement of products into and out of the nation. Several of China's container ports are among the most linked in the world, according to the Liner Shipping Connectivity Index (LSCI), which ranks nations and their associated container ports according to how well they are integrated into existing liner shipping routes [2].

In September, it was reported that the Shanghai International Port Group has taken over operations at Haifa, Israel, on a 25-year lease, further demonstrating China's growing interest in ports throughout the world. Chinese shipping behemoth COSCO Shipping has purchased a 35% minority stake in Hamburg's HHLA Tollerort, a significant container operator that is anticipated to emerge as COSCO's preferred hub for its European shipping operations. In an August 2020 press release, COSCO Shipping Ports Limited (CSP) claimed that "CSP Abu Dhabi Terminal, the first overseas greenfield project of COSCO Shipping Ports Limited (CSP) has announced the launch of a direct and a weekly basis service to multiple ports across Europe and the Indian Subcontinent. However, recently, this port development at Khalifa, UAE, was stopped after US officials Brett McGurk and Jake Sullivan intervened when satellite imagery allegedly revealed hidden construction at a terminal run by COSCO [3].

The strategic significance of these ports:

Beijing is said to be in control of more than 100 ports spread across 63 different nations with its sights set on future ports in Tanzania, Cambodia, and Kiribati in the Central Pacific following the completion of Djibouti PLAN (People’s Liberation Army Navy) station capable of supporting an aircraft carrier. The current scope of COSCO's operations extends from the Balkans to the Mediterranean, across the Middle East, and finally to South East Asia [4].

Although the Chinese government lacks an official platform aggregating the entire statistics for China's foreign port projects, information that is readily available to the general public demonstrates that Beijing now has a presence in at least 100 ports across 63 different countries [5]. As of June 2022, 357 terminals in 36 ports around the world were being operated and managed by the firm. According to the information posted on the COSCO website, its port network reaches Southeast Asia to the Mediterranean, the Middle East, and Europe. A further significant Chinese port developer and operator, China Merchants Group, claims on its website that it completed the "equity acquisition of eight high-quality ports in Europe, the Middle East, and the Caribbean last year alone, expanding the group's global port layout to 27 countries, 68 ports." According to experts on China, Beijing's strategy is based on building ports in strategically significant nations, notably those that are close to maritime chokepoints. According to Craig Singleton of the Foundation for Defense of Democracies, "these port links allow Beijing to exert political influence not only in the country hosting the port but, in many cases, the surrounding countries as well”.

Chinese Port Projects in Africa:

Chinese Foreign Minister Wang Yi praised Chinese companies' contributions to African development at the 8th Forum on China-Africa Cooperation in Senegal in November 2021, drawing particular attention to their construction of around one hundred ports. Wang's attention to the one hundred ports emphasizes the importance of ports in China's interaction with the African continent, even though this number is significantly more than the number of ports built by China that can be verified in public data. Modern port infrastructure frequently serves as the focal point of larger Chinese companies' development initiatives that extend far beyond the pier, including other crucial infrastructure projects. African ports are now primarily built by Chinese companies over the past 20 years. Chinese businesses are increasingly looking to acquire and run these assets as well. They are not just interested in one-time engineering contracts, but also stock shares and operational management over port facilities all over the continent. The PLAN facility in Djibouti has been established as a result of at least one of these port construction, ownership, and operation projects. This first official PLA outpost outside of China was established in 2017, and it heavily depends on the pier and other resources of the nearby commercial port complex built by a Chinese state-owned company (SOE).

China's military presence in and around Africa is made possible by commercial port facilities. However, the main Chinese goal in African ports is not military basing. The appeal of African markets and resources is the more fundamental driving force. Despite the possibility that PLA soldiers would eventually occupy additional Chinese-developed ports in Africa, China's drive to construct, fund, own, and run ports across the continent largely serves commercial goals. Chinese companies have explored significant port projects with host governments to address the significant gap in Africa's transportation infrastructure. Beijing has given them significant political, financial, and diplomatic backing in exchange for ports and other infrastructure. These supply-side initiatives increase Chinese companies' desire to take advantage of Africa's abundant mineral and hydrocarbon resources, developing metropolitan markets, sizable and growing consumer base, and potential for overall development [6]. The success of China's Maritime Silk Road (MSR) program, which connects the mainland to sizable and undeveloped markets across the Indian Ocean, depends on ports. Beijing has made significant investments in African seaports as a result of both attractive business prospects and pressing economic problems. These seaports also give the Chinese military the ability to conduct a variety of military operations, such as anti-piracy, disaster relief, drills, and exercises, across the Indo-Pacific. China's unrivaled record in obtaining contracts to construct, finance, or manage seaports in Africa increases its economic and politico-military sway over the region.

