The discovery of cellular modems on Chinese-manufactured cranes in the United States in September 2024 has raised serious concerns about the potential cybersecurity threat posed by reliance on Chinese state-owned enterprises (SOEs) for critical maritime infrastructure components. To understand the extent of this challenge, it is important to take a broader perspective, examining how the People’s Republic of China (PRC) has become a major global player in maritime infrastructure.
As part of the 21st Century Maritime Silk Road, the maritime dimension of China’s Belt and Road Initiative, the Chinese Communist Party (CCP) is working to develop the country’s blue economy, already worth over USD 1.2 trillion, to improve resource security and project maritime power on the world stage. In particular, the CCP hopes its maritime initiatives will act as a challenge to the US, whose naval pre-eminence and dominance over the world’s oceans has remained largely uncontested since the end of the Second World War. America’s military and naval position is difficult to challenge, with its 750 overseas military bases to the PRC’s one, although China now has a larger navy. But China has become the world leader in the commercial maritime industry, arguably dominating the entirety of the international supply chain.
Thus, China’s most crucial maritime advantage is not its navy but its economic command over the shipping industry, as well as its investment in many of the biggest, busiest, and highest-connectivity ports globally. This dominance will likely increase, particularly as the Made in China 2025 initiative, which aims to modernise Chinese industrial capacities, lists ocean engineering equipment and high-tech shipping as one of its ten priorities. This increasing focus on the maritime industry is part of China’s ongoing efforts to cement its position as a global superpower.
Investments and credit as tools
State backing has played a key role in China’s maritime infrastructure dominance. Financial support has inured Chinese firms against market volatility, allowing them to progressively expand their share of the global shipping market. This has been particularly evident since the 2008 financial crisis, when the shipping industry suffered from a precipitous reduction in demand. For example, China’s share of the shipbuilding market has increased from less than five per cent in 1999 to over 50 per cent in 2023, while its share of container volumes at the 100 largest ports globally in 2024 stood at over 41 per cent.
It is not yet clear whether Trump will institute a similar targeted tariff for shipping and port infrastructure, as recommended by a new report by the Office of the United States Trade Representative on ‘China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance’.
The Chinese government has also pushed for the consolidation of already large SOEs into hugely influential mega-entities. For example, COSCO Group and China Shipping Group merged in 2016, forming China COSCO Shipping — the fourth largest container shipping firm in the world. These advantages have helped make China the world’s largest trading nation and top shipbuilder. China has developed influence over international shipping lanes, ports, and consequently, the flow of goods and materials globally. Its maritime network gives China considerable geoeconomic and geostrategic advantages as maritime transport accounts for around 80 per cent of global trade.
A critical element of the CCP’s maritime strategy is investment in ports across the globe. Chinese SOEs, with the backing of the government, are flush with cash, and willing to circumvent costly and time-consuming international norms regarding the environment, human rights, and labour. This allows SOEs to present developing countries with maritime investment programmes whose terms appear highly attractive. Indeed, China invested around USD 11 billion into overseas ports between 2010-19. Currently, it maintains 129 port projects, many in strategically significant locations, with a majority ownership over 17. It is possible that the CCP could leverage these commercial port interests to establish a military presence across the globe. 91 of the 129 ports with Chinese investment have the necessary features to be used for military purposes, although only 14 of these ports are majority Chinese-owned. One example is the Port of Doraleh in Djibouti, which China helped to construct and where it subsequently established the first publicly acknowledged overseas military base of the People’s Liberation Army.
Thus, China now has a base at the entrance to the strategically significant Red Sea corridor. Aside from official military bases, even overseas port terminals owned and operated by Chinese state-owned companies can play a military role by providing logistics and husbanding services for the People’s Liberation Army Navy.
Beijing’s technological edge and crane dependencies
One pillar of Beijing’s bid for commercial maritime dominance involves cornering the market on indispensable shipping industry technologies, particularly ship-to-shore (STS) cranes. STS cranes are large gantry cranes located on docks parallel to the water’s edge that are used in ports for loading and unloading shipping containers. They play a central role in global supply chains, ensuring the flow of goods from manufacturers to consumers. China dominates the STS crane market; Shanghai Zhenhua Heavy Industries (ZPMC), a Chinese SOE, has an 80 percent market share, and its cranes are deployed in more than 100 countries.
