Will China ever stop manipulating its currency?
China's power at sea
The largest deep sea port in the world is Shanghai. China is currently expanding it to include a new section in the sea: Yangshan is about 90 km from the mother port. It is connected to the mainland by the 32 km long Donghai Daqiao Bridge - the longest overseas bridge in the world. The mega-port represents the future of sea trade. In 2020 it should start operating completely and be able to load and unload container ships of all sizes.
Shanghai has been the port with the largest handling volume in the world for years. It is expected to have a total capacity of 35 million container units (TEU, Twenty-foot Equivalent Unit). The "Institute for Shipping Economics and Logistics" expects global container handling growth of six percent by 2020. By then, the annual container throughput should increase to a volume of 900 million TEU worldwide.
Seven of the ten largest container ports in the world are already in China: Qingdao, Shanghai, Hong Kong, Shenzhen, Nigbo, Guangzhou and Tianjin. The Chinese presence on the coasts is congruent with the shipping routes on the world's oceans. For years, China has been systematically building or planning its own ports and renting berths in ports.
A canal through Nicaragua
In Nicaragua, a gigantic canal between the Pacific and Atlantic will soon cut through the country, parallel to the Panama Canal. President Daniel Ortega wants to lift the second poorest country in Latin America out of poverty. Dr. Paul Oquist, Nicaraguan President's Office, assumes that “we can transform our economy from 11.8 billion to an economy of 25 billion. We will double the gross domestic product by the end of the decade. "
In the country, approval for the construction project is high, allegedly between 60 and 80 percent. The canal will be up to 530 meters wide and 278 kilometers long. On his way he leads through Lake Nicaragua. Barrages are intended to compensate for the height difference of over 30 meters that the lake is above sea level. The Chinese multibillionaire Wang Jing and his company for infrastructure development, HKND, are behind the canal project. He signed the secret contract with President Daniel Ortega in 2014. Allegedly it says that HKND can freely dispose of any Nicaraguan soil for 116 years to build the canal, deep-water ports, roads, railways, tourist resorts, etc. Conversely, the contract is not supposed to oblige HKND to anything, not even to build the canal itself.
Protests come from both smallholders and environmental advocates such as Mónica López Baltodano, a staunch Sandinista who is not a member of the FSLN. She doubts that the canal will ever yield taxes for the country and criticizes her government: “Nobody knows the signed agreement. It's kept a secret so that people don't know what's really in it. "
The government of Nicaragua repeatedly emphasizes that the Chinese are an independent businessman from the autonomous Hong Kong who can bear the costs of around 50 billion on their own. But the assumption that private companies in Hong Kong or China are independent of Beijing's plans and influence is considered naive. Even state-owned companies like COSCO Pacific Limited are headquartered in Hong Kong.
COSCO Pacific is the fourth largest service company in the field of container handling in the world, it loads and unloads container ships, e.g. in Piraeus. The operation of berths is an important key for maritime trade. The Hong Kong-based Hutchison Whampoa Limited is one of the world's largest port investors, developers and operators. The company handles 13 percent of the world's container throughput and is the undisputed number 1. COSCO Pacific and Hutchison Whampoa Limited together manage 25 percent of all container goods in the world.
Container ships are growing
According to the insurance company Allianz, the loading capacities of the transport giants have increased by over 1200 percent since 1968. Even the generation of “Ultra Large Container Ships”, including the 16,000 TEU Marco Polo launched in 2012, are too wide for the Panama Canal.
The longest container ship in the world until a few days ago is operating on behalf of the Chinese state-owned company. The CSCL Globe can transport 19,000 TEU, which corresponds to over a million washing machines or 120 million pairs of shoes. Future ships should be able to load up to 30,000 TEU.
The state-owned company CSCL is currently in eighth place in the world rankings for shipping companies. If you add the Chinese state speech company COSCO, China is already in fourth place. The Middle Kingdom could easily advance to first place by 2020 if it merged the state-owned China State Shipbuilding Corporation and China Shipbuilding Industry Corporation. But Beijing does not want to unnecessarily emphasize its power. The steadily growing ship sizes are causing building movements around the world. Malte Siegert from the Hamburg Nature Conservation Union names the shipping companies as profiteers. "But the economic consequences for the adaptation of the hinterland structure, the adaptation of the terminals, and also for the ecological impacts, that will be borne by the port cities and ultimately, of course, always by the consumer."
