China Power | Economy | East Asia

The Challenges of Finding Political Treasure in Chinese Overseas Ports

When it comes to Chinese overseas port projects, negative economic externalities may coexist with positive ones. 

China’s recent 8th Silk Road Maritime International Cooperation Forum kept the spotlight on Chinese overseas ports, a subject of continuing attention in the news, among think tanks, and in scholarly circles. Although the bulk of commentary emphasizes a geopolitical angle, others devote attention to the economic value of China’s overseas ports presence, especially in countries that have welcomed Chinese investors, contractors, and terminal operators. Among other gains, they expect greater connectivity, employment growth, and shifts to higher value-added activities.  For its part, China touts economic returns from its ports such as higher transport volumes, increased exports, and workforce development in places like Egypt.

The actual economic impact flowing from China’s port participation is not just a domestic or international economic issue. It is a domestic and international political issue and thus needs thoughtful consideration. Discussing this impact is the purpose of this piece, the third in a four-part series on China’s footprint in overseas ports. The first part examined China and Chinese companies’ sundry motives, their footprint, and storms about their presence. The second delved at length into the hopes and fears of host countries, third-parties like the United States, and others with respect to “Chinese” ports’ speculated positive and negative outcomes.

At the most basic level, host countries envision that their ports will improve due to the new berths, expanded terminals, better cranes, deeper ports, enhanced port infrastructure, and modernized IT systems flowing from Chinese involvement. Such changes have featured in Latin America and the Caribbean (LAC) and European ports ranging from Balboa and Cristobal (Panama) to Zeebrugge (Belgium) as well as Southeast and South Asian ports such as Kyaukphyu Made Island (Myanmar) and Mongla (Bangladesh). Port improvements, in turn, will enable them to handle bigger ships, larger cargo volumes, and different vessel types. All of this will boost port earnings, tax revenues, and local port business activities. Furthermore, there will be job creation.

Aside from this, linked infrastructure improvements should spur local economic activity and amplify the benefits of proximate special economic zones (SEZs). SEZs are a regular feature of China’s ports’ footprint and, in fact, may be their most prominent one as seen in Middle Eastern countries such as the United Arab Emirates. Beyond the above, host countries anticipate export growth, greater inward foreign direct investment (FDI) flows, and richer integration with global networks.

Dredging through the data, an analysis of China’s footprint in 20 ports in Europe and the LAC determined Chinese investment indeed led to, among other things, new, bigger, or modernized quays, terminals, and intermodal transportation links. This, in turn, boosted capacity, turnaround times, and efficiency. More than two-thirds of ports where data was available showed improved port performance. Likewise, more than two-thirds of ports, witnessed increased connectivity. On top of this, the analysis........

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