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Saturday, April 13, 2024

China’s Dominance in Maritime Shipping: A concern to the world?

China’s dominance over the commercial maritime sector may be a source of vulnerability for the U.S. and other geopolitical rivals moving forward.

Last month, U.S. President Joe Biden announced 24/7 day and night operations in Port of Los Angeles after similar measures were taken in Port of Long Beach. Together, the two ports cover about 40 percent of the containers entering the United States. As the holiday season approaches, the expanded port operations are aimed at tackling the global supply chain as well as helping to alleviate the growing backlog of shipping vessels that have extended ashore to San Diego. Freight ports at U.S. ports not only did it contribute to fears of inflation but also brought renewed attention to the important role of the maritime industry in the global economy.

Considering that 90 percent of the world’s landmass travels across the ocean to reach its destination, the value of the maritime industry will not be underestimated. Historically, global naval control has been a major focus of economic and military art. Since the Discovery Period, maintaining reliable access to the world’s waterways has been recognized as a major national source of energy.

In 1616, English statesman Sir Walter Raleigh declared, “Everyone who controls the sea controls trade; whoever controls the world trade controls the wealth of the world, and therefore the world itself. Centuries later, one of America’s most famous 19th-century military strategists, Alfred Thayer Mahan, echoed this sentiment. In his 1890 magnum opus, “The Influence of the Sea in History, 1660-1783,” Mahan argued that the size of the country was directly related to controlling the world’s oceans, with the benefits of trade in times of peace and strategic benefits in times of war. In particular, Mahan emphasized the importance of strategic areas such as exits, petrol stations, canals and ports.

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With this in mind, the growth of Chinese investment in the maritime industry, both internally and externally, should be a major source of concern for political competitors like the United States. In addition to the growing collection of ports, China is the world’s leading producer of transportation shipping, producing 96 percent of the world’s shipping boxes, 80 percent of the world’s offshore, and receiving 48 percent of the world’s shipping orders. 2020. China boasts the world’s second-largest commercial shipping port and, according to the US Office of Naval Intelligence, has now surpassed the United States as the world’s largest naval base in terms of total naval capacity.

All of this serves as an indicator of China’s status in terms of strength and elasticity. Focused within much of the 20th century, China’s economic interests continue to grow significantly beyond its borders. China’s growth in the maritime trade over the past decade has been significant. For Chinese officials, however, this development is not only the result of fortune-telling, but also the result of careful planning and strategy.

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New Economic Strategy

In a 2013 speech at the University of Nazarbayev in Kazakhstan, Chinese head of state and General Secretary of the Communist Party Xi Jinping first announced plans for the Belt and Road Initiative (BRI). This multi-billion dollar investment strategy, comprising three continents and nearly 60 countries, is designed to strengthen regional integration and cooperation while positioning China as a key intermediary between regional trade routes. It has been promoted by members of the Chinese government, including Xi, as the “New Silk Road.” Some scholars have suggested that the same approach is followed by the United States Marshall Plan, which promoted economic restructuring in Western Europe after World War II, in addition to deepening economic ties and bringing Europe closer to U.S. interests.

There are two main components of BRI. The first part is the world-based economic belt, which aims to facilitate the entry and exit of goods through China through the construction of highways, railway networks, gas pipelines, oil refineries, power plants, mines, and industrial parks throughout Central. Asia. The second section is a sea road, representing a network of ports and sea tunnels that direct trade from China through waterways. In pursuit of the maritime strategy, China has demonstrated a growing interest in port ownership. However, this interest is not limited to the Indo-Pacific region but extends to the rest of the world.

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China’s Investment in Shipping Ports

Currently, China is home to more ports than any other country, including seven of the 10 busiest ports in the world. In addition to its massive accumulation of domestic shipping infrastructure, China also has more than 100 ports in about 63 countries. More than 80 percent of China’s overseas terminals are owned by “three major terminals”: China Ocean Shipping Company (COSCO), China Merchants Group (CMG), and CK Hutchison Holdings. The first two are state-owned enterprises, and CK Hutchison is a Hong Kong-based independent company with close ties to China. According to the Center for Strategic and International Studies, integrated government support for the transportation industry reached $ 132 billion between 2010 and 2018.

In the Indo-Pacific, major examples of the expansion of the Chinese port include a 99-year lease on the Hambantota port in Sri Lanka, a 40-year lease on the Gwadar port in Pakistan, and a $ 350 million investment in the Djibouti port. Djibouti is also home to the Chinese military base overseas, close to an important junction between the Gulf of Aden and the Red Sea.

In 2018, the Chinese Harbor Engineering Company began construction on the port port of Sokhna in Egypt near another major trading post, the Suez Canal. Policy commentators have described these events as part of a “String of Pearls strategy.”

In Europe and the Mediterranean, it is estimated that China now controls about one tenth of the volume of ports. Examples of this include Le Havre and Dunkirk of France, Antwerp and Bruges of Belgium, Noatum port of Spain, Vado port of Italy, Kumport port of Turkey, and -Girate piraeus. A 25-year lease agreement at the Israeli port of Haifa, signed with Shanghai International Port Group of China, has raised concerns in the United States over possible spying, as the port of Haifa is located less than a mile from the US navy.

In South America, China is also increasing its influence on port ownership. In 2015, China Communications Construction Company borrowed $ 120 million from Cuba to help develop its second largest port, Santiago de Cuba. In 2017, CMG of China acquired 90 percent of Brazil’s largest port, TCP Participaccoes SA. In 2019, COSCO signed a $ 225 million contract with Volcan in Peru’s Port of Chancay for 60 percent of the station. In El Salvador, it is alleged that the government will sell La Unión Port in 2022, which may be reserved for Chinese authorities. There are more reports of Chinese involvement in port projects in the Bahamas, Trinidad and Tobago, Panama, Argentina, Chile, and Uruguay.

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Effects of Chinese Maritime shipping Dominance on United States

Interestingly, the United States has also become an investment destination in the Chinese port. Two Chinese businesses hold equity ownership shares in five U.S. ports. However, no company holds the bulk of the budget, or fully operates these American terminals. Two of these ports include CMG purchasing small stakes for French factory terminals in Houston Terminal Link Texas and the South Florida Container Terminal in Miami. The remaining three ports – Seattle, Los Angeles, and Long Beach – were partly owned by COSCO. However, Trump officials want China to relinquish its ownership to the Long Beach port by 2019.

In addition to direct investment in American ports, which remains insignificant, China’s growing dominance in the maritime transport industry is increasing its metals in Washington as Sino-American relations continue to decline. At a recent summit between Biden and Xi, the rift between the United States and China was particularly evident, given the failure of both countries to produce a joint statement after the summit. Decades ago, such declarations were considered official. Moreover, in addition to the campaign to overthrow President Trump and China’s trade war, Biden has omitted many aspects of the Trump-China trade policy.

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Through turbulent relations, China’s growing dominance in the maritime industry could be a source of danger for the United States and other rivals of a developing world. Just as OPEC used oil as a means of profit during the oil crisis in the 1970s, China’s control over the shipping industry has the potential to pose a risk to accessing essential goods. The recent backlog of containers at U.S. ports serves as a strong reminder of the United States’ dependence on supply chains worldwide. Fortunately, as this holiday season approaches, it may be the timely delivery of gifts at risk. Looking to the future, however, the results can be disastrous.

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