COSCO Fights ‘Military’ Designation
Chinese state-run shipping company and port operator COSCO Shipping Holdings is protesting its inclusion on a U.S. Defense Department list of “military-linked” companies.
Inclusion on the list carries no penalties except exclusion from doing business with Defense Department entities or contractors. However, companies on the list worry that further punitive measures could follow.
COSCO issued a statement denying it was a military company and assuring its customers that the listing had no effect on its operations.
“We have noted the recent inclusion of China COSCO Shipping Corporation Limited (COSCO Shipping), COSCO Shipping (North America) Inc. and COSCO Shipping Finance Co. Ltd. on the U.S. Department of Defense’s list of ‘Chinese military companies,’” the company stated. “COSCO Shipping and its subsidiaries have consistently adhered to local laws and regulations, maintaining strict compliance in all international operations. We remain committed to facilitating global trade and providing high-quality commercial shipping and logistics services to clients worldwide, including agricultural producers, manufacturers, energy firms, retailers and exporters in the United States. We emphasize that none of the aforementioned companies are ‘Chinese military companies.’ We will engage with U.S. authorities to clarify this matter. This designation does not impose sanctions or export controls, and our global operations will continue uninterrupted.”
Established in 2001, COSCO Shipping Terminals (North America) is a wholly-owned subsidiary of COSCO Shipping (North America) Inc. COSCO owns stakes in joint ventures in five U.S. ports, including the ports of Long Beach, Seattle and the West Basin Container Terminal in San Pedro, Calif.
At the end of 2019, during President Donald Trump’s first term, his administration forced COSCO to sell its ownership stake in the Long Beach Container Terminal after COSCO bought the Orient Overseas International Limited Corp. (OOIL), which owned the terminal.
The Defense Department listing is part of a widespread security push within U.S. government agencies targeting Chinese-made equipment and technology. The Defense Department has prohibited federal entities and all contactors doing business with them from using Chinese equipment, including drones, or any parts with Chinese-installed computer chips. The recently passed National Defense Authorization Act dropped a provision that would have banned drones made by Chinese firm DJI from accessing U.S. networks but retained a provision requiring it to be “assessed” by an unnamed U.S. agency. DJI has sued the Defense Department.
In 2023, COSCO bought a 5.8 percent interest in COFCO Fortune, a Chinese state-owned food processor, for $814 million, according to Reuters. COFCO, short for China Oil and FoodStuffs Corp., is one of the world’s largest food-processing companies.
In June 2024, COFCO International Ltd. and Illinois-based Growmark Inc. announced a deal in which Growmark sold its minority stake to COFCO in a grain-loading facility in Cahokia, Ill. As part of the deal, Growmark bought COFCO’s ownership in the Chicago grain warehouse facility known as the “B-House,” located on the Calumet River near downtown Chicago. At the time, U.S. Reps. Mike Bost (R-Ill.) and Nikki Budzinski (D-Ill.) voiced national security concerns about the deal and asked Secretary of the Treasury Janet Yellin to review it. COFCO originally built the terminal in 2017.
At the time of the deal, Zhijun (Jerry) Shi, chief operating officer for COFCO International in North America, said the company plans to continue investing in its U.S. business operation, with a strategy focused on U.S. Gulf and Pacific Northwest exports.
