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FILE PHOTO: Chinese container ship "Cosco Shipping Aries" is unloaded at a loading terminal in the port of Hamburg Germany July 27, 2018. REUTERS/Fabian Bimmer/File Photo

Hamburg Port Backs COSCO Terminal Acquisition Over German Government’s China Concerns

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September 22, 2022

By William Wilkes and Arne Delfs (Bloomberg) —

Hamburg Hafen und Logistik AG said the German government shouldn’t block a Chinese acquisition of a stake in a container terminal, arguing that the deal will bring investment to the port and poses no threat to national security.

China’s Cosco Shippings Holding Co Ltd announced Tuesday it had delayed a bid to acquire a 35% stake in the Tollerort terminal, the smallest of the four container facilities at Germany’s largest seaport.

That was after Economy Minister Robert Habeck indicated last week the government would likely veto the deal due to concerns related to Chinese investment in critical infrastructure. Habeck, a member of the Greens party, and other officials from Chancellor Olaf Scholz’s ruling coalition have recently sharpened their criticism of Beijing over its human rights record and indicated a tougher line on trade with China.

“There are no substantial reasons why this deal should be blocked,” a spokesman for Hamburg Hafen said Thursday. A spokesman for the economy ministry in Berlin said there were no new developments to report.

China’s Belt and Road program, an ambitious plan to develop new trade lines for Asia’s powerhouse economy, has seen Beijing-backed companies invest in infrastructure assets across Asia and into western Europe.

Cosco, China’s largest shipping company, has acquired major stakes in strategically important ports, including a majority holding in the Greek port of Piraeus, the main seaport for Athens.

Germany considers ports to be critical infrastructure, allowing the government to screen and block acquisitions of larger stakes in them by non-European companies.

Germany should only approve Cosco’s bid on the condition the company can be effectively monitored, particularly the digital infrastructure it uses to process goods, according to Rolf Langhammer, a trade expert at the IfW research institute in Kiel.

“The same applies to Cosco’s pricing policy, which must not result in competitors being squeezed out of the market as a result of support from the Chinese state,” Langhammer said Thursday in an emailed statement.

“Conditions are necessary because, firstly, Cosco is a state-owned company created from mergers with other Chinese shipping companies and is under the direct influence of the government, whose strategic goals are unknown,” he added.

Scrutiny of Chinese infrastructure purchases has grown in recent years due to concerns about the country’s geopolitical intentions.

Cosco and Hamburg Hafen will continue to work toward closing the deal and have agreed to extend the deadline for all obligations to be fulfilled to the end of this year, according to a statement published Tuesday.

© 2022 Bloomberg L.P

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