Posted: April 29th, 2018

The Impact of China’s Belt and Road Initiative (BRI) on Red Sea Maritime Trade and Port Development

The Impact of China’s Belt and Road Initiative (BRI) on Red Sea Maritime Trade and Port Development
1. Introduction
The Belt and Road Initiative (BRI) upholds ambitious plans to construct quality, sustainable, interconnected and modern infrastructure projects. It definitely became an attention capturing topic with its broad implications from political to economic aspects. The BRI has a very complex form and implementation which is why it is very interesting to be assessed through an international relations framework. With those reasons, in assessing the BRI an understanding about Chinese grand strategy is needed. BRI is the front runner of Chinese grand strategy declared by the Chinese president as the so-called Chinese dream in a few of his statements. Chinese dream itself is a revival movement for the past century before China entered its century of humiliation. In the grand strategy framework analysis, there are several element assessments needed that are interest, direction and capability of the actor on how he will achieve his national interest. By identifying these elements we can assume or predict the plan made by China in achieving its national interest through the BRI.
Actually, the measure of national interest is meant to be done through more than one way, this is also captured in the elements of state power. China right now is trying to diversify its tools of power that in the end will expand its national interest. To achieve this there needs to be a suitable strategy with the current condition or environment which should be adaptive. A very complex strategy is being carried out by China due to its national interest being very comprehensive along with the fact that there are many interests to be resolved that are conflicting with the interests of other countries. All China needs to the BRI has connectivity to its interest and it requires a comprehensive strategy too to make it real. This is why we should compare the BRI with the Marshall plan, a strategy made by the US to create a contain environment in Europe and to block the Soviet expansion during the Cold War. Although these 2 plans are different there are several parallels in its purpose. From here we know that China has an ideal to create a conducive environment to expand its interest and increase its global influence.
1.1 Background of China’s Belt and Road Initiative (BRI)
The MSR is a plan to build a network of open and inclusive trade-promoting maritime routes connecting China with Southeast Asia, South Asia, the Middle East, and Europe. This will be achieved through a combination of enhancing existing coastal ports and building infrastructures at key sea lanes. Given the strategic importance of the Indian Ocean and China’s dependence on imported energy and materials, the MSR is an incredibly important part of the BRI. In this regard, the MSR and its implications for the MENA region are significant as relatively little information exists about the exact routes and locations of specific projects and how they will affect BRI countries along the northern rim of the Indian Ocean.
The BRI has two main components, the Silk Road Economic Belt (SREB) and the 21st Century Maritime Silk Road (MSR). The SREB is composed of a series of six economic corridors that stretch from China across Eurasia: the New Eurasia Land Bridge, China-Mongolia-Russia, China-Central Asia-West Asia, China-Indochina Peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar. The overland SREB is aimed at forging infrastructure and trade links between China and SREB countries. Of particular interest to countries in the Middle East and North Africa (MENA) region will be China’s plans to expand the China-Central Asia-West Asia economic corridor to the Middle East and to link the China-Indochina Peninsula economic corridor with the aforementioned corridor. This suggests an increased Chinese focus on trade and investment in the MENA region, coming as welcome news to countries that are sensitive to changes in world energy markets and are looking to diversify their economies (Roles, Stévance, 2016 cited in Dezan Shira & Associates, 2016).
Formally launched by President Xi Jinping in 2013, China’s Belt and Road Initiative is its most ambitious infrastructure, investment and trade-oriented endeavor to date. Based on the historical Silk Road that connected China to the West, the BRI envisions the construction of a ‘belt’ of overland corridors and a maritime road of sea routes connecting China to Southeast Asia, South Asia, Africa, and Europe. The BRI seeks to increase trade connectivity within and between these regions that comprise almost two-thirds of the global population and about a third of the world’s GDP.
1.2 Importance of Red Sea maritime trade and port development
A major construction project is the development of the King Salman International Complex located in Jeddah, Saudi Arabia. The port is to be built on a 78 square km area, and it is expected that the complex will help support about 4 million containers, as well as create opportunities in the local economy through a range of industries.
