China has recently embarked on major infrastructure reforms which will directly affect the aviation, railway and highway industries. As well as giving businesses involved in logistics or construction a huge opportunity for growth and consolidation, the changes will also have serious social implications, especially in the North and West of China where transport networks are still insufficient.
As a potent symbol of middle class success, automobile ownership in China is on the rise, and transport networks are changing in response. There are grand plans in motion to create a complete ‘National Trunk Highways System’ for the entire population of China, linking the cities and provincial capitals with around 5.29 million kilometres of road.
There are hopes that this will boost the flagging domestic automobile industry. Although Chinese consumers are buying more cars than ever before, they tend to prefer foreign-made vehicles. The China Association of Automobile Manufacturers (CAAM) reported that 18.51 million cars were produced in 2011. Although exports of China-produced vehicles are forecast to his one million in 2012, representing an increase of 150,000 units, the domestic market seems uncertain for the future. In the first half of 2012, domestic automobile companies only shifted 3.15 million units.
The general secretary of CAAM, Dong Yang, even predicts that if poor sales continue over the next few years, up to half of China’s domestic auto brands may disappear. Their current reliance on low-price, rebadged and re-launched versions of foreign-brand models which have recently ceased production indicate that these low domestic returns are likely to continue. As a result, the automotive industry is looking elsewhere; emerging markets such as Brazil, South Africa and Vietnam are some of the Chinese automobile industry’s biggest markets. Although the current models are undoubtedly inferior to their European and American counterparts, tighter safety restrictions in car manufacturing indicate that Chinese cars may eventually close the quality gap. However significant inroads will only be made if greater attention is paid to design; cars are are aspirational purchase as well as a mode of transport.
When embarking on a longer journey, most Chinese travellers tend to either fly or take a train. Currently, only military aircraft are permitted to fly in low altitude airspace. This is set to change in the next few years as the space is gradually opened up to non-military aircraft, presenting a massive opportunity for the domestic aviation industry. Combined with the vast airport expansion scheme currently planned, the aviation industry will undergo a staggering transformation. Chinese city to city travel stands at about 300 million trips a year; it is estimated that within the next two decades, Chinese domestic flights alone will represent the largest aviation market in the world. Within the same timeframe, Boeing predicts that China’s air carriers will take delivery of 5,000 new airplanes, worth US$670 billion. Most of these airplanes will be foreign-produced, and it remains to be seen whether Chinese aviation manufacturers will be able to expand their market share.
(Click on each province to see present and future airports)
However, the domestic aviation industry also faces competition from the railway sector, as trains remain the vehicle of choice for many Chinese people. Over the last five years, a total of 19,700km of new railway lines were built in China, 8,951km of which were for high-speed trains. The closing months of 2012 saw the opening of the world’s longest High-Speed railway line. The 2,298km line currently connects Beijing to Guangzhou, stopping at major cities such as Wuhan en route.
Despite these advances, scenes of cramped, crowded trains during major holidays stand as a painful reminder that the current railway transport network is still inadequate. In response, the government is forging ahead with further expansion; by 2015 they expect to have 120,000km of railway lines in operation, including 18,000km of high-speed lines.
This focus on an integrated, high speed railway network will place China’s rail transport system far ahead of countries such as the US and India, and will engender both increased domestic consumption and international trade. It is currently cheaper to ship to the US form Guangzhou than to overland to Beijing.
China is often viewed as a single, homogenous entity, in reality this is not the case. Disparities in development between the coastal cities and the Northern and Western regions still exist, and for many in rural areas, transport is inadequate. The combined development of the highways, railways and aviation routes will not only address this issue, but will also connect Chinese people to each other like never before. If previously isolated communities are connected to metropolises like Chongqing, it will not only give them greater mobility and access to markets, but will also connect them to a sense of a greater national community.