This is an interesting article, given that Gawadar gets only a small mention and the image showing global shipping traffic indicates where most of the commerce goes:
China
China’s foreign ports
The new masters and commanders
China’s growing empire of ports abroad is mainly about trade, not aggression
Jun 8th 2013 | COLOMBO |From the print edition
FROM the ground, Colombo’s port does not look like much. Those entering it are greeted by wire fences, walls dating back to colonial times and security posts. For mariners leaving the port after lonely nights on the high seas, the delights of the B52 Night Club and Stallion Pub lie a stumble away. But viewed from high up in one of the growing number of skyscrapers in Sri Lanka’s capital,
it is clear that something extraordinary is happening: China is creating a shipping hub just 200 miles from India’s southern tip.
The old port is cramped and stuffed full of containers. To its left, a vast new breakwater curves into the ocean. Alongside it a Chinese ship has just delivered three giant Chinese cranes (see picture) to a new container terminal built by a Chinese company and run by an entity controlled by another Chinese firm. The terminal opens in July and will be complete in April 2014.
The old port took centuries to reach its present capacity. China will have almost doubled it in under 30 months. Operated at full capacity, it would make Colombo one of the world’s 20 biggest container ports.
This development has split opinion in Sri Lanka. At a gathering of Colombo’s old salts, the mood is optimistic. Tales of Chinese domination are “just scaremongering” says one captain. The port will push Colombo into the big league, says the boss of a repair yard. A few are nervous, though. The Chinese have a hidden agenda, says someone close to the ports authority.
For India’s hawks, there is no ambiguity. The port is part of a Chinese plot. Colombo is a “transhipment” hub for India: big ships unload containers there and feeder boats take these to India’s often crummy ports. About 13% of India’s container traffic travels via Colombo. If the new terminal ran at full capacity and dedicated itself to transhipping containers to India, that could rise to 28%, leaving the country dependent on a foreign-run choke point.
Worse, critics argue, Sri Lanka has become ever chummier with China since the end of its civil war in 2009. On May 29th Mahinda Rajapaksa, Sri Lanka’s president, met Li Keqiang, China’s premier, in Beijing. Loans and declarations of “profound friendship” were secured. China is also developing roads, airports and another port, Hambantota, on Sri Lanka’s south coast. Chinese warships have stopped at Colombo on the way to Pakistan and to anti-pirate operations in the Gulf of Aden.
In the eyes of some Indians, Colombo is part of a “string of pearls”—an American-coined phrase that suggests the deliberate construction of a network of Chinese built, owned or influenced ports that could threaten India. These include a facility in Gwadar and a port in Karachi (both in Pakistan); a container facility in Chittagong (Bangladesh); and ports in Myanmar.
Is this string theory convincing? Even if the policy exists, it might not work. Were China able to somehow turn ports into naval bases, it might struggle to keep control of a series of Gibraltars so far from home. And host countries have mood swings. Since Myanmar opened up in 2012, China’s influence there has decreased. China love-bombed the Seychelles and Mauritius with presidential visits in 2007 and 2009 respectively. But since then India has successfully buttered up these island states and reasserted its role in the Maldives. Besides,
China’s main motive may be commerce. C. Raja Mohan, the author of “Samudra Manthan”, a book on Sino-Indian rivalry in the Indian and Pacific Oceans, argues that China’s port bases partly reflect a desire to get easier sea access for trade to and from west China.
A load of old rope
State-owned firms are in charge of most of China’s maritime activity, and their motives are at least partly commercial. There is certainly not much talk of invading India in the offices of Tissa Wickramasinghe, the general manager of CICT, the firm that runs Colombo’s new terminal. It is 85% owned by China Merchants Holdings International, a Hong Kong firm that is ultimately controlled by China’s government.
Mr Wickramasinghe says
the port aims to take advantage of a new global pattern of trade. Trade by poor countries will rise. More containers will be used (only 22% of Indian cargo is containerised—half the world average). The shipping corridors between East Asia, Europe and Africa will get even busier. A new generation of huge ships that are almost half a kilometre long will dominate them. The ports that service these vessels will prosper.
China’s maritime interests already reflect its status as the world’s largest exporter and second-largest importer. Many of the world’s biggest container ports are in China. It controls a fifth of the world’s container fleet mainly through giant state-owned lines. By weight, 41% of ships built in 2012 were made in China.
Japanese and Korean firms built a presence in Californian ports in the 1980s and 1990s. Now China’s muscle in trade and shipping is being mirrored in ports too. At first this was about building. China Harbour Engineering Company has constructed projects around the world. In 2012 its state-controlled parent firm had orders of $12 billion for construction deals abroad.