Due to the growth of international trade and the rapid increase in quantities of goods being traded every year, there is a serious need for the development of ports along the Red Sea. This will create more space for trading vessels and better access to the channel between the Mediterranean and the Indian Ocean. The Belt and Road Initiative (BRI) in the Red Sea aims to focus on expanding the logistics industry. There will be increasing cooperation between the Shanghai International Port Group (SIPG) and Egypt’s General Authority for the Suez Canal Economic Zone in developing the Ain Sokhna port. This will benefit the Suez Canal and create more revenue for Egypt. Ain Sokhna port is strategically located at the northern entrance of the Red Sea and the southern entrance to the Suez Canal.
The Red Sea has 2 access points to the Suez Canal: Port Suez at the northern terminus of the Red Sea and the city of Suez and Port Tewfik at the south terminus of the Canal. The canal brings wealth to Egypt and connects Europe and Asia. The canal is relatively shallow and can only permit vessels with 32 meters, and the canal only has one-way traffic.
The Red Sea is an inlet of the Indian Ocean located between North Africa and Asia, which helps connect the Mediterranean and the western Indian Ocean. It is known as a corridor for trade and commerce and is a major trade route between Europe, the Middle East, and East Asia. Most of the world’s exported goods, which are large in volume, are usually shipped through this route. The route is significant for Saudi Arabia and other countries of the Arabian Peninsula, as it is both a strategic and economic focal point.
1.3 Research objectives and methodology
By using content analysis and case comparison, we aim to understand its impact at the micro level to macro level to these countries and also its implications towards the global trade and economy.
Furthermore, the case study comparisons shall be done in a qualitative exploratory way using in-depth personal interviews with elites such as diplomats, government officials, and business/trade-related personnel that are involved with BRI-related activities and Red Sea maritime trade and port development in order to understand their perspectives about BRI and its implications.
In this research, a mixed-method approach will be used to analyze the impact of BRI. Content analysis and case study comparison shall be used as a method of gaining a comprehensive, contextual, and systematic knowledge of the activities related to BRI in the Red Sea. Content analysis will include data collection from various sources and countries that are involved in BRI activities in Red Sea maritime trade and port development. This will include assessing past, present, and future activities. Case study comparisons will be done on two Red Sea countries: one country that has special interests with China and another that is not involved in BRI. This is to better understand activities and effects of BRI in the context of a specific country in comparison with countries that are not involved in BRI.
The objective of this research is to examine the impact of China’s Belt and Road Initiative on Red Sea maritime trade and port development. The activities associated with BRI will be broken down into the two key factors: maritime and land transportation. This research will only focus on the maritime trade, which will include the activities and effects that will take place in the Red Sea vicinity. It is crucial to understand the effects of BRI in a specific area to effectively design strategies or policies to fully maximize the benefits related to the initiative. By understanding the effects of BRI in the Red Sea, this research aims to provide an outlook to countries also involved in BRI and have interests in the Red Sea, and also countries in the Middle East and East Africa that are not involved in BRI, to understand the opportunities and challenges that may arise.
2. Historical Overview of Red Sea Maritime Trade
Red Sea’s location has always kept it at the centre of trade routes stretching from the Far East to the Maritime and from the Mediterranean to Africa, the Persian Gulf, and India. In the first millennium BC, a network of trade links connected the peoples of the Eastern Mediterranean with the Eastern world. By the time that the Periplus of the Erythraean Sea was written in the first century AD, international trade intensity was rising, and the Red Sea had become a hub for trade with the East, with the Nabateans maintaining a league of cities on the eastern shores of the Red Sea to control the trade in and around Arabia.
