Similarly, as of 2022, Pakistan owed $23 billion to China. After large-scale borrowing, particularly in relation to the China-Pakistan Economic Corridor (CPEC), Pakistan is struggling to repay its debt and faces an economic crisis. These loans may have contained hidden terms that hinder Pakistan’s economy and force the country to depend on China. Although some analysis dismisses accusations of China’s debt-trap diplomacy, other issues surrounding Chinese lending remain, including lack of transparency, economic viability, social and environmental concerns, and wielding debt for political leverage.
Additional concerns remain about China’s port infrastructure due to its potential dual use for commercial and military purposes. Out of the 70 commercial port projects in the Global South, an estimated 55 projects have the potential for naval use as well. That said, naval use is more likely to occur in ports where China owns the majority share—currently 10 port projects.
There is growing reason for concern as Chinese port projects become more ambitious in terms of uses and strategic location. In 2017, China established its first overseas military base in Djibouti at the entrance of the Red Sea, one of the world’s busiest shipping lanes, six miles from a U.S. military base. There are concerns about similar attempts to establish a military presence in other parts of the Global South. U.S. officials suspect that China and Cambodia made a deal allowing Chinese armed forces to use Ream Naval Base, strategically located on the country’s southern coast facing the Gulf of Thailand, on the heels of elevated conflict with the Philippines and others in the South Sea. The Cambodian government has denied these accusations. Similarly, in the United Arab Emirates, China is accused of attempting to construct a clandestine military facility in the port of Khalifa, outside Abu Dhabi. China is also attempting to build a military base on the Atlantic coast of Africa.
In addition to commercial and military use, port infrastructure could also be used for spying and intelligence gathering. With access to the business trade hubs, China could spy on U.S. commercial and military movements. A 2024 congressional probe showed communications equipment in Chinese-made cranes at U.S. ports, suggesting vulnerabilities to supply chains, trade data, and other sensitive information. China has secured a commanding position through Logink (also known as the National Transportation and Logistics Public Information Platform), a Chinese state-owned digital logistics platform. At least 24 ports worldwide have adopted the Logink system, which could allow China to access significant amounts of confidential information related to transportation, pricing, and management of goods (including military equipment), threatening U.S. economic and military security.
China is also exporting container cranes from Shanghai Zhenhua Heavy Industries Company Limited (ZPMC). ZPMC dominates the global market for container cranes with a staggering 70 percent market share. For example, ZPMC manufactures 80 percent of the cranes used in U.S. ports; this includes 10 strategic seaports. These cranes come equipped with sensors that can track container details, which raises concerns about Chinese access to information about shipped goods, including U.S. military equipment.
U.S. Activity in Port Infrastructure
Today China strongly outperforms the United States in the financing, building, and management of ports. The United States has a limited number of ports, and its infrastructure is deficient and vulnerable to inclement weather. Currently, the United States has 208 commercial ports—up from 178 in 2010. U.S. ports are either privately owned and operated, or they are managed by federal, state, or local government or quasi-governmental authorities. The owner of a U.S. port might lease port infrastructure to a terminal operator in charge of maintaining equipment and buildings. In comparison, China has over 2,000 commercial ports domestically and nearly 100 ports abroad. Furthermore, U.S. port companies do not score well in global rankings. None of the world’s top 10 shipping companies or top 10 seaport operators are American, and only four U.S. ports are among the top 50 busiest ports in the world. None of the U.S. ports make it into the Container Port Performance Index top 20 list.
In addition, U.S. port infrastructure is largely outdated. The 2021 Report Card for American Infrastructure by the American Society of Civil Engineers gives a B-minus to U.S. port infrastructure. According to the Freight Intermodal Connectors Study, 91 percent of U.S. ports have a fair, mediocre, or poor rating: 35 percent are fair, 19 percent are mediocre, and 37 percent are poor. At the same time, U.S. ports have been increasingly vulnerable to climate. In 2022, Hurricane Ian forced temporary closures of seven major U.S. ports. Droughts in the Panama Canal disrupted vessels serving U.S. East Coast ports. Besides, many U.S. ports have infrastructure limitations that do not allow them to receive larger vessels, according to the U.S. Department of Transportation.
