China’s transport initiative could boost trade up to $2.5 trillion

Mark Szakonyi, Executive Editor, JOC.com | Oct 15, 2015 2:31AM EDT

SHENZHEN, China — China’s land and maritime transport initiative linking Asia with Europe and Africa, and the countries in between, promises to add up to $2.5 trillion in trade to the country over the next decade, aKuehne + Nagle executive said Thursday.

“That’s more than the value of (Chinese) exports in 2013,” Jens Drewes, president, North Asia, told roughly 600 people at JOC’S TPM Asia Conference in Shenzhen.

Although the “Belt and Road” initiative, formerly know as “One Belt One Road,’ is still in the early stages, it will provide shippers and transportation providers new opportunities, he said. To pay for the massive initiative, which builds on the government’s effort to shift manufacturing inland from the coast, China has made more than 65 loan commitments since 2013, totaling $50 billion, Drewes said.

The initiative, launched in 2013 by President Xi Jingping, bring together together the Silk Road Economic Belt and Maritime Silk Road developments via ports, railroads and highways. The focus is on rail and sea-rail transport, rather than strictly ocean shipping, John Lin, deputy director of the Policy and Law Research Centre of Shanghai International Shipping.

Lin provided a far more skeptical view of the initiative than his fellow panelist Dewes. Still, money is being spent and more is planned, such as the $10 billion going toward a port in Bagamoyo, Tanzania, he said. In the second half of 2014, the number of rail routes linking China to Europe increased from eight to at least 19, and seven new shipping services were launched from southwest China to Southeast Asia in the same period.

“The central government is trying to kill two birds with one stone,” Lin said, referring to the initiative. “The first bird is to raise the commercial and political influence in neighboring countries in Asia, Africa and Europe, and the other bird is to sustain a steady growth of the Chinese economy.”

Lin likened Belt and Road to an empty bottle that the government can fill with anything and claim success. He said it’s not certain what the impact on containerized shipping will be, and warned that the government could abandon the strategy even though it’s expected to be a major plank of the Politburo’s Five-Year Plan. The 13th roadmap for economic and social development through 2020 will be ironed out later this month.