Throughout history, Red Sea trade has been primarily focused on connecting the Mediterranean with the Arabian Sea/Indian Ocean. For a brief period in the 2nd to 3rd century AD when the Axumite Empire controlled parts of the western Yemeni littoral, and in the early 16th century after the Portuguese had subdued Muslim shipping in attempts to control the region, the Sea also connected with the wider world. But in the main, trade has generally been broken into stages at either end of the Sea, with goods being offloaded, taken across land to the differing body of water, and then re-loaded onto a different set of ships. This was due to the absence for much of history of a vessel which could sail the length of the Red Sea and then venture onto the open ocean without circumnavigating Africa.
2.1 Early trade routes and their significance
This ancient trade was part of a high cost luxury trade system, in which the entire cargo would change hands several times. The cargo would be carried short distances over land by donkey, and then transferred to small boats, with the process being repeated at each interval. This system was vastly different from the trade of the Islamic periods, where goods were exported to be sold directly in the markets of the Mediterranean. Due to the high value of the goods involved, the Red Sea often suffered from increased piracy during this era, and the cargoes of the small boats would often be hidden in remote island complexes for fears of robbery from other sailors. The Achaemenid Empire’s building projects and improvement in river transportation in the Near East allowed for greater trade between the two eras and initiated a trend of increased integration of the Red Sea trade with its surrounding areas.
Early maritime trade through the Red Sea can be divided into its pre-Islamic and Islamic periods. During the pre-Islamic era, there were two main Red Sea trade routes. One route ran from the Yemeni city of Qana to the Egyptian port of Alexandria. This route was particularly significant for the Romans during Augustan and Tiberian periods, but declined in importance in later years. The second route began in the Yemeni town of Moscha, crossed to the African shore, and ran parallel to the coast to its final destination in the Hejaz region of Arabia. It was these pre-Islamic kingdoms of Southern Arabia that were the main exporters of such goods as frankincense and in some periods spices, that were in demand in the Mediterranean World.
2.2 Impact of colonialism on Red Sea trade
The establishment of colonial rule significantly transformed the nature of trade and shipping in the Red Sea. Initially, the primary interest of the European powers in the region was to secure their sea route to India and East Asia against rival European powers. This had little direct impact on the Red Sea itself, and thus, the Ottoman Turks remained the dominant political power in the region until the 19th century. Towards the latter part of the 19th century, the opening of the Suez Canal induced the European powers to extend direct control over Red Sea territory, and this modern period of imperialism was to profoundly affect the economic and political development of the Red Sea region. The construction of modern infrastructure can be thought of as a precursor to the British-sponsored steam navigation agreement in the 20th century. Due to these actions and agreements, the Red Sea became an area of exclusive influence for the colonial powers: the French in the northern region around the Suez and the western coast, and the British in the southern and eastern regions. The first half of the 20th century saw the building of a host of economic infrastructure by the colonial powers, such as the port of Massawa in Eritrea, and this new infrastructure led to the integration of the Red Sea into the global economy. Despite this unprecedented integration, the Red Sea area remained fragmented into a number of small nation-states, and this lack of unity led to them being economically vulnerable to continued outside influence from the industrialized nations.
2.3 Modern developments in Red Sea shipping
At the advent of steam and the opening of the Suez Canal in 1869, the dominance of sail in slow and dangerous voyages was gone. Modern shipping was born on the Red Sea. Sailing ships vanished in less than a decade, to be replaced by steamships and the pace of trade quickened considerably. The canal was typically deepened and widened to allow the larger ships to pass through, allowing two-way traffic and minimizing journey time. This era saw the permanent decline of Egyptian coasting traffic, as foreign-owned shipping lines took control of routes between Europe and the Far East and determined the nature of modern shipping in the region. However, international conflicts, lack of resources, poor internal management, and war all played their part in stunting modern Red Sea shipping despite advanced technological developments.
World War One effectively halted almost all overseas shipping due to the danger of attacks from both the Turkish and the Central Powers, while World War Two and the conflicts between Arab states and Israel in the latter part of the 20th century had the same negative effect. Shipping and port development were also hindered by a lack of labor and capital, wartime destruction of port facilities and harbor installations, as well as bureaucratic policies and regulations set by governments that retard the movement of goods and shipping.
