China’s Transportation/Logistics Industry: A Key to Success?


This much is certain: while China is not the only emerging market growth success story, it is without a doubt the most impressive one. What is considerably less certain, to the point of generating intense debates, is what exactly it is that enabled China to grow at such a remarkable pace. One of the top aspects is, without a doubt, represented by China’s increased willingness to allocate a significant percentage of its GDP toward infrastructure in general and mass transportation-related programs in particular over an extended period of time.

While other emerging markets such as India or South American countries invested anywhere from 2% to 5% of their GDP on such projects, China invested almost two times more than even the most ambitious of contenders, allocating a very generous 9% of its GDP in this direction. It is a quasi-axiom that improper infrastructure acts as an economic growth bottleneck and this is precisely what ended up happening to emerging market economies where leaders did not have the foresight to reach for their proverbial wallets generously so as to fund transportation-related projects.

Is everything perfect transportation-wise in China?

Most definitely not, with lingering issues pertaining to the significant and worrisome rural-urban gap manifesting themselves in terms of transportation as well. As such, while coastline transportation infrastructure is nothing short of stellar and the same can be said about intercity transportation infrastructure… it would be a severe understatement to use the term “lacking” when referring to rural regions, where in many cases non-mechanized transportation is still the norm.

Still, all things considered, the transportation status quo in China demands respect.

It is worth noting that for the most part, transportation-related developments only started occurring on a significant scale after the establishment of the People’s Republic of China in 1949. For example, there were less than 22,000 km worth of railway lines prior to 1950 compared to the roughly six times more that exist at this point. Based on this metric, China currently occupies position #2 worldwide, with railway transportation representing the preferred option for long(er) distances. Among other aspects, China currently having the top high-speed railway infrastructure worldwide attests to the fact that this mode of transportation constitutes a priority (roughly 25,000 km at this point in time).

Other means of transportation haven’t been neglected, however.

For example, air transportation has also experienced tremendous growth, especially over the past three decades. As a bit of a “train + air transportation” combination that speaks for itself, it is worth noting that an entire train transportation infrastructure (Maglev) was built to connect the Shanghai Pudong International airport to the city of Shanghai. A similar level of interest can easily be spotted for Beijing and many of the nation’s key cities.

The same way, there are 34 metro systems in operation over in China at the moment of writing, with 7 of the world’s top 12 such systems being… of course, Chinese. Aside from that, alternatives such as light rail systems or rapid transit lines are also being developed or are in the process of being developed. Similarly, highways have not been ignored either, especially as of the 90s. There are roughly 100,000 km in the National Trunk Highway system, the longest such highway network system worldwide, with the main goal of connecting the country’s various important regions.

China also has more navigable infrastructure than any other country, roughly 110,000 km at the moment of writing. While the importance of this option within China has somewhat diminished due to the massive investments in land and air-based alternatives, it remains a force to be reckoned with and if we also add the international dimension to the mix… let’s just say there is a reason why Chinese vendors are so generous when it comes to offering free or cheap shipping.

From railways to highways, from airports and water navigation infrastructure to pipelines, no other nation can come close to matching the behemoth that is China in terms of transportation/logistics-related investments. While there are still issues in need of being tackled (the less than equal manner in which capital has been allocated) and while China has been known for going overboard every now and then by allocating capital toward such investments in a less than efficient manner, the fact remains that while many Western nations are dealing with problems caused by deteriorating transportation infrastructure and a severely sub-optimal transportation/logistics industry, China keeps chugging along in terms of investments and visible results.

Add a Comment

Your email address will not be published. Required fields are marked *