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Olaf Scholz supports China, ignores government warnings on Hamburg port deal, report says – POLITICO

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When it comes to the future of Hamburg’s port, German Chancellor Olaf Scholz is accused of siding with China on his government.

An investigation by German regional public broadcasters said on Wednesday that Scholz’s premiership efforts to buy a foothold in a container port in Hamburg by Chinese state-owned shipping giant Cosco ignored warnings from six federal ministries, including Greens Deputy Chancellor Robert. He said that he came and forced him to confirm. Habeck is among fears of risky economic overdependence on Beijing.

Just as Germany has finally grasped the consequences of its energy dependence on Russia, more attention is now being drawn to the depths of the intertwined trade relationship with China that has given Beijing enormous leverage over Berlin.

Under the terms of the Cosco agreement, first agreed in September 2021 and subject to regulatory approval, the company will secure a 35 percent minority stake in the container terminal in Tollerort, one of three such sites within the growing Hamburg complex.

The purchase is part of a broader strategic move by Beijing to seize control over infrastructure critical to the worldwide Belt and Road trade initiative, a network of transport links aimed at connecting China’s factories to rich Western markets.

Cosco already owns shares in Europe’s two largest ports in Rotterdam and Antwerp, controls the port of Piraeus in Athens, and is behind a plan to expand an inland rail terminal at Duisburg, the focal point and confluence of the Ruhr and Rhine rivers. It’s the point for road freight from China’s industrial hubs.

The stake in Hamburg, Europe’s third largest port, is only a piece of the puzzle for Beijing, and many don’t like it. The rationale for promoting Chinese investment is that these ports are preferred by Chinese shippers who take their business there. This leads to a race between Northern European ports to reach an agreement with the Chinese.

Habeck, whose economy ministry is overseeing the review of the deal as part of an investment screening process, has repeatedly said Germany is rethinking its overall trade policy with China.

“I’m leaning on the fact that we don’t allow it,” Habeck told Reuters about the Cosco deal in September.

Habeck’s ministry is trying to put the issue on the agenda of a federal Cabinet meeting to formally oppose Cosco’s port purchase, according to the report released on Thursday.

However, Scholz’s premiership instead requested the ministries to draft a compromise that could be approved as the legal deadline nears the end of October for the government to issue a call.

“The transaction is deemed legally cleared if the government does not take a decision before the end of the time limit set to ban the transaction,” said Kai Neuhaus, a Brussels-based lawyer. and specialist in investment audits for law firm CMS.

This will give Scholz a bit of good news to present during his trip to Beijing scheduled for November 3 and 4.

A government spokesman said the ministry did not comment on ongoing investment review proceedings, citing trade and trade secrets.

port call

Scholz ran Hamburg, one of Germany’s wealthiest states, as mayor for seven years, until 2018, when local trade with China exploded. According to the port operator Hamburger Hafen und Logistik (HHLA), about 30 percent of container goods handled in Hamburg come from or are shipped to China.

Locally, Scholz’s Social Democrats favor the Cosco deal, arguing it would lead to extra investment in the terminal and create jobs.

“This does the city-state of Hamburg a favor above the national interest, in the tradition of church tower or state politics,” said Reinhard Bütikofer, a prominent Green MP, who has long been a hawk on China.

He said the issue was about national security and described the cabinet’s efforts to prevent discussion of the deal as “extraordinary”.

However, HHLA spokesperson Hans-Jörg Heims stressed that China has not bought a stake in the port itself, but instead invested in a part of a company that operates the terminal.

Heims said Cosco, for example, would not have access to internal IT systems and would not own land and would only have one of three general managers.

“They follow token politics,” he said of those who oppose the deal. “I’m just worried about the hundreds of jobs that depend on it.”

no veto

Still, there are serious concerns about the extent to which China’s state-backed companies are involved in critical German infrastructure, which is only part of a discussion involving critical telecom infrastructure.

Earlier this week, Bruno Kahl, head of Germany’s foreign security service, the BND, warned against the country becoming “painfully dependent” on China during the Bundestag committee foreign investment debate.

“We are very, very critical of China’s involvement in critical infrastructure,” Kahl said during the session.

Despite these concerns, HHLA’s Heims said the federal departments of defense and transportation did not decide to veto the investment. While the transport ministry said it would not comment on the matter, the defense ministry did not immediately respond to a request for comment.

The European Commission, which POLITICO previously reported, is also skeptical of the agreement. “does not comment on individual transactions for privacy reasons”.

An immediate argument in favor of the deal is that without Chinese investment, Hamburg would be at a disadvantage against its larger, already partially Chinese North Sea neighbors in attracting business in the future.

“Our rivals Rotterdam and Antwerp will be very pleased with this deal,” said Heims.

Hans von der Burchard contributed to the reporting.