China's state-led international port development: Challenges for port states

Chinese state-owned enterprises are playing an expanded role in international port development, utilising their privileged access to state capital to finance, build, and operate hundreds of ports globally. This paper argues that the political nature of these investments vis-`a-vis state ownership of the investing firms has introduced an array of unique economic, strategic, and political risks for recipient port states. We identify four such risks-port overcapacity, military entrapment, commercial and military espionage, and economic coercion-we argue that these risks flow specifically from state ownership of the port investor, and we demonstrate that these risks manifest in China's state-led foreign port investments. On this basis, we argue for FDI screening at the national level to manage the risks associated with foreign investments in critical infrastructure.

Automated summary

Chinese state-owned enterprises are heavily involved in international port development, using their access to state capital to finance, build, and operate ports globally. However, the political nature of these investments has introduced various economic, strategic, and political risks for recipient countries. These risks, including port overcapacity, military entrapment, espionage, and economic coercion, are specifically caused by state ownership and can be seen in China's state-led foreign port investments. Therefore, we argue for national-level FDI screening to manage the risks associated with foreign investments in critical infrastructure.