Come closer
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Bridge to somewhere very useful
Apr 8th 2017
THE VIEW FROM Lovers’ Road in Zhuhai, a seaside promenade in a big city on the PRD’s less developed western flank, is breathtaking. A gentle mist rolls in, delighting mainland visitors more accustomed to toxic coal haze. The most expensive flats in town are now going up on the boulevard, but the premium price reflects more than just the ocean panorama.
If you take a ferry to Hong Kong from the terminus nearby, a spectacular sight will soon come into view: the soaring pillars of the world’s longest sea-crossing bridge (pictured). It is part of a Y-shaped bridge-and-tunnel combination stretching over 40km (25 miles). Despite numerous technical and political snags, the Hong Kong-Zhuhai-Macau (HKZM) bridge is nearing completion. It will turn a four-hour car journey into a 45-minute jaunt. Its most transformative effect may be on tiny Macau, which has lacked the infrastructure needed to attract global mass-market tourism (see next article).
On a map of China the PRD looks small, but the delta’s land and water occupy over 40,000 square kilometres. It can take a long time to get from one side to the other. Planners now want to knit the region together more tightly.
To be fair, the PRD already has better infrastructure than most developing countries (see map). Its cities are better built, more connected and greener than those elsewhere on the mainland, with an extensive road network and excellent harbours and airports. Taken together, the seaports in neighbouring Shenzhen and Hong Kong handle more containers than does Shanghai, the world’s busiest container port. Hong Kong has the world’s busiest cargo airport (see chart).
In many parts of China, politicised infrastructure spending has led to a number of white-elephant projects, but not in the PRD. Bureaucrats in the rest of the country should learn from the delta’s sensible, market-oriented planners. The PRD is not overbuilt, so there is a good case for continuing such investment.
The latest five-year plan for Guangdong, released in 2016, calls for the creation of a “one-hour transport circle” to link the main cities of the delta. The province is adding thousands of kilometres of new expressways. A big expansion of the intercity train network will add 1,350km of track. Guangdong’s officials have increased rail density from roughly 1km per 100 square kilometres in 2008 to 2.2km, but are aiming much higher. The subway systems in Guangzhou and Shenzhen, already among the world’s longest, are being expanded further.
Guangzhou, the provincial capital, is particularly keen on more infrastructure investment. In an effort to make itself more attractive as a transit point for inland goods and grain, it has invested heavily to expand its deepwater port. It is also building a giant “aerotropolis”, a supply-chain hub and special economic zone around its airport, which will occupy over 100 square kilometres. A forthcoming high-speed rail link from Hong Kong to Guangzhou will cut the travel time by half, to 48 minutes.
Every three years a group led by the Urban China Initiative (UCI), a think-tank, prepares a detailed report on the country’s urbanisation. It measures progress on 23 indicators, ranging from social welfare (employment, health care) and pollution (air, water, waste) to the built environment (public transport, green spaces) and resource utilisation (energy and water efficiency). In its latest assessment of urban sustainability, published in March, the PRD once again stood out. Shenzhen emerged as the clear winner out of 185 mainland Chinese cities, and Guangzhou and Zhuhai also made the top six.
Another sign that the PRD is leading China in making smart infrastructure investments came with the publication in March of the “Chinese Cities of Opportunity” report by the China DevelopmentResearch Foundation (CDRF), an official research body, and PwC, a consultancy. Using a different methodology from UCI to scrutinise 28 big Chinese cities, the authors conclude that Guangzhou and Shenzhen are the best mainland cities for “technological innovation and balanced development”.
The most important investments in infrastructure today are going into transforming supply chains so that the delta’s erstwhile exporters can redirect their manufactures to the mainland. The Chinese term for logistics, translated literally, means “the flow of things”. Unfortunately, though exports from the PRD move extremely efficiently, the same is not true for the flow of goods inside China. The country spends over 14% of GDP on logistics, nearly twice as much as many advanced economies. Li Keqiang, China’s prime minister, has complained that it can cost more to ship goods within the mainland than from China to America.
William Fung, chairman of Li & Fung, a pioneering supply-chain firm based in Hong Kong, notes that factories throughout the delta that had been sending exports to the West for the past two decades are rearranging supply chains, rejigging logistics and tweaking product designs to cater to customers on the mainland. Local supply-chain firms are investing furiously in such things as last-mile distribution and fulfilment capabilities to help manufacturers sell at home. One example is Shenzhen’s SF Express, an ambitious delivery firm that pulled off a successful public flotation in February. It has outgrown its command centre at Shenzhen’s airport and is now building Asia’s largest air-freight hub in Ezhou, a city in the middle of China.
The results are beginning to show. Exports as a share of Guangdong’s industrial output fell from 38% in 2000 to 27% in 2015. Mr Fung sums it up: “The next 30-year trend is consumption in China, and we’re jumping in.”
