German coalition divided over sale of port terminal stake to China’s Cosco

A row has broken out in the German government over whether to let Cosco, the Chinese shipping conglomerate, take a stake in a Hamburg container terminal, with chancellor Olaf Scholz in favour and several ministries opposed on security grounds.

Cosco Shipping Ports last year agreed to buy 35 per cent of Tollerort, a container terminal in Hamburg, from logistics company HHLA for €65mn.

But the economy ministry tried to block the deal on the grounds that the terminal was part of Germany’s “critical infrastructure” and should not be owned by foreign rivals. Other ministries, including defence, foreign and interior, also opposed the sale.

According to German press reports on Thursday, the chancellery then asked the ministries to seek a compromise that would allow the deal to go through.

But Scholz’s stance on the issue has created tensions with his coalition partners, the Greens and Free Democrats (FDP). “The Chinese Communist party must not have access to our country’s critical infrastructure,” Bijan Djir-Sarai, the FDP’s general secretary, tweeted. “We shouldn’t be naive about China’s rulers. The hard-nosed power interests China pursues are not in our interest.”

Cosco Shipping Ports is a Hong Kong-listed subsidiary of the state-owned company China Cosco Shipping Corporation, whose subsidiaries also provide support to China’s navy.

“We shouldn’t repeat the mistakes of the past and again make ourselves so dependent on a country that they can blackmail us,” Katharina Dröge, leader of the Greens in the Bundestag, told the DPA agency on Thursday in reference to Germany’s energy dependency on Russia.

The argument over the terminal comes at a time when Germany is reassessing its relationship with China, amid concerns that it is too exposed to its top trading partner. Volkswagen relies on the country for at least half of its annual net profits.

The Greens have long raised concerns over China’s authoritarian drift under President Xi Jinping and its human rights abuses in Xinjiang.

Last month, economy minister Robert Habeck, who is a Green, said he was “leaning” towards vetoing the Cosco deal, adding that there should be “no more naivety” about China.

However Scholz, who is making his first official trip to China in early November, is wary of any moves to “decouple” Germany from China, frequently stressing the importance of Beijing for German firms while also insisting that companies should diversify into other markets.

On the Cosco deal, the chancellery fears that the other ministries’ objections are not legally valid, a person familiar with the matter said, and has asked the economy ministry to substantiate its concerns over the acquisition.

The German chancellery and economy ministry declined to comment on what they called “ongoing proceedings”.

In a statement, HHLA said it was not aware of the deal being rejected by six ministries. “The co-operation between HHLA and Cosco does not create any one-sided dependencies,” the company said. “On the contrary: it strengthens supply chains, secures jobs and promotes value creation in Germany.”

Some officials are worried about the economic consequences of a decision to block the deal, fearing that Chinese ships could stop using Hamburg and dock in other European ports instead, leading to a huge loss of business for the city. The mayor of Hamburg, Peter Tschentscher, has said that the city would be at a disadvantage compared to Rotterdam and Antwerp if Cosco’s investment were blocked.

Hamburg officials have also dismissed the idea that Tollerort is critical infrastructure, stressing that the land Hamburg port is built on is publicly owned and the port is run by the city-owned Hamburg Port Authority.

China’s foreign ministry spokesperson Mao Ning last month warned Germany not to “politicise normal economic and trade co-operation, still less engage in protectionism in the name of national security”.

Cosco Shipping Ports is one of the world’s biggest shipping terminal operators, having expanded as China’s ports became the world’s busiest.

It has stakes in ports across Europe, including Antwerp and Zeebrugge in Belgium, as well as Rotterdam’s Euromax terminal in the Netherlands.