By Eric Vandenbroeck and co-workers

China's Port Power

Over the past several years, U.S. national security officials have focused intensely on China’s growing military power. Having not faced such a powerful challenger since the collapse of the Soviet Union, Washington now describes Beijing, as the U.S. Annual Threat Assessment put it in February, as a “near-peer competitor.” For the U.S. military, China has also become the “pacing challenge,” the benchmark for how fast and far it must adjust to provide adequate defense in a more competitive international system.

Yet the U.S. defense strategy appears poorly calibrated to China's central challenges. The breakneck modernization of the People’s Liberation Army (PLA), showcased in its impressive blue-water navy and increasingly lethal rocket forces, obscures another vital foundation of China’s global power projection: its economic position. Not only is China the largest trading partner of many countries, but it also now provides much of the critical infrastructure that enables international trade. This controlling influence is especially pronounced in maritime transportation, where Chinese firms with close links to Beijing have become leaders in financing, designing, building, operating, and owning global port terminals.

This maritime network has crucial implications for China’s power projection. In terms of its military, Beijing will not be able to duplicate Washington’s global posture. Unlike the United States, China cannot maintain forward-deployed forces that operate from a network of overseas bases around the globe. The PLA established its first foreign military base in Djibouti in 2017. Six years on, despite significant efforts, Beijing has yet to stand up another one. Instead, it has quietly become a “pier competitor” by leveraging the dual civilian-military uses of Chinese firms’ extensive international ocean port infrastructure network to buttress its armed forces' reach.

 

From Containers To Warships

Chinese companies now own or operate terminals in nearly one hundred commercial ports spanning every central world region. The primary business for China’s port network remains international trade, but this critical infrastructure also supports the global operations of the PLA. Of course, commercial port facilities are not typically designed to enable high-end military capabilities. But virtually any commercial port can be employed to serve a range of military missions—and China has begun to do precisely that.

For example, our research has shown an emerging pattern of PLA Navy (PLAN) warships regularly using dozens of overseas terminals owned and operated by Chinese companies. Chinese military vessels show the flag at these ports for diplomacy, refueling, resupply, and even undergo specialized maintenance and repairs. Among the facilities used for such purposes are ports in Singapore; Dar es Salaam, Tanzania; and Piraeus, Greece. And China’s commercial port network already provides logistics and intelligence support to sustain the growing range of PLA missions far from Chinese shores.

First and foremost, Beijing’s global port expansion is an economic phenomenon primarily driven by commercial factors. More than 90 percent of China’s merchandise trade is seaborne—significantly exceeding the global average of 80 percent. Ocean ports around the globe are essential conduits for China’s immense imports of energy, minerals, agriculture, and other global commodities. Modern container terminals and mega container ships facilitate the export of huge volumes of Chinese-manufactured goods. The centrality of international trade to China’s economic development model charted Beijing’s course to a commanding position in the global maritime transportation industry.

According to data from Drewry Maritime Research, as of 2022, Chinese firms owned or operated one or more terminals at 36 of the world’s top 100 container ports. An additional 25 are on the Chinese mainland, establishing China’s presence in 61 percent of the world’s most active international shipping hubs. Mainland China itself hosts eight of the world’s ten largest ports by total cargo tonnage and seven of the ten largest ports by throughput. By the end of 2022, Chinese firms had acquired ownership and operational stakes in 95 ports in 53 countries, spanning every continent except Antarctica.

But strategic and economic priorities have motivated China’s global port push. Beginning in the late 1990s, the Chinese Communist Party made establishing a strong position in international markets and natural resources a central foreign policy objective, offering incentives and material support for Chinese firms to expand rapidly in ports and maritime transportation. In 2013, Chinese President Xi Jinping rebranded and amplified these efforts by launching the Belt and Road Initiative, a global campaign to build connections between China and the world through trade, investment, and infrastructure. These policies helped Chinese enterprises in the port sector grow from purely domestic players to global industry leaders.

