Can belt and road plan reverse sagging fortunes of China’s trade war-hit northeastern ports?
- The rust belt region is focused on drawing more firms from Japan and South Korea to use the subsidised sea-to-rail service, a signature of the Belt and Road Initiative
- Liaoning, which counts the United States as its fourth largest export market, is seeking to use Dalian port to connect with Russia, Eastern Europe and Central Asia
For a while, the ports in the northeastern Chinese province of Liaoning have been pinning their future on the success of Beijing’s Belt and Road Initiative, a global trading strategy to link China with rising consumer classes in Asia, the Middle East and Europe.
But so far the plan has not turned out to be the game changer they had hoped for, due to fierce competition between China’s many large ports for pieces of the sea-to-rail traffic that the trading initiative has created, as well as subsidies the government is offering to support it. In addition, slower growth in global trade due to the trade war with the United States, overcapacity in port facilities, and a decline in foreign investment, have put downward pressure on their operations.
For Dalian port, through which most of Liaoning’s foreign trade flows, the the belt and road strategy highlights how state planning has played a key role – for better and worse – in driving new markets and business in the depressed rust belt region. It is this predominance of the government’s presence in industries and companies that has become one of the most contentious issues in the trade negotiations between China and the US.
The ongoing trade war, with no sign of a near-term resolution, will continue to dampen overall container traffic growth in China, which has the world’s busiest container shipping ports. The growth rate is likely to fall to zero or a low single-digit percentage figure in the next 12-18 months, according to report published in May by US rating agency Moody’s.