ZPMC is one of the most important large crane manufacturers in the world. It has achieved global market dominance for a variety of reasons. First, the availability of relatively economical workers in China reduces labour costs. Second, the main material used to construct cranes is steel, which is heavily subsidised by the Chinese government, reducing production costs. Third, and most importantly, Beijing has undertaken a policy of focussed state support for the Chinese shipping industry.
A conservative estimate of state support to this industry from 2010-18 totals around USD 132 billion. ZPMC benefits significantly from this state support system, which includes advantages like direct and indirect subsidies, low-interest loans, debt forgiveness and preferential borrowing rates. These three factors mean that ZPMC can manufacture and therefore sell high-quality cranes more cheaply than its competitors. They also keep ZPMC’s production volume high, allowing the company to customise cranes according to location-specific demands while maintaining affordability.
Depending on individual specifications, ZPMC cranes may be tracked, controlled, serviced and programmed remotely, making them vulnerable to exploitation. This risk was highlighted by the recent discovery of unauthorised cellular modems on some ZPMC cranes operating in the United States. These modems, which connected to Linux computers on port cranes, could be used for information gathering, remote communication, and bypassing firewalls. They were installed regardless of the specific contract specifications of the cranes. This is a potentially serious vulnerability, as ZPMC produces around 80 per cent of cranes at US ports, with over 200 Chinese-manufactured cranes currently operating in the US. This type of STS crane has not been manufactured in the US for 30 years.
The potential security risks of dependency on Chinese STS cranes have provoked a particularly strong reaction in the US. The Biden administration took steps to strengthen the American position in the commercial maritime industry, including the announcement of a USD 20 billion investment programme in American port infrastructure, as well as an executive order designed to strengthen shipping industry cybersecurity. Biden also proposed a 25 per cent tariff on Chinese STS cranes which, although controversial with port authorities due to the financial strain it would have caused, was set to come into effect in mid-2025. It is not yet clear whether Trump will institute a similar targeted tariff for shipping and port infrastructure, as recommended by a new report by the Office of the United States Trade Representative on ‘China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance’. In the meantime, the maritime infrastructure industry is subject to Trump’s blanket 20 per cent tariff hike on Chinese imports since taking office. Regardless, ensuring compliance in shipping companies that rely heavily on China, with no domestic manufacturing alternative to companies like ZPMC, will be a significant challenge; alternatives remain slower and more expensive to produce.
Path forward for the maritime industry
Beyond STS cranes, other aspects of maritime infrastructure may also be used for CCP intelligence gathering. The Chinese state-sponsored logistics information sharing platform LOGINK is used not just by Chinese companies but also by at least 24 port facilities worldwide. This may provide Beijing with access to ordinarily proprietary information on international trading relations, military supply chains, shipping destinations and routes, cargo valuations, and other sensitive commercial and government data.
More concerning still, these security issues are not isolated to the maritime industry but instead form part of a broader pattern. There is evidence that technologies ranging from agricultural drones to 5G network equipment to electric vehicles may provide opportunities for Chinese espionage and intelligence gathering.
The maritime industry’s reliance on China is a cause for concern due to both the general economic risks of over-dependency on a single supplier and the security challenges posed by the authoritarian nature of the CCP. Accordingly, stakeholders would be wise to take steps towards promoting diversification as well as enhancing industry security. This involves boosting domestic manufacturing of critical shipping infrastructure components and investing in domestic port infrastructure to reduce reliance on Chinese firms.
Additionally, global supply chains must be fortified to reduce dependence on single sources of strategically significant items. Shipping industry cybersecurity must also be strengthened through policies such as the mandatory reporting of cybersecurity threats. Multiple layers of firewalls should also be used to silo other at-risk equipment from the rest of port infrastructure. Finally, partnerships with multilateral financial institutions such as the World Bank can facilitate the development of attractive, transparent and sustainable maritime infrastructure development programmes as an alternative to those offered by China.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.
Author biography
Hannah Hains is a research fellow at the Asia-Pacific Foundation and a member of the Global Threats Advisory Group at NATO’s Defence Education Enhancement Programme. Image credit: Wolfgang Weiser.
