China’s Maritime Silk Road Initiative: Implications for the Global Maritime Supply Chain

Chairman Maloney, Ranking Member Gibbs, and Members of the Subcommittee: Thank you for this opportunity to share my thoughts with you on China’s Maritime Silk Road and its implications for the global maritime supply chain.

Announced during a speech to the Indonesian parliament in October 2013, China’s 21st Century Maritime Silk Road (MSR) is one half of Xi Jinping’s signature “Belt and Road Initiative,” a program aimed at leveraging Chinese lending, investment, and technical expertise to construct infrastructure projects around the world.1 Through these projects, China seeks to connect trade paths across Europe and Central Asia, and sea routes between Southeast Asia and Africa.

To be sure, Chinese state-owned enterprises (SOEs) had been involved in overseas port development projects before Xi’s announcement of MSR in 2013. However, MSR has certainly accelerated this trend. Chinese SOEs have spent billions on maritime infrastructure and now build and operate port facilities around the globe.

For example:

• China’s port builders, such as China Communications Construction Company, the parent company of two state-owned enterprises (SOEs)—China Harbour Engineering Company (CHEC) and China Road and Bridge Corporation — ranks third on Engineering News-Record’s list of the top 250 international contractors as of 2018.2
• According to People’s Republic of China (PRC) Vice Minister of Transportation Liu Xiaoming, “China [has] invested and constructed 42 ports in 34 countries and regions along the Belt and Road Initiative.”3
• Other analysts estimate that, in total, Chinese SOEs have equity stakes or concession agreements to operate port facilities in more than 70 ports worldwide.

The emergence of Chinese companies as global port terminal owners and operators raises questions about the implications for the United States Navy (USN), United States Coast Guard, or United States Naval Ships (USNS) using those facilities. This issue received heightened attention after the government of Djibouti announced in early 2018 that it was terminating its agreement with the United Arab Emirates (UAE) terminal operator, DP World, to operate the Doraleh Container Terminal (DCT), effectively nationalizing the terminal.5 This raised concerns that the Djiboutian government would eventually sign an agreement with a Chinese firm to run that container terminal. In a March 2018 US House Armed Services Committee hearing, General Waldhauser (Commander, US Africa Command), articulated his concerns regarding the potential implications of a Chinese firm taking over operations at the port, and what that would mean for the USN, should the Chinese firm seek to leverage that position to impose restrictions on USN vessels:

If the Chinese took over that port, the consequences could be significant if there were some restrictions on our ability to use that, because obviously the supplies that come in not only take care of Camp Lemonnier and other places inside the continent, it is a huge activity there...