China's infrastructure push offers a sure track to better growth
Frank-Jurgen Richter says trade integration needs local infrastructure
China is busy developing new rail and river linkages. At a recent meeting in Wuhan , representatives from Europe, Central Asia and China met to discuss the strengthening of ties along the rail system - they wish to raise the frequency of pan-continental freight services.
For instance, Chinese goods rolled into Madrid early this month having travelled 13,000km from Yiwu, carrying toys and other Christmas goods, returning with wine, hams and olive oil: a good two-way trade clearly benefiting firms at either end of the line. Regular rail routes at present link Chongqing (with its auto industry) with Duisburg and Beijing with Hamburg, illustrating how rail can be a flexible system, reaching more destinations faster than a sea link.
What is missing is the quantity aspect: a "standard" train will carry only 30 containers - though some countries permit multiple engine units to push very long trains. In contrast, with little fuss, big ships haul up to 15,000 containers on regular timed services.
Given such figures, mayors along the Yangtze River have agreed to cooperate on the integration of road, rail and air transport, plus opening up their ports to redevelopment that will allow larger ships to pass further upriver.
However, generally, port throughput in China grew at a relatively modest level from January to October, according to Ministry of Transport data. Freight handled at the country's major ports grew 4.6 per cent year on year over the first 10 months to nearly 9.3 billion tonnes, compared with a 9.9 per cent increase in the same period last year. The slowdown is an indicator of the country's declining rate of foreign trade growth, which dipped to 2.5 per cent from January to October, from 7.6 per cent in the same period in 2013, as a result of the global slowdown.
Research shows that money spent on infrastructure is well spent. According to a World Bank survey, if Latin America's infrastructure was as good as East Asia's, countries with the worst roads and phones would see their annual growth rates increase by as much as five percentage points. Chinese economists are delighted by this and are extolling its development model to the rest of the world.