China’s Transport Development Hits the Fast Lane

Beijing, China – China’s ambitious plans for an advanced transport network and logistic system designed to facilitate continued economic development are set to accelerate.

In 2013, Chinese President Xi Jinping proposed the Silk Road Economic Belt and the 21st-century Maritime Silk Road – collectively referred to as One Belt, One Road – to strengthen economic links between China and international trading partners.

“The vision of trading corridors like the “One Belt One Road” scheme requires well-orchestrated transport networks – as we’ve seen in projects the World Bank has supported in South Asia and Africa,” said Baher El-Hifnawi, the World Bank’s global lead for transport corridors and regional integration, at the China Transport Day Conference.

In a one-day conference, senior officials from the World Bank, China’s central and provincial governments, and experts from research institutes, shared their views and analysis on transport and logistics issues affecting China, including opportunities for partnership.

Potential areas of collaboration include the development of new international trade routes in the One Belt One Road scheme; logistics in the Yangtze River Economic Belt; and urban transport in city clusters such as the Beijing-Tianjin-Hebei route in Jing-Jin-Ji region.

“In the past three decades, the World Bank has approved more than 100 transportation projects in China, with a total investment of $18 billion,” said Jose Luis Irigoyen, Director of the Transport and ICT Global Practice of the World Bank.

Feng Baoshan, an official with the Chinese National Development and Reform Commission, echoed Mr. Irigoyen, saying the co-operation between China and the World Bank should reach a “new level,” with the focus on meeting the development goals China will set in the 13^th Five-Year Plan period (2016 – 2020).

Transport logistics

While China is reaching out to improve connectivity with other countries, it is also strengthening internal corridors for more efficient logistics.

“To meet transportation needs, a national corridor map has been proposed, which will carry 70% of the country’s cargo,” said Tan Xiaoping, a director at the Transportation Planning and Research Institute under the Ministry of Transportation.

“China’s networks are 30 to 40 years behind those of Europe and America – integration of railway and shipping, China-Europe container trains and high-speed railways all require breakthroughs in technology, equipment and management,” Tan said.

New financing methods key to transport expansion

The use of public-private partnerships (PPP) and new approaches to transport financing were also discussed at the conference, given the borrowing options available with a newly amended Budget Law.

In 2014 China amended the Budget Law to improve local governments’ debt management and reform infrastructure financing mechanism. “The new Budget Law has restricted the use of local government financing platforms to finance infrastructure, but has also opened new opportunities for public-private partnerships or more prudent, revenue-based borrowing,” said Binyam Reja, the World Bank’s Transport Cluster Leader for China and Mongolia.

So far, the Ministry of Finance has approved more than 200 public sector projects piloting the PPP approach, with transport projects including urban rail and highways accounting for 60% in terms of total PPP investments.

“User charges and related revenues are expected to be the main sources of funding for transportation projects under the new financial arrangements,” said Mr. Reja.

The road ahead

Leveraging available state-of-the-art technology for road maintenance can maximize the potential for China’s 120,000 kilometers of expressways and 4.5 million kilometers of highways. By leveraging modern transport and logistics systems, the country can support its new economic growth model, led by domestic-consumption and urbanization.“The one-day conference has provided the Bank and government officials an opportunity to map out key areas in which the World Bank can provide support in the future and present the value added which the Bank would bring in those areas”, said Michel Kerf, Practice Manager for Transport and ICT for the East Asia Region. “We will be following up on these topics in the coming months with the Government and within the Bank to develop a strategy for supporting China in the development of the next phase of its transport development program” said Mr. Kerf.