3. China’s Belt and Road Initiative and its Implications
The BRI is a comprehensive framework of visions and actions, of which the primary objective is to increase connectivity and cooperation among several countries primarily located in Eurasia. The origins of the Belt and Road Initiative can be found in the two concepts which are the Silk Road Economic Belt and the 21st Century Maritime Silk Road. These initiatives were put forward by China in 2013, and are aimed at enhancing the orderly free flow of economic factors and the efficient allocation of resources. ResourceManager.aspx?ResourceID=6614efficiency, the BRI aims to enhance connectivity across the region through infrastructure and trade. As of late 2019, 136 countries and 30 international organisations have signed agreements with China and BRI cooperation documents. This increasing level of international participation shows that China’s BRI is an ambitious project that aims to connect countries to China with the rest of the world. With the majority of the BRI passing through countries with developing economic situations, it is a push to further integrate these countries into the global economy.
3.1 Overview of China’s BRI and its objectives
China’s Belt and Road Initiative (BRI) is a development strategy adopted by the Chinese government involving infrastructure development and investments in countries in Europe, Asia, and Africa. The strategy was a significant move by the Chinese government to finance and build infrastructure in several nations from its own reserves. President Xi Jinping stated that the initiative served the spirit of China’s opening up policy research essay pro papers owl assignment help to better connect Chinese development with the global economy. The initiative was announced in September and October 2013 during the visits of President Xi Jinping to Kazakhstan and Indonesia. The Silk Road Economic Belt was focused on bringing together China, Central Asia, Russia, and Europe (the Baltic), linking China with the Persian Gulf and the Mediterranean through Central Asia and West Asia, and connecting China with Southeast Asia, South Asia, and the Indian Ocean. On the other hand, another major part of the initiative was the 21st Century Maritime Silk Road. This involves the coastal countries of Asia, the South Pacific, and the Indian Ocean, and ultimately the Mediterranean. It serves to connect and build smooth and friendly cooperation among countries along the road.
3.2 The role of the Red Sea in China’s BRI strategy
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The role of the Red Sea in China’s BRI strategy
The Belt and Road Initiative is much more than an effort to expand China’s economic presence in Central Asia because it also aims to increase China’s influence on the global stage. Asharq Al-Awsat, a pan-Arab paper published in London, reported on the 17th of December, this fact is particularly visible in the case of the Red Sea. The Red Sea is of significance to China both economically and strategically due to the pivotal role it plays for the other extra-regional powers and the fact that it represents a gateway to Europe – an area where China seeks to elevate its influence. As such, China has numerous interests in securing its regional presence and aims to ensure that its BRI will be able to provide lasting effects on the Red Sea and its littoral states.
The Red Sea is viewed as a key link between China’s projects in the Middle East and Europe and a place from where the BRI can be extended to influence other regions. According to Chinese statements, the Red Sea is a vital waterway for China’s energy supplies and its importance to the global energy market is also significant. This is shown by the fact that Saudi Arabia is China’s largest global oil supplier and Egypt has recently discovered the large Leviathan gas field. These dynamics have an overwhelming effect on the development of the BRI.
3.3 Economic and geopolitical implications of China’s BRI
A research on foreign investments and the initiative that led to them would not be complete without an examination of the impact on the host nation. As this research discusses Chinese FDI and loan making in the Indian Ocean, the focus will primarily be on assessing the economic and geopolitical impacts of China’s BRI on host nations in this region. According to Wang (2013), the short-term economic impact of FDI on the host nation is generally assumed to be positive as it provides the host with capital, technology, and employment opportunities. In the case of the BRI, it can be assumed that no matter how much the Chinese spend, or the form of investment, they are attempting to increase the trade volume of the host nation and obtain a greater market share in multiple industries. This can be evidenced by the China-Maldives free trade agreement that was signed just before the Maldivian government signed up to the BRI in 2014 (Minivan News, 2014) and also the $25 billion line of credit from China to India which is aimed at modernizing India’s infrastructure and increasing export to China (Wong, 2018). Sums are significant, spread across a variety of industries and it is thus conceivable that they will raise the volume of Sino-host nation trade and subsequent revenue from indirect employment on Chinese projects, to eventually return a profit to the host nation, the specifics of this need to be watched closely in the future. The same article by Wang (2013) also acknowledges that there have been negative contrasts between different forms and industries of investment, stating that joint ventures and investment in technology and capital are much less damaging to the interest of the host nation than sole proprietorship and investment in resource-seeking industries.
