FT on China's Troublesome Transportation Networks

Last week the Financial Times produced a special report on China, Doing Business in China. Most of the articles are about business between China and the UK, including hurdles as well as efforts to shorten the height of those hurdles. One article with a more general applicability to doing business in China, Missing Links, addresses problems with China's transportation networks.

The article argues that China has several regions with impressive logistics and transportation capabilities, including parts of Guangdong province, Shanghai, Tianjin, Qingdao, and Dalian, but that these systems are fragmented and are all designed to get products out of China. It is very difficult to move products internally, and the author says that this fragmentation drives up costs.

The main problem, according to the author, is a rail system that hasn't significantly expanded in 5 years. This has created heavy reliance on trucking which is inefficient due to China having 70% of the world's toll roads, opportunity for demanding bribes on long drives, theft, and a difficulty in tracking goods. Fortunately, plans are in the works for expanding the rail system.

This whole thing sort of reminds me of 19th & early 20th century Mexico where US railroad companies went in and built all of the railways traveling north/south. Great for the export business, bad for domestic business.