Examining the PRC's Strategic Port Investments in the Western Hemisphere and the Implications for Homeland Security, Part I

Defense Posture and Global ThreatsHouse Homeland Security Subcommittee on Transportation and Maritime Security · 2025-02-11 · 119th Congress
The House Homeland Security Subcommittee on Transportation and Maritime Security held this hearing to examine investments by Chinese state-owned and state-linked firms — including COSCO, China Merchants, and Hutchison Ports — in ports across Latin America and the Caribbean, particularly at the Panama Canal, and what these investments mean for U.S. Begins at 0:06:53
Transcript
Highlights

Title

Chinese state-linked port investments near the Panama Canal and homeland security

Purpose

The House Homeland Security Subcommittee on Transportation and Maritime Security held this hearing to examine investments by Chinese state-owned and state-linked firms — including COSCO, China Merchants, and Hutchison Ports — in ports across Latin America and the Caribbean, particularly at the Panama Canal, and what these investments mean for U.S. homeland and economic security. Four witnesses testified on the scope of Chinese port holdings, associated military, intelligence, and cybersecurity risks, and policy responses including port-security funding, reshoring of port equipment, and diplomatic countermeasures. The hearing also became a venue for a partisan dispute over Elon Musk's role in the administration and the freezing of federal grant and foreign-aid funding. Begins at0:06:53

Who spoke

Chairman Carlos Gimenez (R-FL)0:07:19: Opened by warning that the PRC has expanded its footprint at ports adjacent to the Panama Canal, citing that roughly 14% of U.S. seaborne trade and 40% of U.S. container traffic transits the canal annually0:09:05; said the U.S. "cannot and will not accept" a foreign adversary controlling infrastructure critical to homeland security0:10:04. Later questioned witnesses on China's ability to hinder canal traffic0:42:31 and on Chinese fentanyl-precursor manufacturing, noting 97% of precursor chemicals are made in China and are illegal to sell domestically0:41:32.

Ranking Member LaMonica McIver (D-NJ)0:13:31: Argued that scrutiny of PRC port investments is undermined if the administration simultaneously grants Elon Musk and DOGE access to sensitive government data, citing his undisclosed loans from PRC-controlled banks0:15:29 and a contractor's description of DOGE's Treasury access as "an unprecedented insider threat risk"0:16:31. Criticized attempted freezes of port security grants and USAID funding as counterproductive to countering China0:16:460:17:47; later pressed Cary Davis on the impact of grant freezes on the Port of Newark0:49:24.

Dr. Isaac Kardon, Carnegie Endowment for International Peace0:22:36: Said Chinese firms hold minority stakes in five U.S. port terminals (Los Angeles, Seattle, Houston, Miami, and a 51% stake at Long Beach's Pier J)0:23:06; noted the PLA Navy has made only 39 port calls in the Americas out of 413 globally over 27 years (about 9%)0:24:00. Recommended against forced divestiture in favor of cybersecurity screening and domestic technology alternatives0:25:14.

Dr. Matthew Kroenig, Atlantic Council/Georgetown0:26:49: Testified that China's port investments pose a "serious national security threat," citing fentanyl-precursor shipment, intelligence collection, and potential blockage of U.S. naval passage0:27:59; urged a "de-risking" approach and hard decoupling in sensitive sectors, plus increased SOUTHCOM funding0:28:560:31:19. Later said U.S. defense spending, near 3.5% of GDP versus a Cold War average of 7%, leaves the Coast Guard and Navy under-resourced against China1:13:08.

Dr. Ryan Berg, CSIS0:31:48: Said nearly 130 ports globally have some degree of PRC ownership or operation, more than half on major shipping lanes or choke points0:32:16; listed Chinese holdings including a 90% stake in Brazil's Port of Paranaguá and 100% of Jamaica's Kingston Freeport0:32:57. Proposed a DFC-backed "port buyback" program and expanded U.S. commercial diplomacy staffing0:34:430:35:26.

Cary Davis, President/CEO, American Association of Port Authorities0:36:53: Said U.S. ports generate $2.9 trillion in economic activity and 22 million jobs0:37:29; noted the Port Infrastructure Development Program is oversubscribed 4x while the Port Security Grant Program's $400 million authorization has gone unfulfilled for over a decade0:38:260:38:47. Estimated it would take about two years to begin domestic production of ship-to-shore cranes even with funding in place0:59:25, and that a port closure costs roughly $5 million per day1:16:57.

Rep. Andrew Garbarino (R-NY)0:52:53: Asked Davis about cyber vulnerability of Western Hemisphere ports and cited the "Logink" software as a case where U.S. agencies blocked a risky Chinese-developed platform0:54:20; also questioned Kroenig on countering PRC surveillance technology such as Hikvision cameras and Huawei systems in Latin American ports0:56:13.

