Striking new statistics on the origin of Chinese exports reveal how the focus of Chinese manufacturing is gradually shifting away from the costly south and toward the north and west.
The analysis by New York-based global investment banking and research firm Seabury shows year-over-year changes in production by province, adding a layer of insight unavailable from port volume figures.
Seabury’s figures put total Chinese containerized exports last year at 36.9 million 20-foot-equivalent units, up 3.6 percent from 2011. Growth rates, however, varied sharply by province and region.
In 2012, ocean exports originating from Guangdong, a southern province adjacent to Hong Kong and the traditional home of Chinese manufacturing, fell 5.5 percent year-over-year as rising labor, land and power costs and weaker external demand took a heavy toll. Other coastal provinces in the south, including Fujian and Zheijang, saw growth of less than 5 percent last year, while city provinces Beijing, down 0.1 percent, and Shanghai, down 2.8 percent, produced less export cargo in 2012 than a year earlier.
“Shanghai is not at the top of the export list as the volumes (moved through the port) actually now come from multiple provinces,” a Seabury spokesman told The Journal of Commerce.
By contrast, northern provinces such as Liaoning, 20.5 percent; Tianjin, 8.5 percent; and Hebei, 6.8 percent — which have invested heavily in infrastructure and often offer lower production input costs than southern China — posted healthy year-over-year gains.
Inland provinces also made huge inroads into overseas markets. Chongqing, a rapidly growing center for original equipment manufacturers, posted a 43.2 percent increase in containerized exports last year. Anhui’s containerized exports also soared last year, up 46.5 percent compared to 2011.
Growth rates in north and west China are now much faster than in South China, according to Christoph Matthes, ocean freight product manager for North China at German logistics provider DB Schenker. “Ports in North China like Tianjin, Dalian or Qingdao are becoming more and more important,” he said.
The Chinese government’s “Go West” policy and increasing labor costs in port cities “influenced decision-makers to establish new manufacturing plants at inland locations,” he added.
Despite slowing growth, Guangdong province retained its position as the largest generator of containerized ocean exports in 2012, with 9.9 million TEUs, nearly twice as much as second-place Zhejiang’s 4.96 million TEUs. Jiangsu, 4.62 million TEUs; Shandong, 3.9 million; and Fujian, 2.5 million, rounded out the Top 5 containerized export producers.
China’s real GDP expanded approximately 7.7 percent last year, down from 2011’s 9.2 percent. This was reflected in trade data, with exports increasing 7.9 percent, a far slower rate than the government target of 10 percent.
Macquarie Securities, the Sydney, Australia-based equity research firm, said China’s total container throughput grew 8 percent year-over-year in 2012, down from 2011’s 11.4 percent increase. In line with Seabury’s figures, however, Macquarie’s analysis found China’s northern ports on Bohai Bay grew on average by 2 percent last year, while the export-orientated port regions of the Yangtze River Delta and Pearl River Delta grew at just 4.5 percent and 1.8 percent, respectively.
In addition to shifting production patterns, new shipping strategies are impacting China’s container flows. Bonnie Chan, a senior Asia shipping analyst at Macquarie, said ports in the Pearl and Yangtze River deltas were “actively courting” transshipment volumes to reduce reliance on pure export flows and to prepare for carriers’ deployment of even larger ships with fewer direct calls this year.
Transshipment volumes increased 17 percent in the Yangtze River Delta and 29 percent in the Pearl River Delta last year, she said. “With more ultra-large container ships due to be delivered over the next 12 to 18 months,” Chan said, “transshipment will become an increasingly important part of Chinese port throughput.”
Contact Mike King at Michael@borderline.eu.com.