What's happening in China





Looking good: Building a China-US trading relationship into a long-term equilibrium

The saying "what's good for business is good for the USA" might well be re-stated as "what's good for the USA is good for China" at least in terms of trade. And that's how major investment banks see it as we head into the New Year.

"Corporate executives are surprisingly bullish about the US economic outlook for 2020, judging from an extensive analysis of management commentary in Q3 2019 earnings conference calls conducted by Goldman Sachs," says Investopedia. Among the companies with optimistic outlooks are Marriott International, Procter & Gamble, Republic Services, Harley-Davidson and Allegion PLC.

Morgan Stanley also forecasts that global growth will recover from the first quarter of 2020 as trade tensions and monetary policies ease, reversing the downward trend of the past seven quarters.

China-EU rail freight grows rapidly - will it be game changer many hope or sink in a sea of unsustainable subsidies?

Rail freight between China and the European Union has experienced 100-fold increase since the beginning of the 2010s. From 2011 when the first, there have been 6,637 freight trains in both directions when in 2017 there were a record 3,673 trips. This, according to Warsaw's Centre for Eastern Studies (OSW Osrodek Studiow Wschodnich), a state-sponsored think tank which did an exhaustive study on the development.

While the Eurasian Land Bridge was completed in 1990, when the railway systems of China and Kazakhstan linked up at Alataw Pass, it was only in October 2008 when the first "Trans-Eurasia Logistics" train reached Hamburg from Xiangtan travelling along the entire northern route. In July 2011, the line was first used as a regular freight route between Chongqing and Duisburg, Germany that things really got started.

In that time the value of goods shipped by rail has been estimated to have grown to US$22.9 billion, or four per cent of overall EU-China trade. More than two-thirds of trains run from China to Europe, reflecting much the same trade imbalance that exists in the maritime field. Some 200,000 TEU were shipped by train from China while the maritime container flow has reached 10 million TEU.

Will India, Indonesia and Vietnam replace China as the West's Workshop of the World?

Experts on the status quo are often the first to defend it from the challenge of change whether undeniable, self-evident tectonic shifts beneath their feet or rule changes that alter the fundamentals of their way of doing business.

Most often these experts cling to power, arguing they are the best at running the world, forgetting that the world they ran was the world of yesterday and not the one that has been transformed, if not transmogrified, today.

Take China and its accustommed role as West's workshop of the world that is now being challenged. One speaks of China and its relations with the West, noting that India, Indonesia and Vietnam, are replacing Chinese suppliers, a trend of recent years, but recently accelerated as country risk factors loom larger in global supply chains. And with the advent of "near shoring", even Mexico is eroding Chinese markets in America.

Examining new ways of getting cargo from China into the rich hinterlands of Europe and America

At a time of trade tensions, getting cargo from China where it wants to go in Europe and America cheaply has never been so critical given the threats arising from what some call the "new normal".

One critical factor is port choice. And for shippers, it might be worth examining options that have not occurred to them because shipping tradition has been so tied them to the tried and true it has been disinclined to see them as viable options.

But such is no longer acceptable. Ship sizes have gone up, as have fuel costs, while crew sizes and slot costs have plummeted. The arithmetic has changed. Much of this has been factored in and dealt with, though not fully appreciated.

Many have overlooked concomitant factors that have emerged, many byproducts of new economies of scale. Consider the implications of the growing size of ships, the biggest being 14,000 TEU 15 years ago compared to 23,000-TEUers today. Not just the biggest of them, but the increase in the average size of vessels, from 5,000 to 10,000 TEU, far more significant a factor given the cargo volumes they collectively carry.


China Trade Specialists

Way-Way International Logistics Co., Ltd.
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Globelink International Freight Forwarding (HK) Ltd.
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