Beijing’s Go West policy and its pledge to maintain south China ports’ hub status appear to be conflicting strategies.
A Beijing official late last month outlined China’s commitment to the development of the city as an international shipping centre under the current five-year plan to 2015. He also said logistics services in neighbouring Shenzhen ports would be “aggressively developed”.
Two things immediately spring to mind: One is that five years in port terms will pass in the blink of an eye. There is no doubt whatsoever that Hong Kong will remain an international shipping centre until the five-year plan ends in 2015. So supporting Hong Kong’s hub status for five years is no big deal. The real concern is where the port will be in 20 or 30 years, and that leads us to point number two.
Shenzhen is in direct competition with Hong Kong for containers leaving the Pearl River Delta factories, even if the same names pop up on the shareholding lists of terminals on both sides of the fence.
If Shenzhen’s ports of Yantian, Chiwan and Shekou – or even nearby Dachan Bay and Guangzhou’s Nansha – aggressively boost their logistics services it will come at the expense of Hong Kong cargo.
Point number two, however, is not really a point at all. Even if Shenzhen does not expand its logistics services, its growth will come at the expense of Hong Kong. The ports are simply closer to the source of export cargo and it is cheaper to ship via Shenzhen rather than Hong Kong.
Where Hong Kong may hold a slight advantage is in the development of the Western PRD that will see containers barged down the river. Forget the Hong Kong-Zhuhai-Macau bridge, the greatest white elephant, vanity boosting boondoggle ever inflicted on the city's taxpayers. In terms of container transport it will be irrelevant.
Of even greater concern, however, are the migrating factories. It seems that Beijing has tangled itself up in a web of conflicting strategies as it drives inland the manufacturers of low-value goods that use ocean freight while at the same time attempting to boost the PRD as an international container shipping centre. Thousands of factories have gone under and so will thousands more as Beijing sharply increases the minimum wage from January 1.
Those factories that are able to move inland – no small feat for manufacturers dependent on efficient supplier networks for raw materials and transport connections – will have to settle in the industrial centres around major cities such as Chongqing or Wuhan. That means their containerised exports will be shipped down the Yangtze River and off to the world from Shanghai and will be lost to the PRD forever.
Hong Kong’s volumes have been steadily eroded by Shenzhen over the past decade and nothing is going to stop that, no matter how much support Beijing pledges. But the days of taking for granted strong double-digit growth at Shenzhen ports are also over.
The metamorphasis of the Pearl River Delta has begun, and it could get messy.