Beijing
is building a maritime logistics empire that could be an advantage in a future
conflict with the West.
By Christopher R. O’Dea
Jan. 9, 2023 6:15 pm ET
PHOTO: CFOTO/ZUMA PRESS
A shipping company with
deep ties to Chinese state-owned companies purchased container terminals in New
York and New Jersey in December, raising serious questions about the ability
and willingness of the West to counter China’s strategic capability. China’s
growing maritime commercial logistics empire poses a direct threat to the
liberal international order. Beijing is building a platform for control of
oceanic commerce and an amphibious invasion force that is extending the
frontier of Chinese Communist Party influence to U.S. shores.
The consolidation of the
global container-shipping industry into three alliances in 2016 opened the door
for a new type of global organization operating largely beyond the reach of
national regulators. Shipping companies formed the alliances to manage cargo
capacity after price cutting led to the bankruptcy of a major shipping line in
2016. Alliance regulations bar shipping lines from fixing prices but allow them
significant leeway to buy terminals and inland logistics assets. Operationally,
alliance members often concentrate container service at alliance-owned
terminals, which can make ports more dependent on a dominant alliance.
China controls one of the shipping alliances. The Ocean
Alliance is dominated by Cosco Shipping, a Chinese state-owned company that is
the world’s second-largest operator of ports—and is ultimately accountable to
the Communist Party. The other members of the Ocean Alliance are Taiwan-based
Evergreen Line and CMA CGM, a family-owned company based in Marseille, France,
with deep ties to Chinese state-owned companies.
Cosco and other Chinese state-owned port and shipping
companies have been steadily expanding their holdings in the West since 2000.
By some analysts’ count, Chinese companies own or operate terminals in 96 ports
in 53 countries. But it is the relative handful of terminals Chinese
state-owned companies control in ports serving major population centers in the
West that creates the greatest exposure to Chinese leverage.
Control of ports and
terminals gives China economic and political influence over host-country
governments where Chinese state-owned enterprises operate critical
infrastructure. The contracts are even referred to as “concessions,” aptly
implying that Western governments accept the superior containerized logistics
capabilities that the Chinese companies have developed since acquiring the
American technology in the late 1970s.
The newest salvo in
China’s maritime commercial expansion came on Dec. 7, when CMA CGM said it is
buying container terminals in New York and New Jersey. Most of the scant
mainstream news coverage failed to note CMA CGM’s significant financial and
operational links with Chinese state-owned companies. In 2013, CMA CGM sold 49%
of its own terminal subsidiary to China
Merchants Holdings (International). In 2015 the Export-Import
Bank of China extended to CMA CGM $1 billion in financing to buy ships from
Chinese shipyards. That funding has helped CMA CGM become one of the largest
logistics enterprises in the world, with commanding positions in the supply
chains for automotive parts and electronics. Satellite photos of Chinese
shipyards show CMA CGM’s newest liquid-natural-gas-powered vessels being built
alongside Chinese aircraft carriers.
Through the Maritime Security
Program, the U.S. Transportation Department maintains a fleet of privately
owned vessels intended to provide shipping for national-security purposes. This
fleet includes seven vessels operated by container-shipping company APL, which
CMA CGM acquired in 2016. In 2021 the Transportation Department approved
replacement of an eighth APL vessel with one from CMA CGM.
U.S. allies including
Greece, Canada, Germany and Israel have turned to Cosco and other Chinese
state-owned shipping companies to invest in their terminals or build entire
ports, sometimes over strenuous objections from Washington. Singapore and
France are dependent on Chinese container volume or have national-champion
companies that are business partners with the Chinese companies. If the bellicose
rhetoric about imminent naval war with China leads to combat in the Western
Pacific, prompting China to allow only Ocean Alliance vessels access to its
ports, will those countries risk being cut off from Asian supply lines to side
with the U.S.? A cold-eyed appraisal of the logistical situation suggests
that’s a long shot.
Adm. Raymond Spruance,
who helped devise the island-hopping strategy the U.S. used in the Pacific
Theater during World War II—and then carried out the plan as commander of Fifth
Fleet—wrote that a sound logistics plan determines the success or failure of
military operations. The Chinese have such a plan for their economic campaign
against America and the West. At the moment, the U.S. has nothing.
Mr.
O’Dea is an adjunct fellow at the Hudson Institute and author of a forthcoming
book, “Ships of State: The Maritime Logistics Foundations of the New Chinese
Empire.”
Jan 9, 2023
Wall Street Journal
China
Bids to Rule the Commercial Waves
Beijing is building a maritime logistics
empire that could be an advantage in a future conflict with the West.
https://www.hudson.org/economics/china-bids-rule-commercial-waves
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