Several countries have supported the Chinese position on the South China Sea issue. China claims nearly all of the South China Sea — a vast tract of water through which a huge chunk of global shipping passes. It has bolstered its claim by building artificial islands including airstrips in the area, some of which are suitable for military use. The Philippines, Taiwan, Brunei, Malaysia and Vietnam have competing claims to parts of the sea, which is believed to harbour significant oil and gas deposits.
Not only is the South China Sea (SCS) a major shipping route but also a zone of high rich energy resources. Hence USA is also keen to intervene in the dispute. The Philippines, Brunei, Vietnam, Malaysia and Taiwan have overlapping claims. Hence there is tension in the region.
The Chinese government says more than 40 countries have offered support for its position, the latest being the African nations of Sierra Leone and Kenya. And China expressed thanks on June 14 for the dozens of countries it says have offered support for its position on a case brought by the Philippines over Chinese claims in the South China Sea, saying they are speaking out to uphold justice.
The Philippines is contesting China’s claim to an area shown on its maps as a nine-dash line stretching deep into the maritime heart of Southeast Asia, covering hundreds of disputed islands and reefs.
Despite China’s protestations it has no threatening intent in the South China Sea, it has bolstered its military presence there with an ambitious land reclamation programme that includes building airstrips for military use.
China refuses to recognize the case and says all disputes should be resolved through bilateral talks. China has stepped up its rhetoric ahead of an expected ruling by the Permanent Court of Arbitration in The Hague on the Philippine case. Foreign Ministry spokesman Lu Kang said certain unidentified countries had been trying to blacken China’s name over the South China Sea, confusing right for wrong and trying to control public opinion. “Once they’ve worked out the rights and wrongs and gotten the whole story, a fair few countries are willing to speak out from a sense of justice…We express appreciation and thanks for this. It shows that a just cause enjoys abundant support and people have a sense of natural justice,” Lu said. The Chinese government says a small number of countries wanted to blacken China’s name on this issue, they cannot be said to represent the international community.
Energy plus Zone
The South China Sea is dubbed by China as the “second Persian Sea.” The state-owned China Offshore Exploration Corp. planned to spend 200 billion RMB (US$30 billion) in the next 20 years to exploit oil in the region, with the estimated production of 25 million metric tons of crude oil and natural gas per annum, at a depth of 2000 meters within the next five years.
The SCS area may be rich in oil and natural gas deposits; however, the estimates are highly varied. The Ministry of Geological Resources and Mining of the People’s Republic of China estimate that the South China Sea may contain 17.7 billion tons of crude oil (compared to Kuwait with 13 billion tons). However, other sources claim that the proven reserve of oil in the South China Sea may only be 7.5 billion barrels, or about 1.1 billion tons According to the US Energy Information Administration (EIA)’s profile of the South China Sea region, a US Geological Survey estimate puts the region’s discovered and undiscovered oil reserves at 11 billion barrels, as opposed to a Chinese figure of 125 billion barrels. The same EIA report also points to the wide variety of natural gas resource estimations, ranging from 190 trillion cubic feet to 500 trillion cubic feet, likely located in the contested Reed Bank”.
The Philippines began exploring the areas west of Palawan for oil in 1970. Exploration in the area began in Reed Bank/Table mount. In 1976, gas was discovered following the drilling of a well. However, China’s complaints halted the exploration. On 27 March 1984, the first Philippine oil company discovered an oil field off Palawan, which is an island province bordering the South China Sea and the Sulu Sea. These oil fields supply 15% of annual oil consumption in the Philippines.
The nine-dotted line was originally an “eleven-dotted-line,” first indicated by the then Kuomintang government of the Republic of China in 1947, for its claims to the South China Sea. After, the Communist Party of China took over mainland China and formed the People’s Republic of China in 1949. The line was adopted and revised to nine as endorsed by Zhou Enlai. The legacy of the nine-dotted line is viewed by some Chinese government officials, and by the Chinese military, as providing historical support for their claims to the South China Sea.