Plans in Latin America
The Nicaragua Canal plays a central role in China's projects. The Middle Kingdom plans to expand trade relations with Latin America and invest 500 billion dollars. So far, the routes from Latin America to East Asia have all run through the Panama Canal, which is politically unsafe for China. Although it was returned to Panama by the USA in 2000, experts still consider the USA to be the real masters of this vital waterway, which it could close at any time. Beijing does not want to take this risk.
China has become increasingly involved in Latin America since the continent slipped away politically from the USA and, as a world power, is securing resources and raw materials piece by piece. However, with one crucial difference: “The Chinese did not come to Nicaragua with weapons like the North Americans did to Latin America. The Chinese have come to do business with us «, said the representative of the Sandinista youth Erick Ríos.
In a forecast by the auditing company PricewaterhouseCoopers about the 25 most important trade relationships in 2030, China is mentioned 18 times, including in the first five places. In 2030, the Middle Kingdom will overtake the USA in world trade. In addition, there is membership in the community of the BRICS countries: Russia, China, India, Brazil and South Africa represent almost half of humanity. A Panama Canal controlled by the USA is also a danger for them, after all, over 14,000 ships from all over the world pass through the eye of the needle every year, which is around five percent of sea freight traffic.
So-called logistics hubs are an important logistical element of global trade flows at sea. These are deep-water ports that can be called by the gigantic container ships that navigate the overseas routes. There the containers are temporarily stored and later loaded onto smaller feeder ships, which take over the regional distribution of the goods. One such hub was inaugurated in Cuba in 2014 - the port of Mariel. Brazil is officially the sole lender of the 600 million dollars required, but China is also repeatedly mentioned as the alleged lender.
The Mariel project is very long-term. The deputy director Ricardo Concepción explains what potential there is in Mariel: “We only built in the small bay 18 kilometers from the capital Havana. But only 20 kilometers further there is a bay more than four times larger (Bahía de Cabañas), which could also be expanded. In this way we will be able to adapt the port bit by bit to the needs and developments of the world economy and the global flow of goods in the future.
Mariel has a huge special economic zone that is supposed to offer foreign companies cheap production opportunities. Here, too, Beijing has big plans; it is considered a major investor and interested party. Labor is now often cheaper in Latin America than in China itself. The current thaw between the USA and Cuba could have further long-term positive consequences for maritime trade with the socialist island.
The "maritime silk road"
On the other side of the globe, China is also building a gigantic port right next to the Sri Lankan town of Hambantota. The deep-water port is to act as a logistics hub for the region and serve the trade routes to the Arab region and Africa. The most important oil-producing countries are located there, and the port is used as an interim storage facility. A natural gas refinery and fuel storage facility with a capacity of 80,000 tons are planned. Fossil fuels are vital to China. The country already consumes a tenth of the world's annual oil production. From Sri Lanka, China can call at ports in the region under his influence, in the Maldives, Bangladesh, Pakistan, Myanmar, Indonesia, Cambodia, Kenya and Djibouti. Beijing helped build all of these ports or is planning them for the future. Contracts ensure long-term use.
In total, the Chinese have planned three construction phases in Sri Lanka. Phase 1 of the construction work has been completed, the port facilities are functional, the fuel stores are in operation. So far, mainly Japanese cars have been redistributed. In the future there should be 15,000 cars from South Korea, China and India. In 2023, the port capacity is expected to reach 20 million TEU.
Construction is currently in phase 2. The walls of this part of the harbor are around 22 meters high, measuring around 800 meters by 1.3 kilometers, which corresponds to around 130 football fields. But that's just a small berth on the side. In phase 3, a basin that is six times larger will be created. In total, the deep-water port will cover 16 square kilometers and provide work for 50,000 people. It will be the largest man-made port in the world and will cost around $ 1.7 billion.
The incredible dimension is explained by the location of the port. The so-called »maritime silk road«, which is considered to be China's main artery, runs past him. It starts in Hamburg and ends in China. On its way it leads through the North Sea, the Atlantic, Gibraltar, the Mediterranean Sea, the Suez Canal, over the Indian Ocean, past Sri Lanka, through the Strait of Malacca, the South China Sea to the coast of China. The European Union imports 18 percent of all goods from the Middle Kingdom. Beijing and Europe are important trading partners.
