South China Morning Post
July 3, 2006

Viewpoint Beijing’s determination to modernise the Yangtze will transform the mainland’s economic landscape over the next 20 years. The mighty waterway, already the world’s leading cargo-carrying river, has recent average annual growth rates of 25 per cent. Its potential is underpinned by the fact that less than 20 per cent of the river capacity is being utilised. Developing the Yangtze has become a matter of urgency for manufacturers in coastal cities as they face sharply rising land costs and even labour shortages, factors that are forcing many to consider moving inland. The government has been investing heavily to improve road and rail networks in the interior, but the Yangtze, historically the most important west-east transport artery, is the key to the luring development inland as it offers the cheapest and most efficient way to move large plant into more remote areas. By 2020, the government aims to deepen the lower reaches of the river, smooth the middle reaches and extend the upper reaches to Shuifu, in Yunnan province.

The ambition is to allow 10,000-tonne tug-barge fleets to travel from Shanghai to Chongqing for at least six months of the year. In April, the government announced its first allocation of funding, one billion yuan, for vessel standardisation on the Yangtze. The money will be used, among other things, to compensate for the compulsory withdrawal of old commercial vessels. The government hopes that by 2020, 95 per cent of all vessels on the river will be standardised, thereby hugely improving utilisation and productivity levels. This is exciting, but the most far-reaching changes are taking place in the Yangtze ports, with some preparing to seek public listing on the mainland or in Hong Kong, following in the footsteps of the Chongqing, Wuhu and Nanjing port operations. Hong Kong has growing business interests along the river, but the single largest investor on the Yangtze is Shanghai International Port Group.

Over the past five years, the company has poured more than 500 million yuan into developing container facilities at nine ports. Securing the lion’s share of the rapidly growing cargo volumes from the Yangtze is also of strategic importance to Shanghai as its own port handling capacity increases. Its newly opened Yangshan Bonded Terminals have allowed Shanghai to transform itself from a river port into a truly modern coastal facility. Upon completion by 2020, Yangshan alone will have a capacity of 25 million, more than the entire 2005 throughput of either Hong Kong or Singapore. By 2020, the central government hopes to have a network of well-equipped, efficiently run, multi-functioning ports on the Yangtze, with Chongqing serving as a regional hub on the upper reaches, Wuhan performing the same role on the middle reaches and Shanghai, supported by Nanjing, as the hub for the lower reaches. By then, the logistics complications of moving plant inland may weigh less heavily on the minds of manufacturers than they do now.