Seaports in the BRI: Challenges, Solutions and Emerging Regulations

Abstract

The article examines ways to increase the efficiency of seaport projects within the framework of the Belt and Road Initiative. It considers the new challenges and threats posed by the COVID-19 pandemic and the crisis in the maritime sphere. The first direction of the research was an analysis of the current ISSN 2524-101X eISSN 2617-541X 15 LEX PORTUS VOL 7 ISS 5 2021 stage of the implementation of the BRI in the global port industry, attempts to strengthen the influence of the People’s Republic of China (the PRC) on the national port facilities and the reasons for the wrecking of the large, planned projects. The authors note the “rigidity” of China’s “soft power” in promoting and consolidating influence on the maritime port industry. The second part of the article describes the modern practice of implementing the BRI in Europe. The positive and negative aspects of cooperation of the People’s Republic of China with the EU countries are considered. The focus is on the strengthening influence of regionalism in the European port policy under conditions of the COVID-19 pandemic. In addition, the authors point out a natural gradual “cooling” of attitude towards the Chinese investment projects in connection with the focus on strategic sectors of the economy of the EU member states, reinforced by the spread of the pandemic. Based on the analysis, the ways to increase confidence in Chinese investment in the European region are proposed. The third direction of the analysis is the growth of the BRI northern segment, the beginning of the formation of the Ice Silk Road, and the investment projects of the PRC in the seaports of the traditional near-arctic states. The key words: the Belt and Road Initiative, ports, the 21st Century Maritime Silk Road, the COVID-19 pandemic, the China’s Arctic Policy, the Northern Sea Route. Introduction China’s global initiative “One Belt, One Road” unites the two projects – “The Economic Belt of the Silk Road” and “The 21st Century Maritime Silk Road”. This is the ambitious strategy announced by Xi Jinping in 2013 for the development of modern China to increase the influence on the world arena, revive dialogue of peoples and cultures, stimulate economic development and investments, strengthen, and expand transport communications (Belt and Road Initiative). The BRI is being continued as a global development program, an important strategic measure for the implementation of China’s policy of openness and coordinated regional development (Jiashu, 2021, p. 46). In its research, it is really necessary to abandon the excessive globalization and focus on individual elements (as recommended by Jean-Marc F. Blanchard (2021)), differentiation of projects and countries, and elaboration more specific proposals and formulations in cooperation agreements. 16 LEX PORTUS VOL 7 ISS 5 2021 However, after eight years of its implementation, it is possible to note significant results, difficulties, and updating prospects. The transport-related aspects of the BRI, according to the literature reviews, include three major topics: – supply chain management and logistics: capabilities, distribution flows, network, strategy; – shipping and ports: shipping market, vessel speed, fleet management, port cluster, port competition, hub ports, container repositioning, port capacity; – connectivity, transport, and routing: maritime network, hub-and-spoke network, transport network, transport resilience, multimodal transportation, Trans-China Railway, Trans-Siberian Railway, Artic Sea route (Lee et al., 2018, p. 293). These mainly show the critical role of maritime transport and seaports infrastructure in the whole BRI concept. Implementation of BRI policies possesses a direct impact on further developments in respective fields, which results in the essential changes in the transport and logistics landscape, including: – development of inland-inter regional rail and highway corridors and city clustering in China; – connectivity of economic corridors to the Indian Ocean and East Sea in association with dry ports in China; – development of sea-river combined transport and sea-railway/ highway; – development of free trade economic zones along inland road corridors and in ports; – structural changes in maritime cargo flow and shipping network in association with corridor developments and intermodal network; and – alignment of participating countries’ transport and logistics development along the B&R (Chen et al., 2018). In addition, the BRI has proved to affect the internal processes of both public and private subjects involved in the respective transport 17 LEX PORTUS VOL 7 ISS 5 2021 corridors functioning. While for private companies, BRI brings new investment, infrastructure, and trade opportunities, for governments, it erects, alongside the cooperation possibilities, challenges concerning domestic policy and legislation that may demand better alignment with BRI policies and practices (Chang et al., 2021, p. 246). To that end the BRI acts as a soft power tool for China to export its view of the world order and its way of participating in international relations (Costa, 2020, p. 41). In aggregate, the seaports’ segment of BRI routes faces dramatic changes in almost all aspects of their functioning, including financial, managerial, procedural, and regulative. Methodology The present research considers the maritime component of the BRI in the context of the development of the port industry of the participating countries because of implementation of BRI infrastructure projects. Said development’s evaluation includes the impact of three main factors: the COVID-19 pandemic, the crisis in the marine industry, and emerging BRI soft law. 1. The BRI Port Initiatives The sea component of the BRI is the most interesting in the framework of this study, unites the “blue economic passages”: 1) the first “passage” running from China to the Indian Ocean, Africa and onto the Mediterranean; 2) the second passage connects with Australia and the Southern Pacific; 3) the third passage, connecting China with Europe via the Arctic Ocean (China’s expanding investment in global ports; Vision for Maritime Cooperation under the Belt and Road Initiative). In addition, combining with the land component, it is aimed at changing the geopolitical reality for the countries of Central and Middle Asia that do not have direct access to maritime transport highways and remote markets (Idan, 2018). 18 LEX PORTUS VOL 7 ISS 5 2021 One of the components of the maritime component of the BRI, along with the development of shipping and shipbuilding, was the enhancing of the port industry. The role of seaports is rising in the world trade and supply chains every year. China, as one of the largest producers in the world, is interested in establishing, improving, accelerating, and finding the alternative ways of trade through the already quite large, as well as “young” seaports of the world, both on intensive shipping routes and in regions poorly involved in maritime communications. Ports and maritime infrastructures are some of the core elements of China’s connectivity-boosting BRI (Ghiretti, 2021, p. 2). For example, in 2019 China was at the first place among the countries with the most container ship calls (72.583) and dry bulk carriers calls (60.420), and at the third place in terms of the largest number of arrivals of tankers and other liquid bulk carriers (40.702) (Review of Maritime Transport 2020, p. 69). In 2020, five of the top 10 ports were located in China (Shanghai, Ningbo, Hong Kong, Qingdao and Xiamen) (Review of Maritime Transport 2020, p. 77). Also, the essential part of the BRI strategy is involvement of foregin ports. The importance of joint port construction, expanding port partnerships and port unions, and creating free economic zones in port regions is noted in Vision for Maritime Cooperation under the Belt and Road Initiative (Vision for Maritime Cooperation under the Belt and Road Initiative). However, sometimes joint port construction or significant loans lead to the “takeover” of national ports by the Chinese companies. This happened to the deep-water port and its adjacent territories in the city of Hambantota in Sri Lanka (Abi-Habib, 2018). According to the article of Isaac Kardon (2021), the Chinese companies own shares in: 31 ports in the Atlantic, 25 – in the Indian Ocean, 21 – in the Pacific Ocean and 16 – in the Mediterranean Sea. Regionally, there are 22 in Europe, 20 are in the Middle East and the North of Africa, 18 are in America, 18 are in the South and the Southeast of Asia, and 9 are in Africa to the South of Sahara. 19 LEX PORTUS VOL 7 ISS 5 2021 53 of these ports are located near the key sea corridors. 10 of these are near the English Channel, in 9s are near the Malacca and the Hormuz Straits, 6 are near the Suez Canal and 4 are near the Panama Canal, the Gibraltar and the Turkish Straits (Kardon, 2021, p. 3). Thus, the economic influence of the PRC extended to many major ports in the world. The construction of their effective management has various goals – from helping national port industries in need of financing to strengthening their influence on the world shipping, forming a protectionist policy towards the Chinese shipping companies and improving/simplifying logistics for Chinese exportimport operations. It is no secret that the BRI is aimed at the broad cooperation between states in order to create a new world order in which China becomes a new super-power and introduces its values that are not always consistent with the values of the Western liberal civilization. Associated with the development of the port direction was the planning of two mega-projects for the construction of marine channels within the framework of the BRI. One project is in Nicaragua as an alternative to the Panama Canal. It is known that the project failed due to the lack of financing, social tension and corruption risks (Goldberg, 2018). The second is thro