That is why China has signed long-term contracts along this sea route that enable access to the sea infrastructure, for example with the ports in Marseille, Naples and Piraeus. A new deep-sea port is planned in the Crimea; the builder is said to be Wang Jing, who also wants to build the canal through Nicaragua. In Egypt, China is planning a logistics center, in southern Thailand the Chinese strategists would like to build an approximately 100 km long canal through the "Isthmus of Kra". It would shorten the sea route of the "Maritime Silk Road" by around 1,000 kilometers, and thus by five to seven days of transport time.
Subtle pressure on the countries
Beijing is trying to expand its influence to Hamburg. Germany and China are planning to increase their trade volume to 200 billion euros annually. The Middle Kingdom is Germany's third most important trading partner worldwide.
In Europe, the port of Hamburg is the second largest with nine million container units, only Rotterdam in the Netherlands handles more. Antwerp in Belgium ranks third. China sees Germany as the “gateway to Europe”. This is one of the reasons why Beijing finally wants to have a say in the Port of Hamburg and has been pushing for years to buy. But the Hanseatic people put up what Malte Siegert welcomes from the Naturschutzbund: “Hamburg's strategy is that they say they want to be in control of how they manage their entire port operations. And that is also a good thing, because it is really in the public interest that large shipping companies, including Chinese shipping companies, do not tell the port cities how to conduct their policies here. "
China has another concern in Hamburg: the deepening of the Elbe. So far, the huge container ships have only been able to enter and leave the port at high tide, and then not even be fully loaded. The deepening of the Elbe would result in huge costs for the taxpayer. Dredging is already costing 100 million euros a year. There are also significant ecological disadvantages. The salt water border could shift towards the city, so that the fruit growers in the "old country" would get too salty water. In addition, the erosion of the bank areas would increase due to the stronger bow waves of large container ships. On the side of the Elbe, miles of evasive pockets would have to be dug into the banks so that the container giants can even pass each other.
There is an alternative: the JadeWeserPort near Wilhelmshaven. All container ships can call at the only German deep-water port fully loaded. Opened in 2012, it covers an area of 390 hectares, cost: around one billion euros. Theoretically, 2.7 million standard containers could be handled here per year. In fact, it was just 76,200 in 2013. This hub is intended as a hub for Eastern Europe, Scandinavia and Hamburg. But reloading a container one more time means slightly higher costs. So far the Chinese are not willing to pay this surcharge. And because no law enforces them, the container giants will continue to head for Hamburg. The German taxpayer once financed the JadeWeserPort and is now supposed to pay for the deepening of the Elbe as well.
By 2030, the Germany-China trade route will become the fifth most important in the world. Which is why experts assume that even if the Elbe were not dredged, there would be no job losses in the port. The city-state is optimally networked with the hinterland, which is completely missing in Wilhelmshafen. Hamburg has the second largest freight yard in the world. As a transshipment point for goods from the sea to the mainland, Hamburg will not lose its importance anytime soon.
Of the 20 largest container ports, nine are in China, five in Asia, two in the USA and three in Europe. But the gap is huge. Rotterdam is currently massively expanding its capacities, but will still be ten million container units behind Shanghai in 2020. Therefore, Rotterdam plans to further increase its capacity to a total throughput of 30 million in 2035.
With its mega-ships, China ensures that countries around the world have to invest money in order to keep up. But Beijing also offers the alternative: it invests in logistics and is allowed to use this for the long term. This strategy has worked successfully in African countries. Chinese companies are building and planning at numerous ports such as in Cameroon and Namibia.
Is China a threat to the world?
The logistical presence of China with ports or services around the globe can be interpreted negatively. Of course, it theoretically gives Beijing the opportunity to use this infrastructure for military purposes. But nothing indicates it at the moment. China has not started wars for over 100 years. Rather, the country wants to secure its own interests and advance economically. In the past 15 years alone, more than 67 million people have been lifted out of poverty. Today, around 200 to 300 million people in China belong to the middle class. This is why the rural exodus is enormous, over 350 million new homes will have to be built in the next few years - that is, in comparison, more homes than the US population.
It looks like China has other concerns right now than threatening anyone militarily. But many Western politicians do not trust Beijing on principle. But perhaps economic interlocking will ensure that hostile tones are softened. A Chinese proverb says: "One more friend, one more way."
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