In the 1970s, however, the Philippines, Malaysia and other countries began referring to the Spratly Islands as included in their own territory. On 11 June 1978, President Ferdinand Marcos of the Philippines issued Presidential decree No. 1596, declaring the Spratly Islands (referred to therein as the Kalayaan Island Group) as Philippine territory.
The abundant fishing opportunities within the region are another motivation for the claim. In 1988, the South China Sea is believed to have accounted for 8% of world fishing catches, a figure that has grown since then. There have been many clashes in the Philippines with foreign fishing vessels (including China) in disputed areas. China believes that the value in fishing and oil from the sea has risen to a trillion dollars.
The area is also one of the busiest shipping routes in the world. In the 1980s, at least 270 merchant ships used the route] each day. Currently], more than half the tonnage of oil transported by sea passes through it, a figure rising steadily with the growth of Chinese consumption of oil. This traffic is three times greater than that passing through the Suez Canal and five times more than the Panama Canal.
As of 1996, Vietnam, the Philippines, Brunei, Malaysia and other countries asserted claims within the Chinese nine-dotted line The United Nations Convention on the Law of the Sea, which came into effect on 16 November 1994, resulted in more intense territorial disputes between the parties.
As of 2012, all of the Paracel Islands are under Chinese control.
Eight of the Spratly Islands are under Chinese control; Vietnamese troops control the greatest number of Spratly islands, 29. Eight islands are controlled by the Philippines, five by Malaysia, two by Brunei and one by Taiwan] In 2012 the Indian Ambassador to Vietnam, while expressing concern over rising tension in the area, said that 50 per cent of its trade passes through the area and called for peaceful resolution of the disputes in accordance with international law.
On March 17, 2016, in accordance with Memorandum Circular No. 94 s. 2016, President Aquino created the National Task Force for the West Philippine Sea, to secure the State’s sovereignty and national territory and preserve marine wealth in its waters and exclusive economic zone, reserving use and enjoyment of the West Philippine Sea exclusively for Filipino citizens
The South China Sea disputes involve both island and maritime claims among several sovereign states within the region, namely Brunei, the People’s Republic of China, the Republic of China, Malaysia, the Philippines, and Vietnam. Non-claimants want the South China Sea to remain as international waters, with the United States conducting “freedom of navigation” operations.
There are disputes concerning both the Spratly and the Paracel islands, as well as maritime, areas near to sea, boundaries in the Gulf of Tonkin and elsewhere. There is a further dispute in the waters near the Indonesian Natuna Islands. The interests of different nations include acquiring fishing areas around the two archipelagos; the potential exploitation of crude oil and natural gas under the waters of various parts of the South China Sea, and the strategic control of important shipping lanes.
The Shangri-La Dialogue serves as the “Track One” exchange forum on security issues surrounding the Asia-Pacific region, including territorial disputes in the South China Sea. The Council for Security Cooperation in the Asia Pacific is the “Track Two” forum for dialogue on security issues.
In February 2016, President Obama initiated the US-ASEAN Summit at Sunny lands for closer engagement with the Association of Southeast Asian Nations. Territorial disputes in the South China Sea were a major topic, but its joint statement, the “Sunnylands Declaration” called for “respect of each nation’s sovereignty and for international law”. Analysts believe it indicates divisions within the group on how to respond to China’s maritime strategy.
China claims almost all of the energy-rich South China Sea, through which more than $5 trillion of maritime trade passes each year. USA is major user of the sea route mainly for trade purposes.
China’s construction activities and military preparatory actions have drawn criticism from the USA. The United States is not a claimant in the South China Sea dispute but says it has an interest in ensuring freedom of navigation and overflight in the area.
China questions American surveillance activities and other military activities over the South China Sea.
The United States and the European Union have called on China to respect the ruling from The Hague. The court has no powers of enforcement and its rulings have been ignored before.
