German go-ahead for China's Cosco stake in Hamburg port unleashes protest (updated)

Hamburger Hafen und Logistik AG

26/10/2022 15:59

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      Green light for Cosco investment divides lawmakers
    

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      No management or strategic decisions for Cosco
    

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      China's foreign minister: hope for 'pragmatic cooperation'
    

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      Opposition against deal within coalition parties
    

  
 (Adds Cosco Shipping comments in paragraph 13)
    By Andreas Rinke and Jan Schwartz
       BERLIN, Oct 26 (Reuters) - The German cabinet allowed
China's Cosco to buy a stake in a terminal in the country's
largest port on Wednesday in a decision pushed through by
Chancellor Olaf Scholz that triggered unprecedented protest
within the governing coalition.
    With the support of Scholz's Social Democrat-led ministries,
the cabinet approved a 24.9% stake investment by Cosco in one of
logistics firm HHLA's  HHFGn.DE  three terminals in the Hamburg
port.
    The approved investment is less than the initially planned
35% stake that the Chinese shipping giant and HHLA had aimed for
and does not give Cosco any say in management or strategic
decisions. 
    But the painful experience of being too dependent on Russian
gas has changed many politicians' attitude towards strategic
foreign investment. The foreign ministry was so upset over the
approval that it drew up a note on the cabinet meeting
documenting its rejection, Reuters was told by two government
sources.
    The investment "disproportionately expands China's strategic
influence on German and European transport infrastructure as
well as Germany's dependence on China", the document, seen by
Reuters, says. It points to "considerable risks that arise when
elements of the European transport infrastructure are influenced
and controlled by China - while China itself does not allow
Germany to participate in Chinese ports".
    In the event of a crisis, the acquisition would open up the
possibility for China to politically instrumentalise part of
Germany's as well as Europe's critical infrastructure, it says.
The economy ministry and the four ministries led by the liberal
Free Democrats joined in drawing up the note, according to the
sources.
    Scholz, a former mayor of Hamburg, has once again asserted
his will against his coalition partners, the Greens and the Free
Democrats. After pushing through a nuclear power extension
single-handedly last week, the Cosco move fuels discord at home
and among European allies who are against the Chinese investment
and already see Scholz as increasingly isolated.
    Scholz is scheduled to travel to China next week. 
    HHLA WELCOMES DEAL
    HHLA, which is majority-owned by the city of Hamburg and one
of the main users of the port, welcomed the deal.
    "We appreciate that a solution has been found in objective
and constructive talks with the federal government," said Angela
Titzrath, chairwoman of HHLA's executive board. 
    It was working on finding an agreement with Cosco on the new
conditions in a timely manner, she said. 
    With the original 35% deal, the German logistics firm had
wanted to tie its long-standing shipping customer to Hamburg
port in the face of fierce international competition.
    In a filing posted in the Hong Kong stock exchange, Cosco
Shipping Ports Ltd  1199.HK  said it has not received the formal
decision from the German ministry of economics and energy and
will consider the conditions after the ministry has delivered
its decision.
    A German government source told Reuters that the Chinese
company had agreed to the deal.   
    Chinese foreign ministry spokesperson Wang Wenbin, asked
about the deal, said on Wednesday that China hoped "relevant
parties would see pragmatic cooperation between China and
Germany rationally (and) stop gratuitous hype", without giving
further details. 
    Supporters of the HHLA deal say it will allow Hamburg to
keep pace with rival ports that are also vying for Chinese trade
and some of which are partly owned by Cosco.
 (Reporting by Andreas Rinke, Jan Schwartz, Eduardo Baptista,
Paul Carrel; writing by Rachel More, Kirsti Knolle; editing by
Maria Sheahan, Louise Heavens and Nick Macfie)
 ((rachel.more@thomsonreuters.com;))