For Beijing, the factors that make ports commercially attractive—proximity to key markets and resources, major shipping lanes, and maritime chokepoints—also make them valuable for the projection of naval power. While Chinese firms have sometimes sustained long-term projects with little evident commercial merits, such as the Gwadar port in Pakistan and the Hambantota port in Sri Lanka, they have also pursued other projects with clear market logic and negligible potential for overt military use, such as the port of Los Angeles. In most cases, however, commercial and strategic priorities are present: international trade is vital to national welfare, and ports are necessary for international trade. Thus, in its 2015 national military strategy, the Chinese government gave the PLA the “strategic task” of protecting these overseas interests and trade flows.

Commercial ports have become essential logistics platforms for the PLA’s global operations. At these Chinese-owned and Chinese-operated facilities, navy ships can replenish specialized petroleum, oils, and lubricants; resupply military materiel, equipment, and personnel; and even undergo maintenance and repair in some facilities. Overseas port facilities likely augment Beijing’s intelligence capabilities because Chinese terminal operators gain proprietary information about ship movements and trade transactions. These aggregated data are even more valuable when military cargoes and activities in port are monitored. Because Chinese-owned ports are frequently co-located with host nations’ military bases—like at Haifa, in Israel—their commercial terminals offer convenient sites to observe other militaries’ operational routines, personnel, requirements, and movements.

However, the extent to which the PLA could operate effectively from China’s overseas commercial port network in wartime is likely limited. Such military use would also implicate the host country, potentially turning it into a belligerent. And since China lacks military alliances and defense agreements with host countries, it is unlikely that the PLA would depend on dual-use port facilities in the event of a conflict. The lack of such formal security commitments makes China less likely to intervene in overseas disputes, diminishing the need for dedicated combat-ready platforms.

But the peacetime military power that PLA navy vessels project through China’s global port network is already reshaping the international security landscape. The PLA’s sustained military presence in strategically important locations may force other navies to alter their force postures and routines, influence global perceptions of China’s military capabilities, and potentially deter other states from challenging China to protect their economic assets and interests. Therefore, it is crucial to understand the nature and extent of China’s port activity and how it serves Beijing’s interests.

 

Lifelines And Chokepoints

Chinese firms now own and operate port terminals on every continent and significant ocean. This network is densest along the commercial sea lanes connecting China to natural resource imports from the Middle East and Africa and its major export markets in the Mediterranean. Notably, over half of the foreign ports in which a Chinese company has a stake are located along the maritime route running from coastal China through the South China Sea and the Strait of Malacca across the Indian Ocean, linking to the Persian Gulf or channeling through the Red Sea and Suez Canal into the Mediterranean Sea.

PLA and industry analysts call this central east–west sea line of communication China’s “maritime lifeline” because it links China to its largest European export market and natural resource imports from the Persian Gulf and Africa. The Chinese government has called securing its supply lines along this route a “strategic task” that the PLA must fulfill—but without access to the specialized military bases typically required for extended out-of-area deployments. Over half of China’s overseas port projects—57 percent—are located close to major maritime chokepoints such as the Strait of Hormuz and Malacca. The Chinese company–run port facilities spanning the globe position the Chinese navy to surveil and potentially deny naval and commercial flows between the world’s major bodies of water.

The military access that the PLA gains from these ports is crucial to its ability to protect China’s trade interests abroad. Circuitous maritime routes connecting coastal China to the world’s major markets and military theaters mean the Chinese navy needs local port facilities to operate far out of the area. For Beijing, using fixed terminal locations controlled by trusted agents with known technical characteristics offers far more security and reliability than ad hoc calls at friendly ports.

Of course, the ascendance of Chinese commercial firms in the global port industry does not necessarily equal more excellent power projection for the Chinese military. Several countries, including U.S. allies and partners such as France and Japan, own and operate large networks of ports and shipping lines worldwide. What makes China’s position unique, however, is the Chinese Communist Party’s domination of China’s political-economic system and its ability to impose its security goals on the conduct of firms at home and abroad. To this end, Beijing has explicitly tried to leverage Chinese firms’ commercial port networks better to serve China’s broader foreign policy.