The United States and China are currently in disagreement over the South China Sea. This disagreement is exacerbated by the fact that the USA is not a member of the United Nations Convention on the Law of the Sea (UNCLOS). Nevertheless, the USA has stood by its maneuvers, claiming that “peaceful surveillance activities and other military activities without permission in a country’s Exclusive Economic Zone (EEZ), is allowed under the convention. Additionally, a South China Sea free to access is in the USA’s economic and geopolitical interests. In relation to the dispute, the then Secretary Clinton voiced her support for fair access by reiterating that freedom of navigation and respect of international law is a matter of national interest to the United States Her comments were countered by China’s Foreign Minister Yang Jiechi as “in effect an attack on China,” who warned the USA against making the South China Sea an international issue or multilateral issue.
Clinton testified in support of congressional approval of the Law of the Sea Convention, which would strengthen US ability to support countries that oppose Chinese claims to certain islands in the area. On 29 May 2012, Chinese Foreign Ministry expressed concern over this development, stating that “non-claimant Association of South East Asian Nations countries and countries outside the region (USA) have adopted a position of not getting involved into territorial disputes. In July 2012, the US Senate passed resolution 524, initially sponsored by Senator John Kerry, stating the United States’ strong support for the 2002 declaration of conduct of parties in the South China Sea, reaffirms the US commitment to assist the nations of Southeast Asia to remain strong and independent, and supports enhanced operations by the USA armed forces in the Western Pacific. USA resents the Chinese domination in the region and wants India and many others to back it.
In 2014, the USA responded to China’s claims over the fishing grounds of other nations by saying that “China has not offered any explanation or basis under international law for these extensive maritime claims. The Chinese Foreign Ministry asked the United States to maintain a neutral position on the issue. In 2014 and 2015, the United States continued freedom of navigation operations, including in the South China Sea. Sources closer to Pentagon have also said that the US administration is planning to deploy some naval assets within the 12 nautical miles of the Spratly Islands. In response to this announcement, Beijing issued a strict warning and said that it would not allow any country to violate China’s territorial waters in the name of “Freedom of Navigation”.
On 27 October 2015, a US destroyer USS Lassen navigated within 12 nautical miles reclaimed land in the Subi Reef as the first in a series of “Freedom of Navigation Operation”. This is the first time since 2012 that the USA has directly challenged. On 8–9 November 2015, two US B-52 strategic bombers flew near artificial Chinese-built islands in the area of the Spratly Islands and were contacted by Chinese ground controllers but continued their mission undeterred.
China is deeply concerned about Indian naval presence and oil exploration effort in the region with tricky US backing.
On 22 July 2011, the INS Airavat, an Indian amphibious assault vessel on a visit to Vietnam, was reportedly contacted 45 nautical miles from the Vietnamese coast in the disputed South China Sea by a party identifying itself as the Chinese Navy and stating that the ship was entering Chinese waters. But the INS Airavat proceeded on its onward journey as scheduled. India seeks freedom of navigation in international waters, including in the South China Sea, and the right of passage in accordance with accepted principles of international law.
In September 2011, shortly after China and Vietnam signed an agreement seeking to contain a dispute over the South China Sea, India’s state-run explorer, Oil and Natural Gas Corporation (ONGC) said that its overseas investment arm, ONGC Videsh Limited, had signed a three-year agreement with Petro Vietnam for developing long-term co-operation in the oil sector, and that it had accepted Vietnam’s offer of exploration in certain specified blocks in the South China Sea.
ASEAN leaders in China
Meanwhile, Countries in Southeast Asia have serious concerns over recent events in the disputed South China Sea, an unusually strongly worded communique issued by their foreign ministers in China said on June 14. In a rare diplomatic slap in the face for Beijing — issued on its own territory — the Association of Southeast Asian Nations (ASEAN) offered a sharp rebuke over China’s actions in the waterway. It’s communique said without mentioning China by name that recent and ongoing developments have eroded their trust and confidence, increased tensions and which may have the potential to undermine peace, security and stability in the South China Sea.