The next step is to own and run ports (see map). Hutchison Whampoa, a buccaneering, privately owned Hong Kong conglomerate, has long had a global network of ports. The pioneer among mainland firms was Cosco Pacific, an affiliate of state-owned Cosco, China’s biggest shipping line. In 2003-07 it took minority stakes in terminals in Antwerp, Suez and Singapore. In 2009 it took charge of half of Piraeus Port in Greece. It has invested about $1 billion abroad. China Merchants Holdings International, a newcomer, has spent double that. It invested in Nigeria, as well as Colombo, in 2010. Last year it took stakes in ports in Togo and Djibouti. In January it bought 49% of Terminal Link, a global portfolio of terminals run by CMA CGM, an indebted French container line.
The pace is quickening. In March another firm, China Shipping Terminal, bought a stake in a terminal in Zeebrugge in Belgium. On May 30th China Merchants struck a multi-billion deal to create a port in Tanzania. Even the more cautious Cosco Pacific is thinking about deals in South-East Asia and investing more in Greece.
What explains this surge in investment? The slowdown in trade has dulled prospects in China and lowered prices abroad from the heights of 2007-08, says Jonathan Beard of ICF GHK, a consultancy.
The focus on Asia, Europe and Africa is partly because America may be out of bounds. China Shipping Terminal has small stakes in facilities in Seattle and Los Angeles, according to Drewry, a consultancy. But
the experience of Dubai’s DP World suggests that America would not roll out a red carpet. In 2006 DP abandoned plans to buy American ports after a political backlash. Some Americans worry that China wants to take over the Panama canal.
Chinese firms may also subscribe to a supersized vision of the industry in which an elite group of ports caters to a new generation of mega-vessels. These will be more fuel-efficient and link Asia and Europe (they can just squeeze through the Suez Canal). After a decade of hype these behemoths are now afloat. In May CMA CGM received the Jules Verne, the world’s largest container ship. It can handle 16,000 containers and has a 16-metre (52-feet) draft. In July Maersk, a Danish line, will launch an 18,000-container monster. It has ordered 20 from Daewoo, in Korea. China Shipping Container Lines, the country’s second biggest firm, has just ordered five 18,400-container vessels from Hyundai.
Some ports may struggle to cater to these ships. Some of China’s new terminals may try to exploit that. Cosco Pacific is building a dock at Piraeus that can handle mega-ships. Colombo is deep enough for ships with an 18-metre draft. Its cranes can cope with ships 24 containers wide. Nothing in India compares with that.
Darling can’t you hear me, SOS
There are risks to China’s port strategy. The world economy may not recover quickly. Today’s slow growth lowers demand for containers. It also means many shipping lines are losing money, making them nervous about raising capacity by launching lots of new mega-ships. That in turn allows smaller ports to stay competitive.
The immediate outlook is tough for Colombo’s new terminal, in part because of India’s woes. India’s container traffic, having grown at a blistering pace, declined by 4% in April compared with the same month last year. “We never imagined this situation,” says an Indian port boss. Then there is competition. Vallarpadam, a port in the Indian state of Kerala owned by DP World, is only a third full. India’s bureaucrats have relaxed their fiddly rules to help it compete. Ports in Mumbai and Mundra, in west India, already get lots of direct calls from global lines. Other ports such as Chennai are slowly winning more, too.
The age of the mega-ship might secure Colombo’s position, but it is some way off. The initial schedules for the new Maersk and CMA CGM vessels do not include stops in Colombo. Local agents hope other lines will try the port this year. Some expect that patriotic Chinese shipping lines will shift their business to Colombo from other big Asian ports. But that is a stretch. They are losing money and may not want to subsidise Sri Lanka. In 2012 Aitken Spence, a local firm, sold its stake in Colombo’s new terminal, arguing that it was not profitable. Some reckon it will take 15 years for it to break even.
Yet
the port industry is about strong nerves. Eventually a recovery will materialise. In fact,
the long-term challenge for China’s port operators may be commercial success. If they do create hubs for other countries, these firms’ association—unfairly, or otherwise—with China’s strategic interests will be a liability. Colombo is an example. India’s security grumbles are partly posturing. China is its biggest trading partner, and India’s main state-owned shipping firm gets its vessels repaired in China. But should Sri Lanka ever succeed in dominating India’s trade while being a close Chinese ally, India would surely improve its ports enough to be independent.
Experiences elsewhere offer no clear-cut guide. After political tensions in the South China Sea, China Merchants has withdrawn from a port project in Vietnam. But Cosco’s Piraeus investment, once controversial, is a success, with profits rising and the firm winning plaudits for investing and creating jobs for Greeks.
China’s port strategy is mainly motivated by commercial impulses. It is natural that a country of its clout has a global shipping and ports industry. But it could become a flashpoint for diplomatic tensions. That is the pessimistic view. The optimistic one is that
the more it invests, the more incentive China has to rub along better with its trading partners. This, not deliberate expansionism, is what the locals are betting on in Colombo.
From the print edition: International
Argus Panoptes is right we couldnt clear the strategic KKH from Attabad Lake Section and Dreaming of a Rail link in same area 