An article from The Diplomat (Wong, 2017) citing research from Chatham House, echoes this view and states that there is a risk of unsustainable debt increase and exploitation of resources in nations receiving BRI-related investment which may ultimately lead to a negative economic impact. Unsustainable debt may increase due to the BRI’s focus on promoting connectivity and infrastructure; China can aid developing countries in these industries via multiple forms of financing including public and private investment and policy bank, the specifics of the loan agreement can be very flexible and sometimes hidden from the public and lack clear terms for repayment (Sheng, 2018). A case in point is the aforementioned Maldives decision to join the BRI in 2014 allegedly made without proper parliamentary approval in a rushed and secretive manner which has resulted in internal investigation, uncertainty of project specifics, and Maldives’ current indebtedness to China roughly estimated at 3 billion dollars with 70-80% pertaining to Chinese infrastructure projects (The Times of London, 2018 and Minivan News, 2018). This has also caused nearby India to warn the Maldives of the risk of debt entrapment and state that the BRI must not cause debt or strain on the Maldives’ finances (Wang, 2018). The same articles also state that entry into the BRI and Chinese investment can potentially change the host nation’s economic policy to favor more economic ties with China and thus skew the country’s economy to an unhealthy dependence on trading with China and could also lead to job loss in noncompetitive industries and inflow of Chinese labor to the detriment of local workers (The Times of London, 2018 and Wang, 2018).
3.4 Challenges and criticisms of China’s BRI
Although the BRI has succeeded in attracting broad support, it has also generated a significant amount of criticism. Objections include the following:
(a) Debt sustainability. Critics argue that BRI states risk taking on debt distress, an increasing number of those deals are being renegotiated.
(b) Environmental and social impacts. Many BRI projects are coal-related. This has raised concerns that they will increase global carbon emissions at a time when the imperative of mitigating climate change requires a transition to low-carbon energy. Alternatively, there are fears that cancelled coal projects in the home market will simply be diverted to countries along the BRI route. China has also been accused of exporting high-polluting industrial capacity.
(c) Lack of Chinese soft power. Some commentators have contended that China will struggle to win hearts and minds in BRI states. A David and Goliath allegory has been used to describe China’s attempts to win soft power in comparison to the West. One Kenyan commentator stated that China could learn lessons from Kenya on how ‘big powers win and keep friends’. This may change.
(d) Corruption. Both China and recipient countries have been criticized for a lack of transparency and corruption in BRI projects. Accusations include bribery of local officials and Chinese nationals being exempt from local laws and regulations. One prominent example of graft was the 1MDB scandal, which saw former Malaysian Prime Minister Najib Razak accused of siphoning off $700m from a Chinese-backed infrastructure project. China has outlined that the BRI has a ‘zero tolerance policy’ on corruption and it appears to now be stepping up actions to address the issue.
4. The Impact of China’s BRI on Red Sea Maritime Trade and Port Development
China’s BRI projects have primarily focused on port and terminal investments across the globe. This has served to increase host country maritime trade capacities and strengthen trade route relationships with China. In the Red Sea region, Djibouti, Egypt, and Sudan have secured BRI finance for port construction and enhancement projects. Recent developments in Djibouti have been the most notable, with a Chinese firm obtaining a 23.5-year concession on the Doraleh Container Terminal in 2018. Firm figures are scarce; however, it is estimated that Djibouti has received up to US$1.9 billion in Chinese infrastructure financing to date. Egypt has been sourcing Chinese finance and construction expertise to further develop Suez Canal projects, and Sudan is negotiating BRI port investments with an uncertain result. Although seemingly beneficial on the surface, these projects are high risk and high cost. Given the current debt and revenue challenges faced by host countries, Chinese port investments are likely to result in eventual debt equity swaps and/or loan deferments for long-term asset possession. This is a similar situation to the Sri Lankan government’s forced handover of the Hambantota port to a Chinese firm on a 99-year lease due to financing difficulties with a previous BRI project. Chinese asset possession in strategically located ports such as Hambantota or Doraleh may have significant future implications on regional security and trade routes.