The ASEAN statement emphasized the importance of non-militarization and self-restraint in the conduct of all activities, including land reclamation, which may raise tensions in the South China Sea. “We stressed the importance of maintaining peace, security, stability, safety and freedom of navigation in and overflight above the South China Sea, in accordance with universally recognised principles of international law including the 1982 United Nations Convention on the Law of the Sea (UNCLOS).” “We articulated ASEAN’s commitment to maintaining and promoting peace, security and stability in the region, as well as to the peaceful resolution of disputes,” the statement said.
The bloc’s finger-wagging, after a Special ASEAN-China Foreign Ministers’ meeting in Kunming, comes as the region braces for a ruling by a UN tribunal on a claim brought by the Philippines against China. China does not recognize the arbitration and has reacted angrily to the Philippines’ legal efforts over the Beijing-controlled Scarborough Shoal, which sits just 230 kilometres off the main Philippine island of Luzon.
USA and regional powers are awaiting the official response to the tribunal court ruling so that they could react. But Beijing is firm in its stand.
China’s Procrastination could be a Global Fatality
President Xi is welcoming while President Trump is adamant whereas President Putin is indifferent while Prime Minister Johnson stands admitted in hospital. The world is without any leadership to check the pace of pandemic at large. No one knows how or when it would end. One thing which has turned out as of now from the US-Chinese sets of COVID-19 management, is that making quick and prompt decisions reverberate good and favorable results. Shakespearean Procrastination and Platonic cogitation are surely not the traits applicable in these coveted COVID times.
Chinese decision making apparatus has exhibited dealing COVID-19 more successfully than that of US. Is COVID-19 here to settle, beside many other things, the long chanted brawl of Democracy vs Dictatorship as models of statecraft? If that be so, it is Xi, the Dictator, winning over Trump, the Democrat, at least for the time being.
Of all the global responses to COVID-19 containment, China led the world by safely confiscating the pandemic from becoming as lethal as in Europe or now in US. For all the sensible purposes, all the roads now lead to Beijing in taking the world out of this deadly quagmire of human strife but for utterly crazier political purposes; the US stagnancy in blocking the Chinese experience is unleashing the COVID-19 wrath on Americans and Europeans unprecedentedly.
China was slammed, slandered, scandalized and mocked when Wuhan was twitching to the COVID-19 capsids and US took it for another Chinese charade and refuted the global lockdown and such other measures as deeming them Chinese hatcheries to counterfeit the US global interests simultaneously accusing China of delaying the world to know the impeding crisis. Associating the COVID-19 as Chinese Virus was the immediate loss of marbles that US hit in their wild anti Chinese conspiracy framework.
President Xi’s call for collaboration in the drive against the pandemic was never favorably replied due to very commonplace reasons. Had US responded agreeably to the Chinese call, it would have down toned the undisputed status of US global reach out. The cooperation for joint pandemic management would have required reliance and reliability which Washington had always been skeptic of Beijing. The American apprehensions of China ultimately grinding its axes for political reasons globally kept US away from working together with no alternate US strategy whatsoever in responding to COVID-19 itself.
The Trump hysteria of refuting easing out sanctions against Iran and now by threatening the WHO with fund cuts and dire consequences at such crucial times proved once more that there perhaps was a fickle thin line between insanity and democracy which Trump blatantly trespassed under his swampy boots. Pentagon which is supposed to be planning containing the pandemic might be busy drafting an Invasion Strategy of International Organization such as the United Nations. One might witness the United Nations turning back to being the League of Nations.
Truman never knew if the Little Boy he was dropping on Hiroshima could successfully detonate into an armament of collateral damage or could it just turn into a stupid dud but the decision had to be taken against all controversies and he did. This time around, it seems President Xi has taken the decision at the right time with the right post decision management paraphernalia and the people of the world except Trump are beholding him as the prospective Leader of the world. It seems Democracy, as means to running successful governments and States, as interpreted and sold out by the US since fifty years of globalization has both failed and bankrupted amid such exceptional times where prompt decisions count more than anything for success.
