Developing railways key to spreading the wealth in China
March 23, 2007 by SwizStick
Filed under China, Supply Chain Management
Asia Logistics Wrap is starting to post frequently again, so check out his site often for interesting updates and commentary on the Asia logistics scene. He has an oustanding post on how China plans to use railways to “shrink China’s gap” – their income gap that is:
For readers of this blog and other logistics blogs commenting on Asia, it is no surprise that the current status of China’s inland infrastructure is lacking and behind the pace of its own economic growth, and most significant advances in logistics, along its eastern seaboard. WSJ provides a nice summary without digging into my archives, where you can find more details:
The investment would provide a missing link in China’s logistical infrastructure. The nation’s seaports are among the world’s most modern and efficient, but its railroads, which could be supplying these ports with a lot of the goods they send abroad, aren’t up to the task.
In many other countries, railroads carry as much as 20% of all containerized freight; China’s historically underfunded tracks transport less than 2% of its shipping containers. Almost all of China’s exports arrive dockside via truck. Yet trucks in China are cost-effective only over distances of roughly 300 miles, or a single day’s road journey, according to transportation experts.
Of course, that state of this physical architecture impacts the decision-making of businesses around the world when considering China for investment:
Investors who want to produce goods for export have balked at building factories in provinces where reliable transportation links to seaports are scarce. As a result, investment in Chinese export-oriented industries has been concentrated overwhelmingly along the coasts and major rivers near China’s ports. James Wang, a transportation geographer at the University of Hong Kong, calculates that no less than 94% of China’s international trade value is generated within 150 miles of the coast. This investment pattern deepens the country’s internal economic fault line.
Where economic flows don’t reach the people, the people go to where they can tap into it themselves
Read the whole thing, it’s an interesting post. For further background information read here, here, here, here, and here.
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