Cosco participation in Hamburg: the end of the China euphoria

China’s planned entry into the port of Hamburg shows how deep the gap in the government’s dealings with Beijing is. A clear course is still missing. After research by NDR and WDR Chinese investments are now being scrutinized more strictly.

This is certainly not how the Hamburg port operator had imagined its annual balance sheet. In a few days, the operator of the most important German port, HHLA, will present its figures for 2022. It will probably be about high energy costs, the economic downturn and a result that one would probably have wished for higher. Above all, however, one thing is clear: one of the most important deals of the past year is still up in the air.

The entry of the Chinese state-owned company Cosco at the Hamburg container terminal has not been completed almost two years after the start of negotiations. At the beginning of the year, HHLA said optimistically that they had agreed on “specific requirements” and that only the final details were being clarified.

Cosco, however, sounded more cautious: not all the conditions for entry had been met. There is no guarantee. It is still being discussed with the Federal Ministry of Economics (BMWK).

Government examines Chinese investments more intensively

The federal government seems determined to reduce China’s influence in Germany. The motto is less dependency. According to information from WDR and NDR the federal government is obviously already examining planned Chinese investments in Germany much more intensively.

Accordingly, the Ministry of Economics has currently started a so-called in-depth examination procedure for eleven foreign direct investments that have been applied for. Ten buyers come from China, one from Russia. The government sees a risk that public security or order in the Federal Republic could be adversely affected. At the end of the day, the deal can be approved – or denied.

In the case of Cosco, the Federal Ministry of Economics only responded to multiple inquiries that there was no new situation. The examination, in which several ministries and authorities are involved, is therefore not yet complete. HHLA did not want to comment on the confidential talks, and Cosco did not initially respond to a request. Communication is still very reserved. This is probably also due to the fact that there is still no sign of a common China course within the federal government.

Chinese entry as a security risk

The conflict in the traffic light coalition escalated in autumn when the chancellery wanted to push through Cosco’s entry against great resistance within the government. SPD-led ministries, FDP, but above all the Greens in the Ministry of Economic Affairs and the Foreign Office had tried to stop the chancellor’s office.

The internal assessment: “A ban on the acquisition is necessary in order to prevent Germany’s economic dependence on China from increasing, in particular Cosco’s greater influence on port operations and merchant shipping in Germany.” The objections were in vain. The result was a so-called partial ban: the entry of the Chinese would have to be smaller – since then there has been talk of a possible minority stake of 24.9 percent in the Hamburg terminal.

In the government, Economics Minister Robert Habeck and Foreign Minister Annalena Baerbock in particular are in favor of a stricter course against China, which is no longer seen only as one of the most important economic and trading partners of the Federal Republic, but increasingly as an opponent and a possible security risk.

For example, the Federal Foreign Office has drawn up a draft for a China strategy that contains clear words for dealing with Xi Jingping’s regime: more values, less economy. In key industrial areas, for example, Germany and the entire EU should “not become dependent on technological advances in third countries that do not share our values”.

Beijing then spoke of “lies and rumours”. The Chancellery, on the other hand, is said to want to lay down more general guidelines for the China course – without emphasizing the separating and particularly controversial aspects.

Stricter treatment of China

Away from the discussion about wording in the China or security strategy, the government has recently hit pegs: startled by the debate about the port of Hamburg, the coalition changed its position on the sale of the Dortmund chip manufacturer Elmos to a Chinese investor – and is going with the chip Sovereignty on a confrontational course. There had not been a similar retreat until then. According to its own statements, the leading Ministry of Economic Affairs ordered restrictive measures such as a ban in eight cases last year.

So what was long dismissed as American “ghost hunting” is increasingly being followed by the federal government. For years, the federal government under Angela Merkel hesitated to exclude China from the expansion of the fast 5G mobile network. But now the Federal Ministry of the Interior has decided that components from the manufacturers Huawei and ZTE must be removed from the German network.

The social media app TikTok is also increasingly seen as a risk. It’s about possible disinformation and software gaps that could be used by the Chinese parent company. Gradually, numerous countries are already banning the use of the apps, at least on the work cell phones of ministries and authorities.

European China strategy required

The deputy leader of the Greens, Konstantin von Notz, supports the government’s steps: “Those who take the turning point seriously must ensure as quickly as possible that the effective protection of the lifelines of our democracy is strengthened, political responsibilities are clarified and dependencies reduced,” says Notz, who is also the chairman of the Parliamentary Oversight Committee.

China poses a particular challenge: “Our security authorities warn very urgently against espionage and strategic takeovers by Chinese companies in Germany and Europe.” The “necessary political sensitivity was lacking” for too long.

However, there is criticism from the opposition that the government is still missing a common course: “China is increasingly challenging us in many policy areas,” says Stefan Rouenhoff, an economic expert from the Union faction. According to the CDU politician, the traffic light must “finally put a plan on the table for dealing with China”. One makes “naive” decisions – and underestimates China’s strategic approach “considerably”. Rouenhoff calls for much closer coordination at European level.

Critical Infrastructure Protection Act

The government intends to present a draft law for an umbrella law to protect critical infrastructure (Kritis) soon. This should define exactly which areas need to be protected and how – and who is responsible for it. One thing is clear: the number of facilities will increase significantly. An example of this is the Hamburg container terminal in Tollerort. So far it has not been considered a criticism. That had caused horror even in government circles last year – and will probably be reassessed soon.