Eyeing maritime clout, China pumps S$27b into port projects

[chahlley]

(Asia Today Monday 17 July 2017)

Eyeing maritime clout, China pumps S$27b into port projects

Talks have also taken place over a potential Chinese port investments at Kirkenes,

a Norwegian port on the Barents Sea, sources have said. Photo: Reuters

Updated: 10:02 AM, July 17, 2017

BEIJING — China is ramping up acquisitions of overseas ports as it expands its reach as a maritime power, doubling its investments in port projects over the past year to US$20 billion (S$27.4 billion) and pushing ahead with plans to open new shipping routes through the Arctic Circle.

The locations of the ports set for Chinese investments cluster around three “blue economic passages” that Beijing named in June as crucial to the success of One Belt, One Road, a grand scheme to win diplomatic allies and open markets in around 65 countries between Asia and Europe.

A study by Grisons Peak, a London-based investment bank, found that Chinese companies have announced plans to buy or invest in nine overseas ports in the year to end-June in projects valued at a total of US$20.1 billion. In addition, discussions are under way for investments in several other ports, for which no value has been divulged.

This level of activity represents a sharp acceleration from the US$9.97 billion in Chinese overseas port projects in the year to end-June 2016, according to Financial Times estimates.

“In the past year, China has now announced … all three of its blue economic passages, so it is not surprising to see this significant level of increased investment in ports and shipping,” said Mr Henry Tillman, chief executive of Grisons Peak.

The importance of one of the three maritime routes, which runs from China to the Indian Ocean and then onwards to the Mediterranean, shows up particularly clearly in the newly announced investments. Four separate initiatives are set for Malaysia, with Chinese company investments scheduled for the US$7.2 billion Melaka Gateway, the US$2.84 billion Kuala Linggi Port, the US$1.4 billion Penang Port and the US$177 million Kuantan port projects, according to company announcements.

In Indonesia, Ningbo Zhoushan Port company plans to invest US$590 million into the Kalibaru project, an expansion of Tanjung Priok, the country’s largest port. Ms Jing Gu, an expert at the Institute of Development Studies at Sussex University, said the focus on South-east Asia represented an example of Beijing’s efforts to create “good neighbourly” relations in the region.

“However, it is also rather controversial with continuing issues over territorial sovereignty and over China’s economic strength and its resources needs,” added Ms Gu, who is director of the university’s Centre for Rising Powers and Global Development.

Another of the three maritime routes attracting attention is that from China to Europe via the Arctic Ocean. This route could potentially cut the journey time by several days. One planned project involves a new deepwater port near Arkhangelsk, on Russia’s White Sea, and a railway deep into Siberia.

A plan by Poly Group, a Chinese state-owned enterprise, to lead investment in both the port and railway received new impetus this spring with a visit to Arkhangelsk by Mr Wang Yang, a Chinese vice-premier, Chinese officials said.

Klaipeda, a Lithuanian port and feeder for Arctic route traffic, has attracted investment proposals from China Merchants, a port operator, to build a large new container port. Talks have also taken place over a potential Chinese port investments at Kirkenes, a Norwegian port on the Barents Sea, and at two ports in Iceland, according to people close to the discussions.

Some of China’s port investments raise questions over whether Beijing is pursuing an undeclared strategic agenda in the guise of pursuing commerce, said Mr Jonathan Hillman, a director at the Centre for Strategic and International Studies. “Strategically, port ownership opens the door to non-commercial activities like hosting military forces and collecting intelligence, said Mr Hillman.

“But aside from grand strategy, there’s also lowly politics. Interest groups in China and partner countries are eager to participate in new projects, and now they can do so under the expansive banner of China’s Belt and Road Initiative,” he added. FINANCIAL TIMES