China Spends US$10bn to Dig Massive New Canal to Ease Trade Flow with ASEAN

• Sommana Yan
• 18 October 2023
• International News
• 14730 Views

Recognizing that the eastern port where goods pass through the port near Taiwan looks unstable and is under US surveillance, China has invested a staggering US$10.3 billion (equivalent to 72.7 billion yuan) to carve out the sprawling Pinglu Canal. Stretching over 134 kilometers, this monumental waterway links the Xijin Reservoir near Guangxi’s vibrant capital city, Nanning, to the bustling port of Qinzhou in the south. This monumental endeavor, as reported by asia.nikkei on 30 May 2023, is poised to bolster maritime connectivity and reshape trade dynamics, marking a significant shift in China’s approach to the Belt and Road Initiative.

Launched just a year ago, this project signifies China’s strategic pivot towards maritime avenues for the Belt and Road Initiative, in contrast to the emphasis on land routes in previous years. Yang Jiang, an esteemed expert in China’s politics and economy at the Danish Institute for International Studies, observes, “That’s quite new,” highlighting the innovative approach taken with the Pinglu Canal. This transformative canal was first conceptualized in a 2019 plan aimed at establishing China as a transportation powerhouse, diverging from the traditional focus on railway infrastructure.

In terms of scale and magnitude, the Pinglu Canal project is nothing short of astonishing. It involves the removal of an estimated 340 million cubic meters of earth and rock—three times the volume excavated for the construction of China’s iconic Three Gorges Dam, the world’s largest hydroelectric plant.

Li Xiaoxiang, an official at the construction site, revealed that work is underway around the clock to meet the ambitious completion deadline of 2026. The canal’s profound impact is already evident. Upon realization, it is poised to shorten the shipping distance from inland river systems to the sea by a substantial 560 kilometers compared to the route via Guangzhou, potentially saving up to 5.2 billion yuan annually.

This ambitious waterway serves not only as a strategic trade enabler but also as a catalyst for regional economic growth. By establishing a cost-effective gateway in proximity to Southeast Asia, the Pinglu Canal is primed to stimulate industries in Guangxi and other underdeveloped regions in western China.

Intriguingly, geopolitics appears to be playing a role in expediting this endeavor. The Pinglu Canal is strategically positioned to foster and amplify burgeoning trade ties with the 10 members of the Association of Southeast Asian Nations (ASEAN). Remarkably, ASEAN and China have already emerged as each other’s largest trade partners. Their two-way trade has soared by an astonishing 52% from 2019 to 2022, eclipsing even the impressive 20% increase observed with the European Union.

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