In June 2021, Tanzanian President Samia Suluhu Hassan declared that talks with China Merchant Holdings for the development of the Bagomoyo port had resumed. The newly elected president picked up the halted project five days after speaking over the phone with Chinese President Xi Jinping. China has invested in 46 port developments in Africa that are currently underway or are planned, including Bagomoyo. Commercial opportunity to strengthen Beijing's position as Africa's top trade and economic partner, as well as the potential to improve its power projection capabilities in the Indo-Pacific, are the driving forces behind the interest in such port facilities. MSR investments concentrate on African ports to facilitate Chinese exports to the continent. Since 2009, China has become Africa's top commercial partner, and its exports have increased from 4% of imports in 2001 to 16% in 2018, growing at a compound annual rate of 19% [7].

Investments in ports are intended to increase capacity and modernize infrastructure, which would ultimately boost China's access to African markets for goods and services. They increase China's substantial commercial presence on the continent, where trade growth is anticipated to be at its highest in the coming years. Given the growing antipathy toward Chinese exports in Europe, the US, and some regions of Asia, Beijing places greater significance on port investments in Africa. For Chinese companies looking to sidestep the political entanglements of developed countries, its port projects also come with advantageous business conditions and trade terms. Therefore, the primary conduit in China's economic shift toward developing overseas markets is the development of overseas ports.

Ports in Africa are designed to lessen Beijing's reliance on other shaky markets for energy and raw materials. The construction of port infrastructure is necessary to diversify the import of oil and gas away from unstable West Asia and toward comparatively stable markets in Africa, given the country's growing appetite for energy resources. Ports are essential for the efficient extraction of minerals and resources including copper, phosphate, lithium, iron ore, and gold back to the mainland due to China's significant investments in Africa's mining and energy industries. For China's high-tech objectives and ongoing economic expansion, securing consistent supplies of important raw materials is crucial. Finally, the effort to build ports in Africa serves as a release valve for China's machinery and construction industries, which are burdened by overcapacity on the mainland. After exhausting the domestic market, massive state-owned businesses (SOEs) like China Merchants Group, China Harbor Engineering Company, and China Communications Construction Group are now seeking to transfer their industrial capacity to developing nations. The extension of China's port-led growth model to Africa's capital-poor nations with subpar port facilities only strengthens the impression of Beijing as a lucrative trade and development partner.

Demand for ports in Africa:

China's efforts to build ports in Africa are mostly in reaction to a signal of rising commercial demand. According to the UN Conference on Trade and Development (UNCTAD), Africa has an abundance of natural resources and a sizable, expanding customer base, but lacks "sufficient transport infrastructure and services...including maritime transportation links"[8]. The demand for ports in Africa is seen to be large and increasing by international development organizations, banks, consultancies, and business actors. According to the African Development Bank, delays and subpar management drive up handling costs by an average of 50% over worldwide averages in African ports. China has been Africa's top trading partner since 2009, therefore it is particularly acutely aware of the additional expenses brought on by insufficient infrastructure. China may profit the most from lower transportation costs given the size and volume of its commerce with Africa as the majority of trade between China and Africa, according to researchers from Dalian Oceans University, is conducted by ships, as aviation freight is still in its infancy.