The Chinese government has multiple ways to exert influence over Chinese companies abroad. At the organizational level, it can do this through state ownership. State-owned enterprises (SOEs) are highly responsive to Beijing’s direction because the state is their primary—and in some cases sole—shareholder. Although Beijing guides privately owned and state-owned firms via government subsidies, extralegal control, and executives’ membership in political bodies, ownership remains a singularly powerful lever of party-state influence. Notably, in the port sector, the concentration of Chinese ownership in just three conglomerates has given Beijing particular leverage. COSCO Shipping Ports, China Merchants Port (CMPort), and Hutchison Ports (Hutchison) now account for nearly 80 percent of China’s overseas port holdings. Both a central SOE and a dynamic global transport and logistics player, COSCO is likely subject to the most direct influence from Beijing of these big-three Chinese firms. CMPort—which has pursued some of the most ambitious and conspicuous Chinese port developments, such as in Djibouti and Hambantota—is owned by the central government but based in Hong Kong. Hutchison is also headquartered in Hong Kong and is the privately held subsidiary of the conglomerate CK Hutchison; in recent years, however, it has lost much of its relative autonomy from Beijing.

Beijing can also exercise influence over these companies through personnel appointments and membership in party committees; for SOEs like COSCO and China Merchants Group, the Chinese Communist Party appoints their top executives—board chairman, party secretary, and general manager. The state also uses joint appointments, like that of board chairman and party secretary, whereby a single person simultaneously holds top managerial and party leadership posts. The logic is simple: control the leader, and manage the firm. Company party committees can also shape corporate behavior through their authority to discuss significant decisions—including important firm activities or matters involving national security—before they go to the board of directors for final determination.

A growing body of Chinese law and regulations requires Chinese companies to make their assets available for military use. This includes defense mobilization and transportation laws and regulations directly authorizing military use of private holdings. Chinese authorities have further required Chinese firms to build and maintain infrastructure and workforces that can accommodate requests for military utilization. The National Defense Mobilization Law, the National Defense Transportation Law, and associated regulations clearly express the party-state’s intent to employ civilian resources for military purposes.

Chinese law also mandates that certain civilian assets be maintained and made available to the PLA if the government orders military mobilization. For example, Article 4 of the 2010 Defense Mobilization Law establishes “the principles of combining civil with the military, peacetime production with wartime production, and embedding the military in civilian affairs.” Article 36 of the 2017 Defense Transportation Law further stipulates that Chinese firms can be required to support “long-distance and large-scale defense transportation.” Other regulations and industry measures complement this national legislation, requiring civilian port equipment, roads, and facilities to meet military engineering standards.

Additionally, since 2015, Beijing has undertaken sweeping military reforms that have integrated civilian assets and facilities into the PLA’s operational routine. Military commanders are authorized to engage directly with transport enterprises about their overseas investments, use their facilities to pre-position resources, manage specialized parts, fuels, and potentially munitions, and expropriate firm assets if necessary for military operations. The concentration of China’s overseas port facilities in a small handful of Chinese firms facilitates this process.

 

Our Man In Hambantota

For overseas port assets to be strategically valuable to China, Chinese firms must first acquire and exercise some control over them. Majority stakes or sole ownership of terminal leases or concessions gives Chinese firms the most discretion over how ports are used. A Chinese firm is the majority shareholder in at least one terminal at 55 of 95 overseas ports with Chinese company involvement, and 24 of those are wholly owned. With majority or sole ownership, the Chinese firm’s management can prioritize certain vessels and cargos and determine the availability of fuels, parts, and pier-side equipment.

More extensive military use is possible when Chinese firms have operational control of an entire commercial port. In some 29 overseas ports, Chinese firms operate all terminals—for example, in Hambantota, Sri Lanka, and Kribi, Cameroon. From a strategic perspective, full operational control positions the Chinese firm to determine the development of the port complex as a whole, limit or exclude certain vessels from its use, and even support naval operations at the expense of commercial activity. Exact concession terms are closely held and vary widely across jurisdictions, but such control generally confers significant discretion over day-to-day facility use.

