Caixin Weekly | Canal Megaprojects Worth 850 Billion Yuan: Local Governments' Dreams vs. Reality (AI Translation)

财新周刊｜8500亿元大建运河 地方政府的梦想与现实

[para. 1][para. 3] The Beijing-Hangzhou Grand Canal, spanning nearly 1,800 kilometers with a history of about 2,000 years, is the longest canal globally and a vital shipping artery, handling over 800 million tons of cargo in 2023. However, China's ambitions in waterway expansion continue as the Zhegan-Guangdong Canal, set to surpass the Grand Canal in length, is under consideration with an investment of up to 320 billion yuan. The Gan-Yue Canal project, a strategic part of China's canal networks, further emphasizes China's focus on developing its inland waterways.

[para. 2] Across China, a trend of constructing significant canal projects is evident, such as the Jianghuai Canal and the Pinglu Canal within the "Four Verticals and Four Horizontals" waterway network. These projects represent China's strategy of advancing transportation infrastructure to meet future demands. The Jianghuai Canal connects the Huai and Yangtze Rivers, aiming to enhance regional connectivity and logistical efficiency.

[para. 3][para. 5] Despite the potential economic benefits of reducing shipping costs, facilitating trade, and promoting regional industry growth, there are concerns about the heavy investments required for these canal projects. The total planned investments have exceeded 850 billion yuan, a significant financial undertaking with apparent government support through mechanisms like special government bonds and policy bank loans.

[para. 4][para. 5] The Jianghuai Canal serves as a model, demonstrating significant benefits in reduced transportation costs and emissions. By rerouting vessels, it links various regions directly to the Yangtze River, decreasing shipping distances and associated costs. As a successful case study, its opening indicates the possible advantages other planned canals might deliver.

[para. 6] The Pinglu Canal is another noteworthy project, aimed at improving navigation and transportation efficiency by linking the Pearl River system with the Beibu Gulf. The major construction completion expected by 2026 reflects the efforts to enhance connectivity and reduce shipping distances significantly.

[para. 7][para. 9] The overarching strategy from government bodies emphasizes enhancing navigational capacity, reducing logistics costs, and boosting economic activity through canal development. However, concerns persist, such as local debt burdens and the challenge of achieving financial sustainability for these massive infrastructure projects.

[para. 8][para. 11] Despite promises, challenges remain in securing the economic value of these canals. Initiatives like the Jianghuai Canal, while reducing logistics expenses, also face issues like maintenance and funding. The debate over appropriate tolls for canal passage reflects broader financial sustainability concerns.

[para. 10][para. 12] At the strategic level, the government's push for canal construction seeks to support regional economic development by creating infrastructure that promotes high-grade waterway integration. These projects are also seen as a stimulant for local economic growth, with additional emphasis on tourism development along canals like the Jianghuai.

[para. 13][para. 15] The underlying logic influencing these projects revolves around fostering regional economies and leveraging low-carbon transport advantages. Nonetheless, direct returns from canal investments are often low, raising questions about long-term viability and cost recovery through user fees like lock passage charges.

[para. 14][para. 15] Despite the potential benefits, there is skepticism regarding the redundancy of canal construction given current infrastructure sufficiency. Experts caution that canal projects need careful consideration, especially regarding ecological impacts and economic feasibility.

Overall, China's canal construction ambitions reflect a broader strategy to anticipate future transport demands, improve regional connectivity, and stimulate regional economic growth. However, financial sustainability, environmental impact, and transportation demand uncertainty remain critical challenges.