Hamburg’s China fudge adds another notch to Xi’s belt

THE German government’s agreement to sell a stake of less than 25 per cent in one of Hamburg’s port terminals to a state-owned Chinese company is a face-saving compromise that enables Chancellor Olaf Scholz to travel to Beijing bearing at least one gift next week. The deal signals openness to investment from the nation’s biggest trading partner while capping its influence. What’s remarkable is that handing over even a measure of control of such strategic infrastructure was ever on the table to begin with.

After the Ukraine invasion and the cutting of the Russian gas pipeline to Europe, one might think that German officials would have lost their enthusiasm for economic dependence on unpredictable autocratic regimes. Not so for Scholz, at least. His support for the sale of a 35 per cent stake to Cosco Shipping Holdings Co put him at odds with six members of his own cabinet – including ministers in charge of the economy, foreign affairs, finance, transport and defence – as well as the security services. The investment is a qualified win for Beijing, adding another node to the expanding global network of ports and other infrastructure interests known as the Belt and Road Initiative, a signature project for Chinese leader Xi Jinping.

The initial proposal would have given state-owned Cosco one of three managing directors at the port terminal, which is one of four at Hamburg Hafen and Logistik AG, or HHLA. The approved sale of 24.9 per cent is just below the level that would give the Chinese company minority blocking rights. Moreover, Cosco is prohibited from acquiring any more above this threshold. This reduces the acquisition to a purely financial holding, Germany’s economic ministry said in a statement. The compromise “is what we would call a ‘fudge’ in British politics”, said Andreas Fulda, a political scientist who studies EU-China relations at the University of Nottingham.