4.1 Infrastructure projects and investments in Red Sea ports
During the last six years, Sino-Egyptian relations have grown stronger mainly due to the commitment from both countries to upgrade the relationship to a comprehensive strategic partnership in 2014 and improve economic and trade cooperation. China and Egypt have consistently proven through agreements and high-level visits that both countries are committed to driving development and mutual benefits for one another. This has been seen more recently through China’s unique offer to redevelop the Suez Canal Economic Zone, which had been at the forefront of Egyptian President Abdel Fattah el-Sisi’s economic plans to drive the Egyptian economy forward. The reinvigoration of the Suez Economic Zone (SEZ) was constructed under the vision that the area would become a global trading hub through the reallocation of the traffic in the Suez Canal to develop it into a “global industrial and logistics centre” and to use the fees gained from the canal to enhance the infrastructure in the area to attract foreign investment mainly from East Asia.
Realizing the overlap of aspirations for development and economic growth, the BRI was designed to specifically align China’s policy, capital, technology, and expanding global trade dominance to the development agenda of local countries to achieve mutual benefit. In relation to Egypt, aside from the SEZ, China has several past promises and projects to improve Egyptian infrastructure and stimulate economic growth. High-profile areas of hope for the BRI’s impact in Egypt have come from Chinese promises for construction projects in Egypt that include the Cairo Metro Line 6 and Central Business District at the New Administrative Capital, as well as cooperation on rural development projects in conjunction with the World Food Programme. It is through these projects that Egypt has seen China’s dedication to implementation and the BRI’s principles come into effect.
4.2 Trade patterns and volume changes in the Red Sea region
Pre-21st century, the Red Sea largely held geostrategic value due to its proximity to Europe and East Asia and the trade routes that developed between the two. For Middle Eastern and North African states, there was a low volume of trade with states outside of Europe, and due to a general lack of wealth and prosperity in the region, states in Europe and East Asia were not important trading partners. Arabic trade was largely oriented towards autarky in the production of food and trade of oil for food with Europe. For Eastern African states, they generally relied on exporting raw materials to Europe, and as a result of colonization, the trade was fairly lopsided. Owing to colonial preferences in the colonizers’ economies, trade with Eastern African states was largely in the form of imports of raw materials and foodstuffs, with few finished goods being exported to Africa. This largely continued until the turn of the century and an increased focus of the international community towards Africa promoting trade and development.
Since the early 21st century, the trade environment and the volume of trade in the Red Sea region have significantly altered. This is primarily due to geopolitical events in the Middle East and North Africa and the increased focus on African states transitioning to liberal market economies (LMEs), which has led to increased involvement by foreign states in trade affairs in the region. China’s increased involvement via the Belt and Road Initiative (BRI) is a prime example of this and has the potential to largely impact the volume and patterns of trade in the Red Sea region.
4.3 Effects on local economies and employment opportunities
Providing employment opportunities is important for poorer developing countries and regional communities to be able to participate in economic activities and to raise their living standards. Previous research has indicated that low-income third world countries may lack the necessary skills to be able to successfully engage in economic activities resulting from infrastructure development. This is due to the fact that different types of construction labor are required for different types of infrastructure, and a lot of machinery operation and maintenance may require skills that are not present in poorer communities. Although initially it was difficult to determine the types of employment that Red Sea ports provided, it was expected that port development and operation would provide a range of employment types due to the different types of infrastructure that were constructed at the various stages of construction.