Xi has long emphasized the importance of ports that are connected to both highways and rail as the foundation for economic growth. According to the 14th Five-Year Plan, ports are given top priority in Chinese economic planning since they are essential to the "building of a powerful transport nation." Chinese leaders support ports in their worldwide development objectives, similar to how they do with domestic industrial strategy. These unmistakable priority ushers in several potent supply-side dynamics, or motives coming from Chinese officialdom that actively encourage domestic companies to construct and maintain control of ports abroad. China's domestic political economy produces supply conditions for port development that are unique worldwide. Simply said, Chinese businesses, especially large SOE organizations, are in a unique position to export their industrial capacity and engineering and construction services to Africa. They are in this situation in large part as a result of domestic policies implemented over many years that have increased excess capacity in several industrial sectors. Over the course of the reform era, Chinese companies have built impressive commercial skills in engineering, building, and operations through their work enlarging and modernizing China's domestic roads, trains, pipelines, airports, and seaports. As a result of these initiatives, China became the world's largest trading nation and developed its ports and maritime transportation into a sector with unique strength and capacity, supporting an export-led economic model. China is home to 7 of the 10 highest throughput container ports and 31 of the top 50 ports in the world by total cargo tonnage.

While Africa lacks sophisticated ports, China is overrun with them. With the promise of building a new Shenzhen or Dubai on the strengthening of ports integrated into local transportation and industry, China is now pitching this same concept to eager African leaders. Therefore, there exists a self-reinforcing logic behind the externalization of China's enormous domestic port capacity given the enormous cargo volumes passing through Chinese ports, being transported on Chinese carriers, and frequently moving to and from Chinese commercial firms overseas.

Conclusion:

African leaders overwhelmingly support China's presence in the country and applaud its emphasis on government-to-government deals with little to no conditions. Many African leaders think China, another emerging nation, is motivated more by altruism than Western governments and enterprises. African leaders applaud China's contributions to their countries' infrastructure, pointing out observable enhancements that support increased economic activity, the creation of jobs for locals, and tangibly better roads, railroads, bridges, and other transportation networks. However, some Africans have issues with China's involvement. Chinese businesses are criticized by labor unions, civil society organizations, and other facets of African society for bad working conditions, unsustainable environmental practices, and job displacement. Good-governance watchdogs caution that China negotiates unequal accords that encourage corruption and poor decision-making and exploit the relative fragility of African governments. They contend that China maintains a neocolonial trade arrangement with Africa in which raw materials from Africa are exported to China in exchange for manufactured commodities. In such a dichotomous response from the African population, China might face severe challenges in consolidating itself politically in Africa. However, given the number and extent of Chinese port projects, the success of these ports would largely mean greater geoeconomic consolidation of Chinese influence in the continent.

Endnotes:

1.  Peter Stein & Emil Uddhammar, “China in Africa: The Role of Trade, Investments, and Loans Amidst Shifting Geopolitical Ambitions”, Observer Research Foundation 25 August 2021 https://www.orfonline.org/research/china-in-africa/
2.  “How Is China Influencing Global Maritime Connectivity?” China Power, Center for Strategic and International Studies https://chinapower.csis.org/china-ports-connectivity/
3.  Antonia Filmer, “China expanding its ports worldwide”, The Sunday Guardian, 1 January 2022 https://www.sundayguardianlive.com/world/china-expanding-ports-worldwide
4. Antonia Filmer, “China expanding its ports worldwide”, The Sunday Guardian, 1 January 2022 https://www.sundayguardianlive.com/world/china-expanding-ports-worldwide
5. John Xie, “China's Global Network of Shipping Ports Reveal Beijing’s Strategy”, Voa News, 13 September 2021 https://www.voanews.com/a/6224958.html
6.  Rahul Karan Reddy, “Why is China Interested in Africa’s Ports?”, Institute of Peace and Conflict Studies, 08 October 2021 http://www.ipcs.org/comm_select.php?articleNo=5790
7.  Nadège Rolland, “(In)Roads and Outposts Critical Infrastructure In China’s Africa Strategy”, The National Bureau of Asian Research, May 2022 https://www.nbr.org/wp-content/uploads/pdfs/publications/sr98_inroadsandoutposts_may2022.pdf
8.  Nadège Rolland, “(In)Roads and Outposts Critical Infrastructure In China’s Africa Strategy”, The National Bureau of Asian Research, May 2022 https://www.nbr.org/wp-content/uploads/pdfs/publications/sr98_inroadsandoutposts_may2022.pdf

Pic Courtsey-Ian Taylor at unsplash.com

(The views expressed are those of the author and do not represent views of CESCUBE.)