China clears Hutchison

China clears Hutchison

HONG KONG (Reuters): China has cleared Hutchison Whampoa Ltd to take a majority stake in a port project despite the country's policy of barring foreign investors from controlling domestic container operations.

China's cabinet has allowed the world's largest container port operator to take a 65 percent stake in phase three of the Yantian container port in Shenzhen, officials at Hutchison's China partner Yantian Harbour Group said on Wednesday.

Yantian Harbour would hold the remaining 35 percent, the officials told Reuters by telephone from the southern Chinese city.

Phase three will require a total investment of 5.57 billion yuan (US$673 million) and would have four berths capable of handling 1.6 million twenty-foot equivalent units (TEUs) annually, the Shenzhen-based Securities Times daily said.

Chinese port officials said earlier this year that foreign investors were no longer allowed to hold controlling stakes in domestic container ports.

A Yantian official said Beijing probably approved the deal because Hutchison already holds 50.5 percent of the first two phases of the container port, in which Hutchison and Yantian Harbour Group's subsidiary Yantian Harbour Co Ltd [0088.SZ] had sunk HK$7 billion (US$897 million).