In a rare interview, a top executive of the China Ocean Shipping Co. in Beijing expressed anger, confusion and frustration over the ongoing controversy related to the company's plan to expand into a larger terminal at the Port of Long Beach.

"Cosco is not operating a fleet of warships. We are a company of merchant vessels," said Gao Wei Jie, Cosco's director of transportation in Beijing. "Unfortunately, a handful of persons have been slandering us through the news media."

Indeed, the Port of Long Beach's plan to build Cosco a new $200 million terminal on the site of the former Long Beach Naval Station has elicited a chorus of opposition.

Prominent among those opponents are two Republican congressmen from San Diego Randy "Duke" Cunningham and Duncan Hunter, who has introduced legislation to block the Cosco project, calling it a national security risk.

"Cosco's involvement in arms smuggling and the recent unchecked shipment of machine guns and grenade launchers through Long Beach is unacceptable. My legislation will prevent a Communist Chinese beachhead at the naval station," said Hunter in a March 20 prepared statement.

Cosco has been operating at the Port of Long Beach since 1979 and has been a model tenant, according to port officials.

But opposition from preservationists seeking to save a number of historic structures on the 55-year-old base prompted an L.A. Superior Court judge to order Long Beach to terminate its deal with Cosco, throwing the 145-acre cargo facility and on-dock railyard project into doubt.

"Everything is off the table now," said Long Beach Mayor Beverly O'Neill, who recently returned from a trip to Beijing, where a delegation of city officials met with Cosco President Zhen Zhong and three other executives.

O'Neill characterized her delegation's meeting as "embarrassing."

"We had to be perfectly honest with them about what was happening," she said. "It was not the news they wanted to hear."

Despite O'Neill's pessimism, Gao indicated that Cosco remains committed to Long Beach, and is not entertaining recent offers by the rival Port of Los Angeles to build the company a cargo facility at the L.A. port's new Pier 400 development.

"We have already committed to the (Long Beach Naval Station) lease agreement," Gao said. "There is no need to discuss further at this moment."

Cosco is the Long Beach port's fastest-growing tenant, and one of the world's largest shipping lines, handling about 25 percent of all U.S.-China trade. China is Southern California's second-largest trading partner, with more than $18 billion worth of goods moving between L.A. and China per year.

Despite its setbacks, Long Beach still hopes to go ahead with the 145-acre terminal project. The city's Harbor Commission voted for the third time last week to build a shipping terminal on the former Navy site.

Lawyers for the port are expected back in court on May 13 to seek permission to proceed. If granted, they will need to draw up a new lease agreement with Cosco, said Long Beach Harbor Commission President George Murchison.

Asked if she is confident about the future of the $200 million terminal project, O'Neill said, "I don't feel really confident about anything right now. We just have to follow the process as described (by the judge)."

The delays have been equally vexing for Cosco.

"I don't know why (the lease was canceled)," said Gao who, like many Cosco executives, seldom speaks with foreign reporters. "This is just an attempt to hurt Cosco."

The company has outgrown its current home in Long Beach and desperately needs a new facility to accommodate its fleet of massive containerships.

"We have to expand," Gao said. "If we use the naval base, the customer can be better served. The current facilities are too small, too congested, so the customers have to wait to pick up their cargo."

He said longer delays could have implications far beyond Southern California. "It is certainly going to interrupt Cosco's future planning," Gao said. "In turn, it will affect trade between (the U.S. and China)."

Under its recently terminated agreement with Cosco, Long Beach promised the company a working terminal by July 1, 1998.

The China Daily newspaper in Beijing, which acts as the Chinese government's English-language mouthpiece, recently reported that Cosco is considering filing a breach-of-contract lawsuit against the port.

Gao would neither confirm nor deny that report. "All facilities will be employed if it is necessary, but there has been no decision (about whether to take legal action)," he said.

The terminal project has been mired in controversy since last April, when Cosco signed a letter of intent with the Port of Long Beach for a new terminal, which Long Beach officials said would generate about $1 million in additional tax revenues for the city per year.

But the project has encountered fierce resistance on a number of fronts. Long Beach preservationists have filed suit to save historic structures at the 55-year-old base. The cities of Compton and Vernon have sued to block the project, citing traffic concerns. Environmentalist groups also object to the project, arguing it would pose a threat to an endangered bird species which nests near the property, the California least tern.

Larry Kanter reported from Los Angeles and contributor Jason Booth reported from Hong Kong.

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