It is anticipated that the levels of trade flow through the Red Sea region will increase over the coming decade. In anticipation of this, as a result of the development of the BRI corridor, job opportunities within the ports and off-site in related industries are expected to provide employment for significant numbers of people throughout the Red Sea region. Comparing employment levels before and after port development will provide observations and conclusions as to the scale and type of employment that such activities generate in the region. During the data collection phase at port sites, information sessions and questionnaires were posed to local residents around the area. These findings were aimed at identifying the local skills and resources available in order to gauge the extent to which the employment requirements for port construction and operation can be met.
4.4 Environmental and social impacts of China’s BRI projects
In terms of the environment, Red Sea has historically suffered from a range of problems including coastal development, fishing pressures and shipping lane pollution. These problems are liable to be exacerbated by development of the transportation sector, particularly if increased traffic and upgrading of ports occurs without proper assessment of the overall benefits and costs to the region. While some countries and ports may stand to gain from improved transport infrastructure, these gains may be offset by other nations’ loss particularly if goods are diverted from their intended destination due to cost savings from efficient transport. Ecosystem damage from mining and global climate change will further stress and isolate affected areas. While it is not the only factor behind current and future environmental problems, the BRI has the potential to greatly increase the Red Sea’s vulnerability. An example of this is the currently proposed $10 billion USD Saudi-Chinese refinery and associated land bridge across the Gulf of Aqaba. Owing to the global importance of Red Sea oil trade, investment in this sector has the most potential to affect global and local welfare with both positive and negative impacts. However, today there is a relatively low dependence of Sea oil on Saudi imports, and the opportunity costs to the Saudi and Chinese partners are particularly high given the alternative resources to invest in the development of renewables.
In contrast to the seemingly beneficial aspects of China’s investment into the Red Sea region, the environmental and social impacts of these ambitious projects may pose problems for the long-term sustainability of Red Sea’s socio-economic development as well as China’s role in the region. This is because poor investment choices, particularly in the port and mining sectors, are liable to damage the Red Sea’s delicate marine ecology. Furthermore, China has an inconsistent record on labour laws and is not known for promoting decent work standards overseas. In order to maximise the benefit of the BRI in the Red Sea region, it is important for China to implement these projects in a manner which will serve to preserve and protect the environment and benefit local populations.
4.5 Future prospects and potential risks
The second scenario is “the marginal gains scenario,” where the ports improve their current functions. This is most likely to occur at HUB ports, rather than transshipment ports. The HUB ports’ main function is to directly import products to the country or export products out of the country. This scenario is less likely to occur at transshipment ports as there is no point in importing goods near the place of transfer and then exporting them again. This function is simple and has no risk to the ports. This would be a good thing for countries that want to import or export products near the area of the Red Sea. This could lead to an increase in GDP for countries near the Red Sea, as the port can create higher salary job opportunities offered and engaging in trade can create more demanding job opportunities in the future.
According to Oh and Wang, they have identified four possible scenarios for the future development of the Red Sea port industry. The first scenario is “the panacea scenario,” where the Red Sea ports become the principal transshipment hubs in the region. This means that the ports will be used to transfer cargos from one ship to another, which is often done to connect routes between origin and destination ports due to cheaper costs. This scenario could bring high profits to the port, assuming they have the suitable capacity and efficiency, as the demand for Asia-Europe trade is relatively high and the fuel prices are more expensive, thus making it more cost-effective to transfer cargos at the Red Sea. This scenario could possibly become true, as the world’s leading container shipping company, Maersk, has recently signed a strategic agreement with the Chinese e-commerce company, Alibaba, to place a joint initiative of Maersk using its own Maersk-Italia service to the Al-Sahba container terminal at the Port of Tangier.
The Chinese BRI has created a great competitive environment for the port industry in the Red Sea. Once dominated by European companies and countries with Thai-Pacific ports, the Red Sea ports have to be more efficient and feasible to attract both domestic and international trade going through the area. David W. P. Oh and Heng Wang have identified and classified different prospects from the ports and potential risks that the ports might face with the implementation of BRI.

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