Over the past decade, infrastructure investments have become the cornerstone of China’s strategy in Europe. Predominantly, these investments have taken the form of direct investments and construction agreements, usually without the provision of loans. A prominent exception is the Budapest-Belgrade railway project. Globally, the strategic implications of Chinese investments have sparked debate, and Europe is no exception. Chinese firms have shown a willingness to venture into high-risk European projects, raising questions about their underlying motives. This has been particularly pronounced in the context of infrastructure, as it pertains to the broader strategic implications of China’s Belt and Road Initiative (BRI).
The BRI’s initially stated purpose was that of connecting the Eurasian continent, via land and sea links traveling from China to Europe. As such, Europe and the European Union have since the beginning been an important element in the development of the BRI. The Action Plan on the Belt and Road Initiative published by the State Council of the People Republic of China in 2015 states five main goals for the BRI: promote policy coordination, facilitate connectivity, ensure unimpeded trade, and foster financial integration as well as people-to-people bonds.
Although none of the goals presented elements of concerns or evident strategic elements, the development of the BRI and of Chinese investments into EU transport infrastructures resulted in the emergence of the argument that China is seeking ownership of strategic assets to: (i) secure its geographical presence in strategic locations, and (ii) secure its access to global markets. In fact, diversification of supplies and markets to make China’s economy more resilient has long been one of the main objectives of the BRI, and its evolution in Europe has been no exception.
An Indispensable Trade Partner
The EU has been and still is an important commercial partner for China. China’s export-driven economy has historically navigated the challenges of overproduction by finding international markets for its exports, which are vital to its economic prosperity. The EU with its large and mature market, stands out per scale and capacity as a prime destination to absorb a significant share of Chinese goods. And this has not changed as China has been increasing its added-value production. This has made the EU an indispensable trade partner for China. Proof of this is the fact that commercial tensions between the two, whether they concern trade in textiles in the early 2000s or in electric vehicles in 2023, are matters of considerable concern for Beijing. Such frictions are not merely transactional disputes but touch on deeper strategic considerations for both China and the EU, i.e. on the resilience of their respective economies.
If guaranteeing a venue for its exports is key to China’s resilience and a core element of China’s approach to its investments in Europe, then making sure that exported commodities reach the destination market in order to generate profits is also a key element. Considering that and Beijing’s longstanding focus on security, transport and logistics composed a three-pronged problem for China. First, a large part of the global trade and of the trade between China and the EU travelled via sea, and a European company, MAERSK, was the largest shipping company in the world. Second, cargo had to pass through European-owned ports and in case of disputes between China and European countries, that cargo could potentially be blocked. Third, infrastructures, especially land infrastructures, to transport that cargo were underdeveloped.
As a strategic move to enhance its influence in global trade, China has significantly expanded its role in the shipping industry. Notably, COSCO has ascended to the ranks of the top five largest shipping players worldwide. This growth has been complemented by strategic investments by COSCO and other state-owned enterprises, such as the China Merchants Group, in European port facilities. These investments have secured a safe process for delivering Chinese products to European markets, exemplifying China’s commitment to vertical integration within its economic practices. This integration strategy is underscored by a clear preference: When possible, Chinese shipments are funneled through Chinese-owned terminals and ports, reinforcing China’s logistical autonomy and control over its international trade routes.
Geographically, Chinese companies have made acquisitions of terminals all over Europe, covering 15 ports and seven EU member states. Chinese companies are present in the ports of Greece (port of Piraeus and of Thessaloniki), Malta (Malta Freeport Terminal), Italy (Vado Reefer Terminal), Spain (CSP Bilbao Terminal and CSP Valencia Terminal), France (Terminal de France and Terminal Nord, Terminal du Grand Ouest and Terminal de Méditerranée), Belgium (Terminal des Flandres, CSP Zeebrigge Terminal, Antwerp Gateway), the Netherlands (Euromax Terminal and Rotterdam World Gateway), and Germany (Tollerort Terminal in Hamburg).
