Changing China

It’s often suggested that the post-recession world is a lot different from the world before the near-collapse of major world economies. That’s certainly true at China’s ports.

When the ports of Shanghai, Ningbo and several others in China are growing at double-digit rates this year, while Shenzhen — which for years liberally dispersed the industrial bounty of the factory-rich Guangdong province — barely grew at all, there clearly is an important churn under way within the country that generates 30 percent of global container volumes. Several key trends are behind these numbers, some known, others developing.

One is a well-known story: the deindustrialization of Guangdong that accelerated when migrant workers didn’t return to factories after this year’s Lunar New Year break, forcing up labor rates and uprooting traditional manufacturing. That came as the government pushed the relocation of polluting industries to the interior and their gradual replacement with higher-end manufacturing.

Although the Guangdong ports now see a greatly expanded region of South China as their catchment area, annual growth exceeding 11 percent from 2001 to 2008 at the Pearl River Delta ports, including Shenzhen, Hong Kong and Guangzhou, is unlikely to appear again, David Deng, assistant general manager of China Merchants Holdings, told the TPM Asia Conference in Shenzhen last month.

The low growth at Shenzhen, where volume is focused heavily on trans-Pacific and Europe-Asia trade, also reflects the slow-growth U.S. and European economies that resulted in the meek 2011 peak season. The woeful U.S. housing market is a particular drain on volume at Hong Kong and Shenzhen, one Hong Kong-based shipping analyst said.

Guangzhou is faring better this year because of its greater exposure to intra-Asia and intra-China traffic.

But in a larger sense, the Pearl River Delta and Guangdong province, still the largest in China in GDP terms, is looking at a different kind of future. It’s a future dominated by advanced manufacturing and high-tech agriculture versus traditional labor-intensive processing, Deng said, as well as by regional economic integration, specifically the China vision for a Pearl River Mega-City, a single metropolis formed from nine cities through some 150 infrastructure projects in transportation, energy, water and telecommunications, according to a description of the plan in the Economist.

These projects include the $10 billion Hong Kong-Macau bridge, set for completion in 2016 or 2017, as well as initial plans for a third runway at Hong Kong International Airport and a third runway planned at Shenzhen.

The story is different elsewhere in China. Shanghai and Ningbo are reporting solid growth this year, as are Qingdao, Tianjin, Dalian and Xiamen.

In Shanghai, this reflects growing export volume out of the Yangtze River, as well as imports contributing more to the mix, Yan Jun, vice president of Shanghai International Port Group, said in an interview. It’s in the area of imports where experts see a big area of change in China’s port volume. Imports of raw materials and components are shifting north, reflecting the shift in manufacturing.

“If you look at pure export numbers across China ports this year, you would see relatively the same old story,” said one senior logistics executive who requested anonymity. In other words, a long-term shift northward.

In fact, South China ports have lost market share within China since at least 2003, when the region had 36 percent of containerized volume, compared with approximately 20 percent today, according to Hong Kong-based Transport Trackers.

“When you dig into the total throughput volume numbers, it becomes obvious that imports seem to be making the difference (because of) the import of raw materials for manufacturing shifting toward the migration of manufacturing north (and) China’s focus on domestic consumption versus exports as part of its 12th Five-Year Plan,” the logistics executive said.

Another factor affecting China port volumes is the developing world.

China supplies some 47 percent of U.S. container imports, according to PIERS, a sister company of The Journal of Commerce. Yet U.S. total containerized imports through September were up only 3.3 percent. Third quarter imports from Northeast Asia, which is overwhelmingly China, actually were down 5 percent. Yet China’s overall container volume through all ports was up more than
12 percent through September.

That’s a lot of growth generated from somewhere, and it’s not coming from Europe. A good portion is exports of consumer products going to Latin America, Africa and elsewhere in Asia. What China is producing for the U.S. is being produced for everyone else as well; there is plenty of economic growth around the world, and it shows in the numbers.

The map may look the same at first glance, but the numbers show the landscape is changing a great deal.

Peter Tirschwell is senior vice president of strategy at UBM Global Trade. Contact him at ptirschwell@joc.com, and follow him at twitter.com/PeterTirschwell.

For the full story: Log In, Register for Free or Subscribe