Vineet Ravindran asked: How does China benefit from Hambantota and similar Chinese-owned ports in other countries? Does the host country lose its sovereignty over the port?

Abhay Kumar Singh replies: Decades of economic growth and government prioritisation have enabled China to position itself at the nexus of global maritime trade. Today, China is home to more shipping ports than any other country, including seven of the 10 busiest ports in the world. In addition, China owns over 100 ports in approximately 63 countries.

The Indian Ocean Region (IOR) accounts for 80 per cent of China’s energy imports and is essential for China’s trade activities. Ports, in this context, have become important sites of strategic investments for China. For the past three decades, Chinese investment and maritime infrastructure construction activity in the IOR has increased. At present, there are nearly 17 port projects in the IOR which have some degree of Chinese involvement. Major examples of Chinese port expansion include a 99-year lease at the Hambantota Port in Sri Lanka, a 40-year lease at the Gwadar Port in Pakistan and a $350 million investment in the Port of Djibouti. In 2018, the China Harbor Engineering Company (CHEC) started construction on a port terminal at the Sokhna Port in Egypt, near the Suez Canal, a major trade chokepoint. In Europe and the Mediterranean, it is estimated that China now controls almost one-tenth of the port capacity.

Over 80 per cent of China’s overseas port terminals are owned by the “big three” terminal operators: China Ocean Shipping Company (COSCO), China Merchants Group (CMG), and CK Hutchison Holdings. The first two are state-owned enterprises, while CK Hutchison is a private company based in Hong Kong with close ties to mainland China.

China experts believe that establishing ports in geo-strategically important countries, including those that are located near maritime chokepoints, are central to Beijing’s global strategy. These port linkages allow Beijing to exert political influence not only in the country hosting the port but, in many cases, in the surrounding countries as well. In other words, seaports are a critical enabler for China's bid for commercial, diplomatic, and military influence across global maritime routes.

China has already constructed a military base in Djibouti. There are also persistent concerns that Chinese-built ports, such as Hambantota and Gwadar, could potentially be used to host the Chinese military, particularly since these ports have been leased to a Chinese company.

However, it needs to be noted that these lease agreements are similar to the leasing agreement of any commercial property, which allows the lessee to use premises for the agreed terms of usage without any claim over ownership rights of the leased property.

In other words, host countries continue to exercise ownership rights and complete sovereign rights over leased ports. Further, the operation of the leased port would remain subject to the specified terms of the lease, and it does not assure guaranteed access to military vessels even during peacetime unless specified in the agreement. For example, Djibouti has allowed China to use its Doraleh Port for military logistics. However, Sri Lanka has specified that military vessels will be allowed into the Hambantota Port only with government approval.

Posted on 14 October 2022

Views expressed are of the expert and do not necessarily reflect the views of the Manohar Parrikar IDSA or the Government of India.