China must not wait for US sense to prevail as it seems impossible under Mr. Trump. What must immediately do is to come forth and save the world on its own. The global death toll is increasing and Chinese procrastination at such time is not rational. US role in leading the world out of this scuffle is long forgotten as they still skirmish amongst themselves in scandalizing the Chinese leadership, scientists and researchers with accusations of Chinese concealment of facts and their delay in timely informing the world of COVID-19. It is time for China to lead the world and act promptly by placing in full swing its infrastructure of global diplomacy by activating the China Model, China’s Uniqueness, SCO, AIIB and the Doctrine of Belt and Road which seem to be the only instruments of saving the humanity these times around.
The Infrastructure Competition Between the West and China: A Co-Prosperous Future?
Since the beginning of 2020, humanity has been shadowed by the fear and panic of COVID-19, which might cause one to neglect some subtle but significant changes in the world. In November 2019, Washing, a non-member of the Belt and Road Initiative (BRI), the China-led infrastructure project, launched its “Blue Dot Network” (BDN) with Australia and Japan. This project is “a multi-stakeholder initiative to bring together governments, the private sector and civil society to promote high-quality, trusted standards for” sustainable and principles-based “global infrastructure development”. Similarly, in September 2019, the European Union and Japan, also non-members of the BRI, announced the “Partnership on Sustainable Connectivity and Quality Infrastructure” (PSCQI), encompassing the Indo-Pacific, Eastern Europe and Central Asia regions.
Even without mentioning China, it is not difficult to establish that the BDN and PSCQI projects are the Western strategic responses to the BRI in the infrastructure area in Indo-Pacific and beyond, an identical scope that the BRI focuses on. Conspicuously, both projects try to compete with the BRI thanks to its comparative advantages. Multi-stakeholder in the BDN compares with the SOEs-and-states domination in the BRI. High-quality, trusted standards, sustainable and principles-based development in the BDN and PSCQI contrasts with the potential economic leverage, debt trap of some Western narrative and the well-acknowledged vagueness in the BRI. The BDN and PSCQI are born to challenge the BRI.
Furthermore, as the announcer of the BDN, the US Commerce Secretary Wilbur Ross, said that the US has “no intention of vacating military or geopolitical position” in the Indo-Pacific and is “here permanently, and the US “will be continuing to invest more” in this region, alluding to the incoming power confrontation between the US and China in this area. More directly, in August 2018, US President Donald Trump ranted behind closed doors with CEOs that the BRI is “insulting” and plays havoc with the global trade. In fact, “He didn’t want it” and “he had told Xi as much to his face”.
In February 2020, just one month after the first-phase trade deal between China and the US, Mr Donald Trump has embarked on his maiden voyage to India. During his visit, as the firm vocal opponent of the BRI, India almost agreed with the US to join the BDN and just needs to negotiate details. To this extent, the first-phase trade deal is not a truce, but an opening song that signals more dramatic events between the US and China.
Currently, it seems that the world has been divided by opposing viewpoints of the BRI and infrastructure projects. In the future, the globe might be potentially split up into three camps: the China-led BRI, the West-led anti-BRI and neutral countries. Possibly, the third category does not want to side with either China or the West but wants to play the swing-role in order to benefit from their competition. This does sound like a new Cold War, but it differs because of the current intertwined economic ties among these three camps. Arguably, this is the fate of this century: a more complex and entangled world wherein no one knows what the future will be.
However, I argue that this situation is not necessarily a bad deal. There is the inevitability of the competition between the rising power, China, and the ruling power, the US. According to Bruno Macaes, “in the end, the question of whether a new world order will be born, or the status quo preserved is less important than the question of whether the outcome will be determined peacefully or whether China and America are destined for war”. So, why not let the two global powers just rival each other in terms of the infrastructure? At least this is not a military collision. Essentially, the increasing connections that the newly established infrastructure may bring are beneficial to the global economy, which is far better than the current struggle for trade, a game that highlights the side that will suffer the least rather than the winner. Individuals may be still anxious about a potential Cold War, but it is essential to remember that the historical Cold War was a less chaotic period than it is today. Also, due to the race of the Eastern Bloc and the Western Bloc, great economic and technological strides have been made during this period. Interestingly, differing from the separated Cold War, the contest in the infrastructure domain is doomed to promote economic integration and globalization. The core principles of the BRI are interdependence and connection. Similarly, that of the BDN and PSCQI are respectively network and connectivity. Actually, they are just fulfilling the same functions but in distinct ways.
