Logistics infrastructure

China's logistics infrastructure has developed rapidly since the economic reform and opening up, although it is still insufficient to meet the growing demand of the developing economy and the needs of modern logistics. Table 4.10.1 provides a snapshot of the transport infrastructure over the period 1996 “2000.

Table 4.10.1: China's transport infrastructure: development 1996 “2000 (thousand km)

Item	1996	1997	1998	1999	2000
Length of operating railways	56.7	57.6	57.6	57.9	58.7
Electrified Railways	10.1	1.2.0	13.0	14.0	14.9
Total length of highways	1,185.8	1,226.4	1,278.5	1,351.7	,402.7
Length of navigable inland waterways	110.8	109.8	110.3	116.5	119.3
Total length of civil aviation routes	1,166.5	1,425.0	1,505.8	1,522.2	1,502.9
International routes	386.3	504.4	504.4	523.3	508.4
Petroleum and gas pipelines	19.3	20.4	23.1	24.9	24.7
Source: China Statistical Yearbook 2001

Railways

The railway is losing its position as the main method of freight transport. It once carried over 75 per cent of the country's freight but now takes only 13.1 per cent of total freight volume, of which 2.46 per cent is containerized traffic. The sector is heavily controlled by the state. The lack of flexibility in transport schedules and prices has contributed to the railway's shrinking market share.

Ports

By the end of 2000, China had 581 deep-water berths for vessels of 10,000 tons and above along its coasts and inland river ports, and a total 26.19 million tonnage of ocean-going vessels. According to Customs statistics, inbound and outbound containers totalled 25.46 million TEUs, among which 25 million TEUs were in ocean shipping containers. Apart from Hong Kong, Shanghai and Shenzhen Ports are among the 10 largest container ports in the world.

Airfreight

There are 139 civilian airports in China. In 2000, airfreight had a negligible share “ only 1.97 million tons “ of China's total volume of freight. However, it had been increased at an average annual rate of 14.36 per cent in the 1996-2000 period and it is expected that airfreight will increase at an average rate of 13 per cent over the next five to ten years . Currently, airfreight and air express services are mainly covered by passenger aircraft. Airfreight is rarely connected with other modes of transport and there is a lack of sufficient warehousing capabilities at most airports. Also, value-added services such as processing and consolidation are rarely available.

Highways

Highway transport plays an important role in the movement of goods in China. In 2000, 10.39 billion tons (76.49 per cent) of China's total freight was carried by trucks . The total size of the truck fleet in China was 7.16 million, 6.97 million of which were standard sized trucks. Long trailers are rarely seen on the roads . The level of containerization is low.

Warehousing

Another element of the logistics infrastructure is warehousing. A survey of the commerce sector, ie wholesale and retail, grain supply, industrial material supply, rural supply and marketing and foreign trade, revealed that there is a total warehousing capacity of more than 300 million square metres. The capacity is even larger if the warehousing capacities owned by the transport sector, postal services and industrial operations are taken into account. However, most warehouses are simple and crude. Improvements and renovations are badly needed.

Information technology

In 2000, fibre optic networks exceeded a total length of 300,000 kilometres. Together with digital microwaves and satellites , China has a fairly sophisticated telecommunications network covering all the major cities and 90 per cent of the counties and townships. Internet services have developed rapidly. The total number of Internet users had reached 33.7 million by the end of 2001, an increase of 49.8 per cent. The application of broadband transmission technology has alleviated the bottleneck in Internet services.

Future plans

In an effort to further improve the logistics infrastructure, China will increase capital input to beef up the transport capabilities in the tenth five year plan period. RMB270 billion ( roughly US$33 billion) will be invested in railroad construction and by 2005, the total length of operating railroad will be 75,000 kilometres. An additional 26,000 kilometres of trunk-line highway will be built, upon completion of which 99.5 per cent of the townships and 93 per cent of administrative villages will be connected by highways.

It is recognized that economic globalization and China's integration into the world will accelerate China's trade flows, which will require improved handling capabilities by major Chinese ports. The government will therefore intensify its efforts to improve port facilities. One such effort is the construction of the Shanghai port into an international shipping centre . Containerization of the key ports such as Shanghai, Ningbo, Dalian, Tianjin, Qingdao and Shenzhen will receive priority support from the government and fourth- generation or higher standard container docks will be constructed at those ports. By the year 2005, the container throughput capacity of China will reach 50 million TEUs. There are also plans to renovate or build 200 inland shipping berths, an addition of 25 million tons to the existing capacity.

Airfreight capabilities will also be improved. As mentioned above, total airfreight volume is expected to reach 2.8 million tons by 2005. To achieve this target, three major airfreight terminals will be constructed in Beijing, Shanghai and Guangzhou.

China has the necessary basic infrastructure to support reasonable growth in logistics, while recognizing the need to improve value-added service capabilities to meet the requirements of modern logistics.