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China's state-owned Cosco takes over Port of Kaohsiung: report

China could now own Taiwan's largest harbor - the Port of Kaohsiung

Port of Kaohsiung.

Port of Kaohsiung. (Wikimedia Commons photo)

TAIPEI (Taiwan News) -- It appears that China's state-run shipping and logistics giant China Ocean Shipping Company (Cosco) could now own the Port of Kaohsiung, the largest harbor in Taiwan, though tax loopholes being exploited in Bermuda make the degree of control exercised by the state-owned corporation on the Taiwanese port murky, according to a report by Nikkei Asian Review.

Despite reservations by the Trump administration over Chinese ownership of the Port of Long Beach, the second-largest container port in the U.S., the US$6.3 billion acquisition by Cosco of Hong Kong-based Orient Overseas (International) Limited (OOIL) and its subsidiary Orient Overseas Container Line (OOCL) has been approved, according to the report. The move makes Cosco the world's third-largest shipping company and initially appears to give it control of the Port of Kaohsiung and the Port of Long Beach.

As trade tensions continue to heat up between Beijing and Washington and as suspicions rise over China's Belt and Road Initiative, the U.S. has approved of the deal on the condition that the Long Beach facility be put into a separate trust before being sold off, the report stated. There has been very little mention of the massive deal in the world media, with only Cocso making low-key announcements that it had received permission from the Committee on Foreign Investment in the United States (CFIUS) to acquire OOIL on July 7.

On July 27, Cosco announced that it had completed its acquisition of OOIL and its affiliated company OOCL, but it made no mention of the Port of Kaohsiung. The Nikkei Asian Review asserted that the OOCL signage is still visible in Kaohsiung and that staff had said the management remained the same.

One worker told the news service, "We are still the original OOCL team here running the piers and all the shipping business is as usual." While a spokesman at the company's headquarters in Hong Kong said, "We have not sold our interest in the Kaohsiung Container Terminal."

Of OOIL's original board, Cosco has removed six out of nine directors, appointed 11 new directors and appointed Xu Lirong as the new chairman. Xu is a secretary of the Communist Party committee and chairman of Cosco's parent company.

Taiwan's Ministry of Economic Affairs' Investment Commission confirmed that OOCL was sold to a Bermuda-registered company. The commission's executive secretary Emile Chang(張銘斌)told the Nikkei Asian Review that OOCL was owned by a Taiwanese businessman and insisted that following vetting of the businessman's investment in OOCL, no capital from Cosco was found.

However, Taiwan Commerce Department records show that all of OOCL's board members were replaced in July and that the new chairman, Hsu Ting-hsin, is a chairman of China Cosco Shipping Co., Ltd. (Taiwan). The Bermuda-registered company's name translates as Bermuda Orient Overseas (Agency) Co., while OOIL itself is also incorporated in Bermuda.

The Taiwanese state company that has authority over the Port of Kaohsiung, Taiwan International Ports, said it believed that it is still communicating with the original OOCL management team. However, New Power Party (NPP) legislator Huang Kuo-chang (黃國昌) was skeptical of the deal and said the government needs to look more closely at Cosco's acquisition of OOCL.

Democratic Progressive Party (DPP) lawmaker Gao Jyh-peng (高志鵬) also told the Japanese media outlet that even from the other side of the world, the U.S. had taken precautionary measures to stop China from taking over its port and that "Taiwan should be more cautious about this matter."