Maritime Trade and Transport - HWWI

In the PRC, as in Europe, the future of rail transport will involve (partial) privatization to
an increasing extent (see Chapter 7). At the end of 2005, 20 joint ventures existed in the railroad
sector, attracting funds equivalent to $5.5 bn, including 310 mn from private investors.
This past summer, the first rail operator, Daqin Railway Co., went public on the Shanghai
Stock Exchange. The IPO of the largest coal transporter in northern China had a total volume
of $1.75 bn. According to statements made by the Railway Ministry, this example is to be followed
by a number of other IPOs. The recent Initial Public Offering of Air China showed that
investor expectations are not always met. The number of shares offered had to be reduced
immediately, and the initial market price did not meet the price of issue.
Regardless of this, expansion in aviation and airports is becoming progressively important.
In 2005, domestic airlines transported 138 mn passengers and 3.4 mn t of freight. The Civil
Aviation Administration of China (CAAC) expects annual growth in freight and passenger traffic
to average 14% by 2010, followed by a slight slowdown in the growth rate to 11% annually
by 2020. In that year, 1.4 bn passengers and 30 mn t of freight will be transported. To meet
this demand, 44 new airports are to be built by 2010, with an investment sum of 140 bn yuans.
The U.S. logistics company FedEx is currently building the largest air cargo handling center for
the Asia-Pacific region in Guangzhou in southern China, investing capital of $150 mn. The
hub is to go into operation at the end of 2008.
A major potential for inland navigation which is still fully untapped is offered by the
numerous canals that crisscross the country, particularly in the southern part. The first smaller
canals for transporting goods were already built 2500 years ago. The most important such
waterway is the Grand Canal, which connected Hangzhou (near Shanghai) with the former
capital, Xian, a distance of more than a thousand kilometers. Today the Grand Canal is
1,800 km long. Whereas regional traffic in the north primarily uses roads, in the south more
than 120,000 kilometers are considered navigable, so that water transport – especially on the
Grand Canal and the Yangtse – is quite significant.
One of the most important infrastructure projects for the shipping sector up to 2010 is the
deepening of the canal between Beijing and Hangzhou. Another project involves deepening
the Pearl River. The critical significance of the expansion of China’s waterway and navigation
capacity, however, is demonstrated by the “Millennium Project” for expanding the Yangtse with
all of its intermodal facets. At present, merely 15% of its capacities can be navigated. Only after
total completion of the Three Gorges Dam – the world’s largest dam – including its navigation
locks and ship lifts 1,000 km west of Shanghai (end of 2009) and the construction of the new
container port in Wanzhou will the Yangtse be navigable for cargo ships over a distance of
660 km. This will amount to a fivefold increase in cargo volume and savings of approximately
35%. Container shipping on the Yangtse, which has already more than quadrupled in the past
five years (2006 estimate: 3.1 mn TEU) is expected to increase to 15 mn TEU by 2030. A fur-
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