In this context, let the China-represented authoritarian capitalism versus the US-led liberal capitalism compete regarding the infrastructure and finally let the winner prevail. I suppose there will be one day when the roads or other infrastructure of adversary camps may eventually meet and connect because of their natural attributes. Finally, the opposition of the two camps will gradually fade away, and compromises will be made. It is not the first time that human beings have been taught to abandon narrowness and stand together. In essence, the current coronavirus is one example, and the building of infrastructure in the future will likely be another.
From our partner RIAC
China’s road freight problem and its solutions
Shifting freight off China’s roads could be key to tackling air pollution in the 14th Five Year Plan period (2021-25), according to an annual report by the environment ministry.
Motorised vehicles have become a key driver of pollution; a single diesel truck creates as much pollution in China as 200 private cars. Diesel-powered goods vehicles are in fact responsible for 60% of the nitrogen oxides and 85% of the particulate matter pollution released on China’s roads, despite making up only 8% of all vehicles. These vehicles are thus a central target for pollution control measures.
Polluting road freight
National average levels of PM2.5 – the most dangerous particulate matter pollution for human health – dropped 27% between 2015 and 2019, according to the latest report from the Center for Research on Energy and Clean Air. But nitrogen dioxide levels fell only 9%, while ozone actually rose 11%. The transportation sector is China’s third largest source of nitrogen oxides, second only to coal-fired power stations and industry. It is also the second largest source of ozone, after industry, accounting for 20% of the total.
Between 2013 and 2018, the number of heavy-duty diesel vehicles on Chinese roads increased an average of 4% per year.
Li Ganjie, head of the Ministry of Ecology and Environment (MEE), said at a recent meeting on national environmental protection work that “the reliance on road freight remains unchanged,” a fact he described as a weak point in the MEE’s work to manage the environment.
According to the MEE’s “2018 China Vehicle Environmental Management Annual Report”, the nature of pollution in many Chinese cities is changing. What was once simply a product of coal-burning is now a more complex mix coming from coal, vehicles and secondary pollutants. Data released by the Beijing Municipal People’s Congress in mid-January shows that mobile pollution sources, not coal-burning and industry, are now the main cause of PM2.5 in the city, accounting for 45% of annual emissions.
Tackling diesel vehicle emissions is not easy. At the China Blue Sky Observers Forum in December last year, Ni Hong, a researcher at the MEE’s Vehicle Emissions Monitoring Centre, said that the majority of these vehicles are owned by their drivers, some of whom adulterate their fuel to lower cost. Vehicles may also avoid environmental checks, be driven above the speed limit, overloaded or in breach of emissions standards. The authorities do not have the capacity to carry out full checks, or to ensure that issues are resolved.
Another approach would be to rely less on roads to carry freight around the country and more on the alternatives.
Costs associated with shifting to rail or water
It is cleaner to move freight by rail, rivers, canals and coastal shipping than by road. Commonly accepted industry figures show rail uses one-seventh of the energy needed to move the same goods by road, and produces one-thirteenth of the nitrogen oxides and PM2.5. Transportation by water, meanwhile, uses one-fourteenth of the energy and produces one-fifteenth of the pollution.
But the bulk of China’s freight still travels by road. Figures from the National Bureau of Statistics show that in the past decade the proportion of road freight has fluctuated around the 76% mark, while water transport has increased a little in the last five years and rail freight is actually decreasing. Road freight accounts for too much long-distance transport of commodities such as coal, ores, and iron and steel. Progress in moving these bulk goods off the roads is slow.