Fertile Ground
The large number of European ports with a Chinese investment demonstrates that, for a while, China’s approach found fertile ground. Not only was the BRI and the investments it promised to bring to Europe welcomed, but the EU and China formed collaboration strategies such as the EU-China Connectivity platform launched in 2015. Between 2016 and 2019 the EU and China compiled a list of projects to be developed together in the respective territories. In the EU, the list included the Trans-European Transport Network (TEN-T) projects proposed by member states.
The TEN-T network is a policy adopted for the “development of coherent, efficient, multimodal, and high-quality transport infrastructure across the EU.” Some of the projects listed at the time include the Hungary-Serbia railway, the Genoa port breakwater project, Trieste integrated rail hub, the North Sea Baltic corridor and other port, railways, and highways projects that have since been criticized and/or stopped. The Belgrade-Budapest railway has become one of the most contested infrastructural projects within the EU due to the lack of transparency that characterized the whole process. The two projects listed for Italy correspond with projects included in the Memorandum of Understanding signed between Italy and China in 2019 in the framework of the BRI; neither materialized, and Italy left the BRI at the end of 2023. Meanwhile, the North Sea Baltic corridor, like the other corridors, has come under EU protection from foreign investments, with a particular attention to Chinese investments.
Growing Pushback
In recent years, China’s geostrategic approach to European infrastructure has been met by a growing pushback from the EU. This pushback has been part of a broader reassessment of the risks of Chinese investments that eventually led to the adoption of the EU framework for foreign direct investments screening. But it has also taken on some more specific characteristics, such as concerns regarding the preferential treatment given to Chinese shipping companies in Chinese-owned ports, the attempt to expand in the infrastructural environment, and the leverage it gave to threaten redirection of cargo.
In the Port of Piraeus, for example, not only has COSCO increased its shares, but the involvement of Chinese companies has expanded from shipping, to onloading and offloading of cargo, to railway transportation. Also, an attempt was made to adopt a Chinese port management software. As for the redirection of cargo, the process that led to COSCO’s acquisition of a 24.9-percent share in the Tollerort Terminal in the Port of Hamburg included a threat from COSCO to redirect cargo to Antwerp and Rotterdam, where it is already present, if the investment did not go through.
No Great Unwinding
In 2023, the European Parliament published a draft resolution on building a comprehensive European port strategy that looks at the risks of Chinese investments in maritime infrastructure and at ways in which the EU and member states can better respond to these risks. The resolution and work behind it have paid particular attention to the core TEN-T network that in the past was at the center of the plans for collaboration with China within the framework of the BRI.
What is left of China’s geostrategic approach to the EU today is mostly what has been achieved between 2013 and 2016, but not for lack of interest from China. Both the 2022 acquisition of the share in the Tollerort terminal and the increased presence in the Port of Piraeus show that China’s interest in European ports is still alive. As long as Europe remains an important commercial partner for China, China’s interest in European transport infrastructure will not disappear as it contributes to guaranteeing the resilience of China’s economy.
As the EU seeks to boost its resilience and competitiveness at the same time, it is up to Brussels and national capitals to protect EU strategic assets such as ports. The risk is first and foremost a European one, as many small investments all over European critical infrastructures not only have shown to create dependencies, but have already been used to leverage diverging interests among member states.
Most importantly, however, it is up to Europeans to ensure that alternative sources of capital to Chinese investments are available for the maintenance and development of strategic assets. Chinese investments have often been a last resort when there were no other good options. Protection without promotion is a losing game. In that regard, while progress has been made, the EU still has not solved the central problem of how to consistently make not only the protection but also the promotion of strategic assets a truly European affair, incentivized through a European budget. The more the EU is involved in European critical infrastructure, the more both protection and promotion will be truly European and increase the EU’s resilience as whole.
Francesca Ghiretti is Senior Geoeconomics Analyst at Adarga Ltd. in London. She writes in a personal capacity.
