China’s acquisition of Mediterranean ports is a logistical move to facilitate its growing trade with Europe. But the ports also serve to augment China’s naval presence in the region, increasing its capability to counter risks to its trade flows and citizens.

 

Caption: China’s ports in the Indian Ocean and the Mediterranean, (INSS Strategic Assessment, Vol. 19, No. 1 April 2016, p.55

The sale of the Port of Piraeus to China’s COSCO shipping company has captured the public attention like no other Chinese investment in Europe. The recently completed privatisation of the Greek port became a symbol for the Eurozone’s economic woes as well as for China’s global reach.

Piraeus is indeed the new main entry point for Chinese goods into Europe. The port is an important building block in China’s “Maritime Silk Road” vision, which would connect China and Europe by sea and continue via a network of railroads through the Balkans. And, perhaps less known to the European public, it is only one of a growing number of Chinese-owned ports around the Mediterranean – a trend that will have far-reaching economic and geopolitical implications for the entire region and for other parts of Europe.

Chinese companies have acquired stakes in ports around the Mediterranean littoral including Algeria’s Port Cherchell, Egypt’s Port Said and Port Alexandria, Israel’s Port Ashdod and Port Haifa, Turkey’s Kumport terminal in Istanbul Ambarli Port, and Italy’s Port Genoa and Port Naples. China has also expressed interest in ports in Portugal.

As the largest trading nation and the third largest shipbuilder in the world, China has sound economic reasons to invest in key logistics and trading hubs in the Euro-Mediterranean region. Keeping Chinese imports competitive in the European market requires reduced shipping times to offset rising production costs in China.

The land-sea express connecting Piraeus to the Belgrade-Budapest High Speed Railway could reduce the time to transport goods between the Suez Canal and Western Europe. Directing exports bound for Europe to Piraeus allegedly already shortens the total shipping time by one week compared to traditional routes.

This shift is already tilting the economic balance among European cities, since ports along these traditional routes are the losers of the new arrangement. Previously, Chinese exports were shipped around Europe to ports on the northwestern coast, including Rotterdam, Antwerp and Hamburg, and finally taken by rail to inland cities. In 2012, Hewlett Packard replaced Rotterdam with Piraeus as its main distribution hub to Europe, Middle East and Africa due to the lower costs.  Other companies such as Huawei, ZTE and Sony followed suit, while Dell, Lenovo, IKEA, Samsung and LG have also expressed interest in choosing Piraeus as their regional distribution centre.

Aside from commercial reasons, China’s investments are also driven by security interests. Security risks such as piracy in the Gulf of Aden, coupled with presence of ISIS and Islamic extremist groups at the northern end by the Sinai, have prompted China to seek alternative trade corridors to the Suez Canal. This partially explains why China is investing in Israel’s “Steel Canal” to bypass Egypt’s Suez Canal by building a Med-Red Rail between Port Ashdod in the Mediterranean and Eilat in the Red Sea.

Seaports like Piraeus might also serve a dual purpose by providing the Chinese navy with platforms to address non-traditional challenges. They could support evacuation operations in conflict-prone regions in the Middle East and Africa, where China has an estimated two million workers.

China and Greece have a history of cooperating in crisis management in the region. Greece assisted in the evacuation of Chinese nationals during violent crises in Albania (1997) and Lebanon (2006). When the Chinese navy and air force evacuated 35,000 Chinese citizens from Libya in March 2011, most of the evacuees where taken to Greece in chartered passenger ships before being flown back to China. And when the Greek Navy coordinated with Beijing to evacuate another 80 Chinese nationals from Libya in 2014, then Greek Prime Minister Antonis Samaras offered China the use of maintenance and repair facilities on Crete, and suggested to conduct joint naval patrols.

So as China augments its maritime power projection to protect assets and citizens overseas, this also presents an opportunity for the EU to enter into non-traditional security cooperation with China in its southern neighbourhood.