Speaking at the forum, Xu Honglei, a senior researcher at the Ministry of Transport, said this is down to distorted pricing. There is fierce price competition in the road freight sector, with varying degrees of unhealthy competition, low prices and overloading. Meanwhile, market reforms of the rail sector are proceeding slowly, with transportation costs not coming down. “When moving bulk goods a distance of less than 800km, door-to-door prices for rail are usually higher than for road,” he said. “And road freight haulers offer a single price, while rail freight includes various miscellaneous fees.”
In a 2018-2020 plan for restructuring the transportation sector, the State Council called for “deeper market reforms of rail freight prices, a complete and flexible freight pricing system, and the use of the market to allocate resources,” in order to increase the amount of freight moved by rail. But so far, rail freight market reforms have had very little effect.
Zhao Jian, director of Beijing Jiaotong University’s China Urbanisation Research Centre, recently wrote in Caixin that when taking administrative measures to move freight from road to rail, the government needs to improve efficiency and speed in order to meet market needs. That means looking at how the railways are managed, and carrying out more extensive reforms.
Zhao Jian wrote that rail freight in China remains, in great degree, a monopoly. The China State Railway Group keeps overall control of all railway assets and finances nationwide, with 18 regional railway bureaus managing local freight operations. Zhao thinks this renders railway freight companies unable to respond to market demands. Regional railway bureaus cannot earn income directly, as payments must pass through the China State Railway Group. Nor can they set their own prices or purchase or dispose of assets, and they have no incentive to reduce costs. As each bureau covers too small an area, and rail freight in China usually travels over 700km, they are often unable to guarantee shipments will arrive on time, respond to rapidly changing market demands, or adopt modern logistics systems – and so they lose a great deal of business.
At the forum in December, Xu Honglei also pointed out that rail, road and water freight networks are not interconnected with infrastructure allowing goods to move between them. Meanwhile, dedicated railway lines to serve ports, logistics zones and large industrial and mining firms are underdeveloped; they suffer from poor quality links to the rest of the network.
Peng Chuansheng of the China Waterborne Transport Research Institute at the Ministry of Transport told China Dialogue that unless customers have their own docks, trucks are still needed to shift water freight from docks to factories. “It might work out cheaper for the company to just use road freight,” he said.
Improving rail and water freight
Experts say faster market reforms and better infrastructure and transportation links are needed to allow rail and water freight to reduce costs and make use of their competitive advantages.
Zhao Jian thinks the best way to boost the vitality of rail freight firms is to break the railway monopoly. In his Caixin article, he suggested restructuring the 18 railway bureaus into three larger regional rail companies, with the China State Railways Group to be a holding company, responsible for managing capital. The three new companies would have control within their regions and be able to set prices and acquire or dispose of assets, become market actors in their own right. He told China Dialogue that this approach could be trialled by expanding some railway bureaus to cover wider areas. The Harbin and Shenyang bureaus could be restructured into a single bureau covering north-east China, for example. This would reduce the barriers preventing rail freight from making use of its advantages.
Commenting on the lack of freight infrastructure, Xu Honglei said at the forum that work to build railway main and dedicated lines should continue, rail services to businesses and logistics zones should be improved, and links at freight hubs improved. On water freight, Peng Chuansheng said the government should encourage companies to have their own docks, giving them a direct link with ports.
There is no doubt that some transportation of bulk goods could be shifted from road to rail and water. However, road still has an advantage in parcel freight, and China’s express delivery sector is growing rapidly. Data from the postal authorities show 50 million express deliveries were made in 2018, up 26.6% on the previous year. These rapid deliveries of smaller items must still be made by road. Peng Chuansheng said industrial restructuring and changes in the energy mix will mean goods being moved will be smaller and lighter, but more valuable, requiring faster deliveries and better services. Rail and water freight cannot yet provide these.
The rapid growth of parcel deliveries by road reminds us that while changing the freight transportation mix is important, reducing emissions from road freight remains an urgent task.
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