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Germany agrees on compromise over China port bid

October 26, 2022

The compromise lets China's Cosco buy a smaller stake than planned in the Hamburg port terminal. The widely criticized initial deal would've given Cosco a major stake in the vital port.

COSCO Shipping
Cosco is already the biggest investor in Hamburg's portImage: Clement Mahoudeau/AFP/Getty Images

The German Cabinet agreed on a compromise in the dispute over China's Cosco buying a stake in a Hamburg port terminal, as the Ministry of Economy and Climate Protection shared in a press statement on Wednesday, saying the "reason for the partial prohibition is the existence of a threat to public order and safety."

The compromise allows Chinese shipping giant Cosco to take a stake "below 25%" instead of the initially planned 35%. The initial deal was widely criticized as it would have given Cosco a major stake in Germany's largest port. 

A dispute between German Chancellor Olaf Scholz and several government ministries had ensued over the bid, leading to the negotiation of the newly-announced compromise. 

Germany's Cosco deal: A risky dependency?

Economy Minister Robert Habeck was one of the politicians voicing concerns about Germany selling critical infrastructure to China. But supporters of the deal claim that it will allow the port to stay competitive against others as the race for Chinese trade increases. 

The decision comes as Germany tries to strike a balance between maintaining ties with its biggest trade partner, China, while avoiding heavy reliance on it

Tensions between China and Western countries have deteriorated recently. During a NATO summit last summer, member states declared China as a "security challenge."

Scholz slams criticism of revised deal

Scholz rejected the criticism of his decision to allow China to buy into a container terminal in the port of Hamburg. A government spokeswoman said on Wednesday that the chancellor had made clear that the bid was not about selling the port, but "merely" a stake in a single terminal.

According to the statement, the small shareholding did not open up any strategic opportunities for the Chinese company to exert influence. 

The decision had no connection with the Chancellor's upcoming trip to China, the spokeswoman said. 

A Foreign Ministry spokeswoman said that the ministry, like other departments, had clearly expressed concerns over the decision. 

A spokeswoman for the German Interior Ministry said: "The Cabinet's decision has dispelled all concerns." 

Germany's Foreign Ministry had priorly warned in a Cabinet note seen by Reuters news agency on Wednesday that an investment by Cosco "disproportionately expands China's strategic influence on German and European transport infrastructure as well as Germany's dependence on China."

"On behalf of the Foreign Ministry, I point out the considerable risks that arise when elements of European transport infrastructure are influenced and controlled by China — while China itself does not allow Germany to participate in Chinese ports," the note, brought forward by Europe Minister of State Anna Lührmann, read.

"In this respect, the acquisition of the container terminal does not only have an economic, but especially a geopolitical aspect." 

In case of a crisis, the investment would allow China to possibly instrumentalize part of Germany's – and therefore Europe's – critical infrastructure, the note continued. 

A government official told Reuters that the note had been backed by the Greens and the Free Democrats (FDP), which govern in a coalition with the Social Democrats (SPD), before the Cabinet came to a final decision.

Marcel Fratzscher, the head of the German Institute for Economic Research (DIW) also slammed the proposed compromise.

"The German government is repeating the mistake of many previous federal governments" by prioritizing "short-term economic interests over long-term prosperity and prosperity and stability," he told Reuters news agency.

Sino-German relations in the spotlight

The news of the compromise comes as Scholz prepares to visit China next week.

During Angela Merkel's nearly 16 years as chancellor between 2005 and 2021, Sino-German trade ties flourished, with Merkel often favoring engagement with Beijing rather than confrontation.

Chinese President Xi Jinping meets via video link with German Chancellor Olaf Scholz in Beijing, capital of China, May 9, 2022.
Scholz has been under pressure to ease Germany's reliance on ChinaImage: Yao Dawei/Xinhua/IMAGO

The current coalition government under Scholz, however, has seen some voices calling for a harder stance on Beijing. Foreign Minister Annalena Baerbock, a member of the Green Party, has been particularly keen on calling out China on human rights issues such as the treatment of Uyghur Muslims in Xinjiang.      

los, rmt/es (dpa, Reuters)  

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