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Germany doesn’t learn: Lets Chinese firm take 25% stake in terminal at country’s largest port

Chinese President Xi Jinping (Lan Hongguang/Xinhua/Sipa USA/TNS)
October 27, 2022

The German government is allowing a Chinese shipping firm to buy a roughly 25 percent stake in one of the four major container terminals in its largest port city, Hamburg. The move comes as international observers have raised concerns Germany could become increasingly beholden to Chinese influence as China seeks to become the dominant global power. The move also comes as Germany is facing economic woes for its heavy reliance on Russian energy.

On Wednesday, German Chancellor Olaf Scholz’ cabinet allowed the China Ocean Shipping Company (COSCO) to take a 24.9 percent ownership stake in a Hamburg’s Tollerort shipping terminal. While it’s less than the 35 percent ownership stake COSCO originally sought, the cabinet decision still reportedly drew criticism within the German government.

Chinese firms have sought to gain control of key real estate and infrastructure throughout the world in recent years. Western officials have previously raised concerns that countries could jeopardize their national security by allowing firms beholden to the Chinese government to own or have access to valuable property, telecommunications and other critical infrastructure. In 2017, Sri Lanka signed a 99-year lease of its Magampura Mahinda Rajapaksa Port to China to pay down debt it owed to China.

Hamburg is Germany’s largest port city and the third largest port in Europe. The Tollerort terminal is one of the city’s four terminals for loading and unloading the largest container ships. The city has additional smaller terminals for more specialized cargo.

Two sources within Germany’s government told Reuters that the German foreign ministry was angered by Scholz’s cabinet’s decision to allow COSCO to buy up the Hamburg port terminal ownership stake and presented their arguments against the move in the cabinet meeting. In a note presented at the cabinet meeting and reviewed by Reuters, the foreign ministry argued the move “disproportionately expands China’s strategic influence on German and European transport infrastructure as well as Germany’s dependence on China.”

The foreign ministry also said there are “considerable risks that arise when elements of the European transport infrastructure are influenced and controlled by China – while China itself does not allow Germany to participate in Chinese ports.”

Scholz cabinet said the decision to cut COSCO’s ownership stake in the port from 35 percent to below 25 percent will appropriate reduce the risk the Chinese firm could exert harmful influence over the terminal’s operations.

Scholz defended against criticisms for allowing COSCO to take the ownership stake in the Hamburg port terminal, saying that while there is a “justified concern to say there must be no false influence on infrastructure” but “that is in no way the case here” because the land the terminal is on remains property of the government and will never be privatized.

Some German officials are particularly warry as the country has already faced economic struggles over their past reliance on Russian natural gas.

In a 2018 United Nations speech, then-U.S. President Donald Trump warned that Germany could become “totally dependent” on Russian gas. Germany diplomats were seen laughing and scoffing at the remarks as Trump spoke.

Germany has faced a dilemma in recent months on whether to continue Russian energy imports or follow other Western nations who have banned such imports in order to avoid underwriting Russia’s invasion of Ukraine. Market analysts have projected widespread energy shortages throughout Europe as winter approaches.