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Build a Global Logistics System Connecting China with the Rest of the World
2017-12-15
By Wei Jigang
Research Report Vol.19 No.6, 2017 I. An Era of Global Connectivity
Globalization is one of the most important features of today’s world. Globalization has deepened the international division of labor, driven global economic growth and trade expansion, and promoted the flow of people, commodities, resources, funds, information, data, knowledge and technology on a global scale. Globalization requires countries to strengthen connectivity in such aspects as transportation, logistics, information and communication, the Internet, finance, culture, and systems. Global connectivity and global flows have further boosted globalization and global economic growth.
Over the past decades, the developed countries such as the United States, Europe and Japan have focused on the global market and global allocation of resources, dominated global connectivity, and promoted the global flow of elements, commodities and services. The United States has developed the national strategy to build transportation, logistics and supply chain service systems driving its economic growth and keep control of the world’s main logistics channels by controlling the global transportation network, logistics network, information network and supply chain network, so as to achieve its global strategic objective. The European Union’s strategy is to ensure that its industries and products enter the European market and international markets by building an integrated transportation and logistics network①. Japan has established the strategy of circulation-driven development, focusing on building a comprehensive international transportation system and logistics system connecting East Asia and other parts of the world by achieving seamless connectivity with East Asia②.
With the rise of emerging economies in recent years, China, India, Russia, Brazil and other countries have continuously strengthened their ability of global connectivity. Especially, China has occupied an increasingly important position in the global flow network and is expected to overtake the United States as the global trade center and distribution hub.
In addition, the wide application of information and network technology, such as the Internet and mobile communications, enables small and medium-sized enterprises to participate in the trend of global connectivity along with traditional multinational companies.
II. China’s Global Logistics Capability Needs to Be Strengthened
In 2010, China became the world’s largest manufacturer, and in 2013, it became the largest trader in goods, and surpassed the United States as the world’s largest logistics market. Currently, China ranks No. 1 in the world in terms of railway, highway and waterway freight volume and freight turnover, the volume of express delivery, and the mileage of inland river channels, highways and high-speed railways, and takes the second place by air freight and air express volume. However, China is still not a power in logistics. According to the logistics performance indicators released by the World Bank, China is ahead of other developing countries in terms of infrastructure, logistics capability, maritime transport capability, customs clearance efficiency, cargo tracking and timeliness, but still lags behind many developed countries. A McKinsey study shows that the United States and Germany are the most connected countries in the world, with China’s global connectivity accounting for only half of theirs.
For example, China has little influence on the global maritime transport market. Its international maritime transport capacity is only two-thirds of that of Germany and Japan, and only one-fourth of China’s imports and exports are transported by sea③. China also has limited influence on major global shipping routes, and the construction of the international air cargo network, international express delivery network and cross-border warehousing and distribution system remains at the primary stage. China has little say in the formulation of international logistics service standards. China’s product exports have reached more than 220 countries and regions, but no Chinese logistics company has global delivery capacity. In contrast, international express delivery giants such as UPS, FedEx and DHL all have a global logistics network covering more than 220 countries and regions.
III. Vision for China’s Global Logistics System
1. Strategy
To build a global logistics system, China should grasp the new characteristics of globalization and the international situation, strengthen strategy coordination with other countries for mutual benefits based on the global strategy and needs of global production, distribution and trade, take the opportunity of the Belt and Road Initiative to gradually establish a global logistics and supply chain service system that links China to other parts of the world and reaches out to main target markets, improve its capabilities of global connectivity, global services and global solutions, so as to sell, purchase, manufacture, transport and deliver products worldwide.
2. Strategic objectives
To establish a logistics service network that connects China to its neighboring countries and regions and covers the countries and regions along the Belt and Road and main target markets, develop competitive global logistics service capabilities, provide strong support for China’s global production, global distribution and global trade, and ultimately build China into with the world’s most powerful country in global connectivity and logistics services.
3. Strategic tasks
China’s global logistics system is composed of “four beams” and “eight columns”. The “eight columns” refer to the international rail transport network, international road transport network, international air cargo network, international sea transport network, international pipeline network, international postal and express delivery network, international warehousing network, and international distribution network. The “four beams” include the global logistics information system, global logistics standard system, global logistics policy system, and global logistics operation system.
(1) Establish the international rail transport network.The network will extend from mainland China to Russia, Mongolia, Japan and South Korea northeastwards, to Europe, Central and West Asia and Africa northwestwards, and to Indo-China Peninsula, India and Pakistan southwestwards. China will strengthen cooperation in international railway transport with main countries bordering the Pacific Ocean, Atlantic Ocean, and Indian Ocean, open up the inland trade channels, energy channels and exchange channels, and promote China’s railway technical standards, technical equipment, engineering construction, operation management and other industries to the whole world, so that the international rail transport network is well-structured, safe and efficient, and up to universal standards.
(2) Improve the international sea transport network.Improve China’s maritime routes and global port layout, strengthen the capability of maritime transport between China and its trade partners, and promote marine infrastructure connectivity with other countries; increase the density of maritime routes between China and the developed economies, strengthen maritime routes between China and the emerging economies of Asia, Africa and Latin America, and open up routes to the Arctic and Antarctic; strengthen the integration with global port and wharf resources, and improve the layout of overseas ports; improve the domestic coastal coal, oil, ore, grain, and container shipping systems; actively participate in international shipping infrastructure investment, construction and operation, and expand the international maritime cooperation network; strengthen the construction of the international shipping center, promote the open development of maritime transport, actively participate in global marine management, and strengthen the ability to ensure the safety of international shipping.
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