China’s Port Investment are Raising Security Fears: How to Deal With Them

March 01, 2023 • By The UCI Paul Merage School of Business

As China continues to build ports and military bases across the world, U.S. officials are concerned about potential security risks stemming from the expansion.

In the January 25th issue of Barrons, UC Irvine senior lecturer Leonard Lane and UCLA distinguished Professor Christopher Tang seek to solve the issue by providing recommendations to prevent China from gaining control of U.S. ports and to impede the development of military bases. But the co-authors have made sure to maintain balance in their analysis so that global trade is not negatively affected by their suggestions. Lane and Tang also provide an important rundown of China’s worrisome foreign developments.

“We are really interested in this because these ports and terminals, including those owned by Chinese companies, are used for commercial purposes and they play a vital role in global trade,” Lane said. “So disrupting or restricting the operation of those facilities could have a significant impact and consequences that may not be in the interest of any country.”

While the United States, United Kingdom, and European Union have been planning to minimize how dependent they are on Chinese goods, the trade titan has been investing in more than 100 ports in dozens of countries spanning across Southeast Asia, the Middle East, Africa, Europe, the Mediterranean, and the Americas. Lane and Tang believe that this expansion strengthens China’s influence on other nations.

“When 7 of the world’s 10 busiest ports are already in China, additional investment of over 100 foreign ports would certainly provide China’s global dominance in international shipping,” they wrote in the paper.

Lane and Tang note that seaports have been used throughout history to develop economic and military power, so China could eventually use these seaports as military bases for its navel ambitions, which can “pose new threats to the free world.”

U.S. officials have been concerned with China’s establishment of a few military bases in the last several years. The co-authors outlined in their paper that U.S. intelligence initially raised surveillance concerns when China opened a military base in Djibouti next to the Pentagon’s only military base a few years ago. Since then, the U.S. has been concerned with China’s intention to build a naval base in Equatorial Guinea. Also, after Chinese and Cambodian officials broke ground at Ream Naval Base in Cambodia last year, the Biden administration pressured Cambodia to clarify whether this naval base gives the Chinese Navy exclusive access. China did not explain its plans for any of these military bases.

It’s incumbent on the U.S. to take proactive steps to impede the development of military bases around the world. To accomplish this task, Lane and Tang provide three suggestions.

The first recommendation is to utilize the power of the Indo-Pacific Economic Framework for Prosperity launched in May 2021 to bring Cambodia and other Asian countries into the issue. The framework is an economic partnership between the U.S. and several Asian countries, including Japan, Malaysia, Thailand, Singapore, and Vietnam, among others. Backed by the power of the framework, the U.S. can negotiate with Cambodia to ensure the naval base has equal access for other countries.

Another strategic proposal from Lane and Tang includes developing countermeasures for China’s Belt and Road Initiative, which is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in about 150 countries. The authors note that it is already facing setbacks, funding shortfalls and political pushback that has stalled certain projects.  The final suggestion is to form a plan based on the Americas Partnership for Economic Prosperity, which is an agreement announced by Biden last year to drive the Western hemisphere’s economic recovery and growth. This partnership aims to mobilize new investments in the region, but the U.S. can negotiate deals that can preempt China’s infrastructure investments in the future.

The authors conclude that a “smart deployment of U.S. economic influence now would reduce the risk of military confrontation going forward” and hope their suggestions help guide U.S. officials as they respond to China’s unprecedented moves.

“Chris and I have been looking at supply chain issues like this for years Lane said. “We'll be continuing to look at how the Belt Road Initiative, the changing international alliance  landscape and related economic, and political events impact global trade.”