Rep. Turner (R-TX)0:58:29: Representing the Port of Houston area, asked about the timeline for domestic manufacture of ship-to-shore cranes and support for the roughly $20 billion federal crane-manufacturing initiative0:58:58; questioned why USAID funding cuts to the Western Hemisphere (about $1.8 billion of a $4 billion global budget) might benefit the PRC1:01:061:01:32.

Rep. Eli Crane (R-AZ)1:03:49: Contrasted concerns about Musk's China ties with the Biden family's foreign payments1:03:49; asked Davis which allied countries could supply crane equipment instead of China, citing Germany, Austria, and Ireland1:05:07; questioned why profitable port authorities like Los Angeles ($684.7 million) and Seattle ($1.2 billion in revenue) need federal subsidies1:06:30.

Rep. Sheri Biggs (R-SC)1:08:28: Asked Kardon how PRC control over shipping routes affects the Coast Guard's ability to police illicit trade [0:09:54 in her remarks]; Kardon replied China's dominance spans shipbuilding and supply chains, not just its navy1:10:34. Asked Kroenig whether the Coast Guard is adequately resourced against China1:12:38.

Rep. Pablo José Hernández (Puerto Rico)1:14:01: Warned that federal funding freezes threaten Bipartisan Infrastructure Law-funded port projects in Puerto Rico, citing a magnitude-7.6 earthquake and tsunami advisory over the weekend as an example of ports' emergency-response role1:16:26; Davis agreed port closures can cost roughly $5 million per day and called port investment bipartisan: "the containers can be blue, the containers can be red"1:18:17.

Rep. Zach Nunn (R-IA)1:27:45: Described a 20-year career as an intelligence officer flying reconnaissance near the PRC periphery1:28:16; cited a Chinese deep-space station development in Argentina and BYD's battery dominance per CSIS1:28:40. Asked Berg how well Latin American governments assess long-term risks of Chinese deals1:29:50 and asked Kroenig and Davis about countering embedded Chinese software/hardware in U.S. port systems, referencing the Salt Typhoon hacking campaign1:33:24.

Key moments

Gimenez said Hutchison Ports, a Hong Kong firm with close CCP ties, manages terminals at both Balboa and Cristóbal adjacent to the Panama Canal, and that a mere Panamanian audit of the operator is "simply not enough"0:09:330:10:04.

Kardon testified Chinese firms hold stakes in 15 of 95 total foreign port investments in the Americas (about 16% of their global total), with minority stakes in four U.S. ports and a 51% stake at Long Beach's Pier J0:23:060:23:33.

McIver and Gimenez sparred indirectly over Elon Musk: McIver cited Musk's undisclosed loans from PRC-controlled banks and DOGE's "unprecedented insider threat risk" at Treasury0:15:290:16:31, while Rep. Crane later countered by invoking the Biden family's foreign payments1:03:49.

Davis disclosed that 97% of fentanyl precursor chemicals are manufactured in China, are illegal to sell there, and are nonetheless incentivized for export by the CCP — a point Gimenez called evidence China is America's "greatest threat"0:41:320:42:01.

Kroenig said halting disrupting canal trade "would not be very difficult," drawing a comparison to the Suez Canal blockage, and warned China could hinder U.S. naval mobility in a crisis0:43:420:44:10.

Berg detailed nearly 130 globally PRC-linked ports, more than half on major shipping lanes, including a 90% China Merchants stake in Brazil's Paranaguá and a 100% stake in Jamaica's Kingston Freeport0:32:160:32:57.

Davis said the Port Security Grant Program's $400 million authorized level has not been fully appropriated in over a decade, while the Port Infrastructure Development Program is oversubscribed 4x0:38:470:38:26.

Kroenig said U.S. defense spending has fallen to about 3.5% of GDP versus a 7% Cold War average, calling for 5% spending to properly resource the Coast Guard and Navy against China1:13:08.

Turner noted USAID directs about $1.8 billion of its roughly $4 billion in investments to the Western Hemisphere and argued cutting that funding cedes ground to China's Belt and Road Initiative1:01:061:01:32.

Davis estimated it would take about two years to stand up domestic ship-to-shore crane production even with funding secured, and many more years to replace the hundreds of Chinese-made cranes already installed at U.S. ports0:59:250:59:53.

Hernández linked a weekend 7.6-magnitude Caribbean earthquake and tsunami advisory to the stakes of federal port-funding freezes, arguing weakened ports leave Puerto Rico and the USVI vulnerable during disasters1:16:26.

Metadata

CommitteeHouse Homeland Security Subcommittee on Transportation and Maritime Security
Chamber / CongressHouse · 119th Congress
Date2025-02-11
TypeHearing
Witnesses
Mr. Cary Davis — President and Chief Executive Officer, The American Association of Port Authorities
Matthew Kroenig, PhD — Private Citizen
Ryan Berg, PhD — Private Citizen
Isaac Kardon, PhD — Private Citizen
Videoyoutube
Transcript187 caption blocks · 12,956 words · 1:35:25 runtime
EventCongress.gov 117849