In terms of overseas ports, the United States severely lags China, as the United States does not manage or own any commercial ports outside its territories. The U.S. International Development Finance Corporation (DFC), however, is beginning to invest in some port infrastructure abroad. In May 2023, the DFC announced a $150 million commitment to Yilport Terminal Operations to expand and modernize the Puerto Bolívar container port in Ecuador. This is a significant step forward, but a more robust pipeline of projects must be developed.
In November 2021, the White House announced the Biden-Harris Action Plan for America’s Ports and Waterways, recognizing that U.S. ports are underfunded and that poor infrastructure has important costs for the U.S. economy and global competitiveness. The administration under President Joe Biden developed the Bipartisan Infrastructure Deal (BID) and the Port Infrastructure Development Grant (PIDG) program, which both allocate investment to improve port infrastructure. The U.S. Department of Transportation will award $230 million to the PIDG, and the Biden administration committed $17 billion to the BID. While this is a good start, much more funding should be allocated, with a specific strategy focusing on the Global South. Currently, the U.S. government does not consider the commercial maritime industry as critical infrastructure, making it even more difficult to prioritize the sector.
Moreover, the United States could also draw on the financing and expertise of multilateral development banks (MDBs) and international financial institutions (IFIs) when it comes to ports infrastructure. These institutions provide financing and technical assistance to the private sector in middle- and low-income countries, help de-risk investments, and catalyze private capital. In 2021, MDBs were the second-largest financier in these countries and financed 9 percent of the total value of private investment in infrastructure projects. From 2010 to 2021, the largest share of MDB financing of private investment in infrastructure projects went to the transport sector and represented 38 percent of all financing. In 2023, a total of 18 port projects in 11 countries received investments worth $4.9 billion, twice the amount in 2022, according to a World Bank report. The Latin America-Caribbean region had the highest level of private investments for ports, reaching $1.5 billion in five ports in Brazil and $975 million in one port in Peru.
However, the U.S.-led multilateral lending process has discouraged developing countries. Compared to Chinese lending under the BRI, Western MDB loans tend to be less attractive, as they are more difficult to apply for and are contingent on more rigorous vetting requirements and standards for bankability. China, by contrast, is often involved in predatory lending, which imposes unfair terms on the borrower and makes its deals look more attractive on the surface. To compete with China, Western MDBs must streamline their services and strike a better balance between managing risk and delivering results.
China also has a growing influence in these traditionally U.S.-led institutions. China now has the second-highest aggregate voting power in the IFIs it supports, even though it significantly trails the United States. Despite many Chinese firms being sanctioned or debarred from the World Bank for fraud and corruption, China has consistently ranked among the top countries receiving MDB contracts, and Chinese firms easily outperform firms of other countries in securing contracts, according to the Center for Global Development.
Recommendations
The United States cannot respond on its own to the increasing Chinese presence in Global South ports; it must rely on the MDB system, a strong interagency process, and allies and partners to offer better terms and financing to counter China’s growing influence in port infrastructure in the Global South. Some initial recommendations are put forward in this paper, but further dialogue and research are needed to devise specific actions so the United States can lead on this important infrastructure.
1. Devise a Clear National Security Strategy on International Ports
The next U.S. presidential administration should develop a clear port infrastructure strategy to convey why a Global South port infrastructure presence is in the U.S. security interest. The strategy should focus on immediate concerns and a long-term vision for working with allies and becoming an effective competitor and alternative to Chinese investments. This strategy must be followed by a streamlined interagency approach throughout the whole government. Currently, U.S. government efforts on the matter are siloed, but the administration can fix this situation if it provides a clear strategy and elevates ports to a top priority. Consolidated interagency efforts will provide more focus and avoid redundant efforts.