Existing port facilities vary in the degree to which they meet military standards. Still, those under the most significant levels of Chinese control are often the best suited for military use. For example, COSCO’s majority ownership of the Piraeus Port Authority, in Greece, since 2016, has enabled it to direct the development of the whole complex, including warehousing and shipyards as well as bulk, container, and roll-on/roll-off terminals. Such infrastructure upgrades make these facilities more useful to naval vessels and enable Chinese warships to make technical stops for repairs and maintenance. PLA forces may not have many dedicated bases, but they are making intensive use of commercial facilities to sustain global deployments and support more sophisticated overseas operations.

Although individual ports are essential, their strategic value to Beijing derives, above all, from their networked nature. For example, by coordinating among multiple Chinese company-owned terminals, the PLA can sustain military operations across a broad geographic area. Such coordination is even more readily achieved within a single company, which can directly manage port calls, pier space, warehousing, and other services across its terminal portfolio. The integrated transportation capabilities of large state-owned conglomerates like COSCO thus give the PLA a nearly complete logistics solution. Even though these firms’ commercial networks are not directly under PLA command, Beijing’s ultimate authority renders their assets reliable and ready for use.

As China’s interests expand around the globe, so, too, does Beijing’s imperative to protect them. In 2019, Chinese defense officials reported that China had 40,000 enterprises in foreign jurisdictions, overseas investments exceeding $7 trillion, over one million citizens working overseas, and 140 million more traveling abroad yearly. From the present crisis in Sudan to Russia’s invasion of Ukraine to the COVID-19 pandemic, the list of contingencies threatening China’s citizens, assets, and international trade continues to grow. Faced with a dearth of overseas bases, Chinese military planners have come to depend on China’s commercial port network to protect vulnerable interests abroad. According to Deng Xianwu, captain of the PLAN amphibious transport dock vessel Changbai Shan, “as long as there are Chinese companies, there is a guaranteed forward transportation support point for warships.”

Overseas ports give China valuable logistics and intelligence capabilities at a suitable material and geopolitical cost. In peacetime, these ports' support functions may be sufficient for the PLA to protect China’s economic interests abroad. In wartime, their plausible use would be pretty limited—but so, too, is the PLA’s warfighting potential in theaters outside China’s immediate periphery. Remote forward bases are of little direct value for the potential conflicts the PLA might be called upon to fight: an invasion of Taiwan, another border war with India, or a third battle with Vietnam in the South China Sea. For now and for the foreseeable future, Beijing does not likely face a strategic imperative to project hard combat power beyond these nearby theaters.

 

A Different Path To Global Power

China’s network of overseas commercial ports has already produced a novel form of power projection. Looking to the future, the PLA focuses on how these ports can support its growing repertoire of expeditionary operations. Despite a lull in port calls during the COVID-19 pandemic, Chinese forces continue to employ China’s port assets for noncombat functions like logistics and intelligence.

But should Beijing elect to project high-end combat power through commercial ports, it will face stiff headwinds. Chinese companies' control over ports in nonallied foreign jurisdictions is hardly secure under wartime or crisis conditions. China’s power will remain constrained by host country authorities and vulnerable to foreign military forces. Ports themselves are fixed targets and have little protection from directed strikes. Mining or scuttling even a single vessel in an approach channel could render an entire port inoperable. Further, a host government might suspend port operations or even move to seize or nationalize Chinese facilities if conflict breaks out. There are numerous foreseeable and significant drawbacks to projecting combat power from commercial ports, so the PLA will almost surely continue its efforts to establish more dedicated overseas bases to meet high-end contingencies.

China has demonstrated that the familiar Anglo-American power projection model through overseas military bases is not the only pathway to establishing a global military presence. Beijing is capable and willing to project power from overseas commercial ports. Chinese companies now own and operate a vast portfolio of terminals worldwide, and these assets are highly concentrated under the control of a few key players subject to multiple mechanisms of party-state influence. And China’s continuing expansion in the global ports and maritime transportation industry shows that few countries have been willing to block Chinese firms from operating or acquiring these critical infrastructure assets, despite known security risks. As China seeks greater commercial and military advantage across the world’s oceans, its expansive global network of commercial ports reflects and amplifies its growing power.

 

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