China is going full steam ahead with deepwater ports

As part of their ambition to create a 21st century maritime Silk Road, China is investing heavily in building and expanding deepwater, container ship–friendly ports across South Asian cities such as Colombo and Gwadar.

Quartz Creative on behalf of HSBC

As part of their ambition to create a 21st century maritime Silk Road, China is investing heavily in building and expanding deepwater, container ship-friendly ports across South Asian cities such as Colombo and Gwadar. More than just asserting their dominance in the global shipping industry, these strategic investments will open up new markets for trade and dramatically cut down the transport time of goods – in some cases by 60 per cent or 70 per cent – from Asia to the Middle East and Africa. The consequent drop in cost could make many Chinese exports affordable to new markets and help kick-start growth in some emerging economies.

“China has excess industrial capacity and technical skill in hard infrastructure areas,” says Sourabh Gupta, an Asia-Pacific international relations policy expert at the Institute for China-America Studies, a Washington, D.C.-based think tank. “It is thinking it can compete in those areas. And there are low- and middle-income countries that lack the infrastructure, the capabilities, or the financing to do some of these things themselves.”

China is already the dominant global player in container ports. Analysts agree that the shipping industry is looking more buoyant since the slowdown caused by the 2008-2009 recession, so China’s long-term bet that many low-income nations will eventually grow through international trade could pay off.

“The underlying premise of these investments is that most countries are highly underdeveloped and they are going to get wealthier through external trade, and China wants to make money from these projects,” says Gupta. “There’s a lot of space in South Asia for expanded trade and shipping.”

A feature by Quartz Creative