This is China! BLOG

Inexorable China: Increased Infrastructure Availability

As I sped along at more than one hundred miles per hour on the bullet train from Shanghai to my home in Suzhou – cars peeling away from the landscape, the occasional water buffalo a blur - I considered what a Beijing-based journalist-friend had told me a half-year before: “In the late 90s when I traveled from Shanghai to Suzhou it took me nearly a day by train and bus. It seemed they both stopped at every village along the way.” Now, the bullet train takes a cool 35-minutes, station-to-station. Another hour-and-a-half if I want to continue on to Nanjing, 250km to the west of Shanghai.

But it’s not just the more economically vibrant areas of China’s eastcoast that are seeing arterial expansion of its railways: the Western areas are a priority, as well, with the Central Government aiming to nearly double the regional rail network to 40,000 kilometers by 2020.

Highways that did not exist even two years ago between Shanghai and hamlets such as Fenhu, to the south of Suzhou, now slice through rice paddies and neighborhoods with only efficiency of transport in mind. The central government plans to expand the country’s expressway network to 85,000 kilometers by the year 2020 to connect all towns and cities with populations greater than 200,000. By 2030, the Chinese government expects to have in place 120,000 km. By contrast, the USA’s total amount of highway today is 75,198 km, the vast majority of which was built during the 1950s. The new highway system does not stop at the Chinese border, though; China has hammered out agreements with Thailand, Vietnam and even India to extend roads through the countries to facilitate commerce.

China is also building some of the longest bridges in the world connecting points that what two years ago would take a car the better part of a day to traverse. The bridge across the Yangtze River connecting Shanghai to the rivertown Nantong, to the north, will bear the 2008 Olympics torch; the bridge between Shanghai and Ningbo, on the southern lip of the Yangtze River Delta is said to be the longest deep-water bridge in the world.

In addition to dredging a deeper Yangtze River to facilitate commerce along the river, the government is building or beefing up current and building new deep-water docks along the river and inlet in cities such as Ningbo, Zhangjiagang, Wuhu and Chongqing. The Central Government is also investing heavily in ports along the seacoast at Shanghai, Shenzhen, Dalian, Qingdao and even Tianjin.

Kunming, deep in the south of China, is slated to become a major logistics hub for supply chains reaching from Japan and South Korea, through China and into Thailand, Cambodia, Malaysia and Indonesia. Kunming is currently building an international airport to supplement its current domestic airport, which it will move from the rapidly growing city. Total, the Central Government plans to undertake 71 airport expansion projects, relocating 11 airports and building 49 new ones.

China’s irrevocable trend toward developing its transportation network to become world-class implies that by the year 2020 it will potentially be more cost-effective to move goods from the east coast to the interior and from the arid northwest to Thailand than it is today. The ease of transportation means Western companies selling products in China will be able to increase margins currently eaten up by expensive toll fees, inconsistent duties from province to province, centralized (usually Shanghai) distribution centers and a lack of long-haul vehicles. Just as American supermarkets now enjoy tomatos in wintry Chicago picked the day before in Mexico, retailers such as Carrefour and Walmart will be able to lower distribution costs by building and stocking localized distribution centers.

The increased mobility China’s improved transportation infrastructure will bring will also enable Chinese themselves to re-locate from city to city, boosting the local GDPs of cities in China’s poorer interior. Higher GDPs imply the Chinese will be more able to buy Western brands, which polls show Chinese consistently trust over local brands.

Western companies coming to China to produce goods for the export market will find that shipping their ports from, for instance, Chengdu, in Sichuan province, will be affordable. Now, despite increased labor, land, lease and utilities costs in the Shanghai municipality, it is actually less expensive to have an export-operation in Shanghai than in lower cost Chengdu.

Bill Dodson
SUZHOU, China

1. Inexorable China
2. Inexorable China: Land Grabs
3. Inexorable China: Increasing Water Demands