By Raelene Lockhorst*
Chinese companies own or operate at least one port on every continent except Antarctica. These investments present more than immediate security concerns; they position China to fully exploit the economic potential of ports at the expense of other countries.
And with Chinese companies controlling development of a port, the government in Beijing can interfere in physical development of the facility, perhaps to ensure that navally useful infrastructure isn’t built. (The Australian Strategic Policy Institute. The Strategist.)
The former and current Australian governments have been criticized for acquiescing in the Chinese company Landbridge owning a 99-year lease on Darwin Port, the commercial operation in Darwin Harbour. Criticism has focused on security concerns, such as the Chinese government possibly arranging to use the facility for military surveillance or for sabotaging it in times of tension.
But the ordinary civilian activity of a Chinese company controlling the development of ports can have negative consequences for the host nation and others. As is seen in many industries, one Chinese business will often prefer to work with another, with the result that China has maximum exposure to potential profits.
We saw a step towards this last month in relation to Darwin Port, the commercial operation in Darwin Harbour. As the ABC reported, Port of Darwin signed a memorandum with the Port of Shenzhen for ‘friendly cooperation’. The aim is to increase trade links between the ports, which would have to mean Chinese companies, such as shipping lines, deepening economic involvement in Darwin Port.
Situated in southern China, the Port of Shenzhen is one of the busiest and fastest-growing in the world.
Interestingly, this agreement was not announced in Australia, and after the ABC reported it there was no public discussion of new links to China by the commercial port in one of Australia’s most strategically important harbours.
The Council on Foreign Relations has been tracking China’s growing maritime influence through investments in strategic overseas ports and has reported that while China has limited overseas naval bases, it has emerged as a leading commercial power with considerable economic influence over international sea lanes and commercial ports. China’s shipping routes and service networks span major countries and regions worldwide, backed by 70 bilateral and regional shipping agreements with 66 nations.
In October 2023, the Department of the Prime Minister and Cabinet finalised a review into the circumstances of the Darwin Port lease, finding that a robust regulatory system would manage risks to critical infrastructure, that existing monitoring mechanisms were sufficient, and, as a result, that the government did not need to cancel or vary the lease.
But the review appears not to have addressed the problem that decisions about development of Darwin Port are now in non-Australian hands. In particular, Australia does not seem to have considered that the Chinese government now exerts influence over capital investment at Darwin Port.
Warships use civilian wharves and other port facilities as well as naval bases, especially during conflict, just as military aircraft can fly from civilian airfields. Some port facilities suit naval ships and their missions better than others.
The Chinese government can exert influence on a Chinese company operating abroad and even take coercive action against Australian companies, as experienced by the Lynas Corporation in Western Australia. If the Chinese armed forces take an interest in a foreign port’s capacity to support naval operations, they can certainly send a message to its Chinese owner about what improvements should not be made there, even profitable improvements.
The 2024 National Defence Strategy and associated spending plan, the Integrated Investment Program, did not expressly mention the Darwin Port, but the importance of logistics facilities in Darwin was implied by funding allocated for enhancing theatre logistics and improving fuel holdings, storage, and distribution in northern Australia.
As China continues to deepen its geoeconomic footprint, addressing the potential risks associated with foreign control over critical infrastructure becomes increasingly important. Transparent communication and proactive policy decisions are crucial to preventing national assets from becoming leverage points in broader regional power dynamics.
*Raelene Lockhorst is the deputy director of national security programs at ASPI.
