Huang Zhendong: Port interconnectivity to bring prosperity

On a large wharf, cranes and AGVs were busy loading and unloading containers, while in the operation control center there were only a few operators making all this possible with the aid of computers.

That was what Huang Zhendong, former transport minister, saw during a recent visit to the phase IV of the Shanghai Yangshan Deep Water Port, the world’s biggest automated container terminal.

Huang, who had worked in the port industry for 22 years, regarded the project as a sign of the ongoing modernization of ports unseen before in this country, and also an important embodiment of China’s effort to build its strength in transportation, a requirement made in the report delivered by Chinese President Xi Jinping at the 19^th National Congress of the Communist Party of China (CPC).

Huang recalled the Port of Qinhuangdao in the 1960s and 1970s. A young man with a weight of about 60 kg would usually carry sacks weighing 75 to 100 kg each, according to him. “How heavy that was!” he said. “Should we go on with what our predecessors endured? If so, how could our motherland change for the better?”

He said he and his colleagues who had gained expertise wanted to make a change. “Once we had an opportunity, say when getting promoted to be team leaders, we were determined to change this backward situation.”

The phase IV of the Yangshan Port marked a new milestone in building Shanghai into an international shipping center, which will be an important symbol of the integration of the Chinese economy into the global economy and a major window to showcase and facilitate China’s opening up.

Beginning with the topic of the Shanghai international shipping center, Huang talked about the story of Chinese ports’ reform and opening up in the past 40 years during a recent interview.

Development of Shanghai Port

Shanghai Port has been the No. 1 among global ports in terms of container throughput for eight years in a row. It has been hailed as an epitome of China’s port development.

The central government made the decision to build Shanghai into an international shipping center in the mid-1990s, according to Huang.

On January 16, 1996, Li Peng, then Chinese premier, announced China’s plan to build Shanghai into an international shipping center. This decision has played an important role in the development of Pudong new district, as well as making Shnaghai a global center for economy, finance and trade.

Huang said the initiative was put forward as China decided to join the World Trade Organization (WTO) and get involved in economic globalization and international competition.

“The plan to turn Shanghai into an international shipping center marked the reform and opening up of China’s shipping industry,” said Huang, “It was also a major move China took to participate in regional and international competition, following suits of other international shipping centers, such as Hong Kong, Singapore, Hamburg, and London.”

All ports in the region were competing to become the shipping center for the Asia Pacific region. “Everyone  saw the market potential from Chinese mainland,” he said. “But in our opinion, Shanghai had the most favorable conditions.” Although its container throughput was only a little more than 1 million TEU in 1996, Shanghai Port has unique geographical advantages due to its location at the mouth of the Yangtze River, Huang explained.

But the Shanghai port also had a major drawback. According to Huang, both the Huangpu River and the Waigaoqiao area had relatively shallow water for shipping and port. To address the problem, a proposal for integrating ports in Shanghai, Jiangsu and Zhejiang – with Shanghai at the core – was put forward in 1997. It was suggested that the deep-water ports in Zhejiang’s Ningbo and Zhoushan to be fully used, while making Jiangsu a major container production base.

Since it was obvious that container ships were getting increasingly bigger, it was necessary to increase the water depth at the estuary of the Yangtze River, which was just six to seven meters at the time, he said. He recalled a visit to Denmark, where he “was shocked” to see container ships with a capacity of 8,000 TEU in Maersk’s dockyard there.”

Eventually, after years of research and discussions, it was decided that the water depth at the mouth of the Yangtze River to be increased to 12.5 meters to ensure both the affordability of the project and the stable performance of the waterways, Huang said.

Up to 1980s, Shanghai’s ports and terminals were mainly located along the Huangpu River. Since then Shanghai port has been expanded greatly. Today, with an annual container throughput of over 40 million TEU, the Shanghai Port handles more than one-fourths of the goods shipped on the Yangtze River. The Yangshan Deep Water Port has become a world-class modern container port, and the 12.5-meter-deep waterway has been extended to Nanjing. In particular, the Shanghai Shipping Exchange, the first of its kind in China, is now regarded as a barometer and trend indicator for domestic and international markets.

Shanghai port now handles more than 1,300 international liner ships on a monthly basis, and serving routes covering Asia-Europe, Americas, the Middle East, Africa and Southeast Asia, the port is the world’s largest in terms of route density.

Deepening reform

China now boasts seven of the world’s top ten ports. The country is now linked with 600 major ports in over 200 countries.

Yet back in1970s, Chinese ports suffered greatly from capacity crunch.

“Before the reform and opening up, any slight uptick in the economic growth would lead to transportation capacity crunch,” said Huang. It was common for ships and cargo to be stranded at ports for a few days or even several months, so ports often struggled to ease congestion. A captain of a foreign ship once joked that delays was ‘throwing away gold’,” he said.

On September 14, 1985, ports made the headlines of the China Transport News for “having no severe delays” thanks to coordinated efforts. “It’s hard to believe but it was the reality then,” said Huang.

In order to break the bottlenecks restricting economic and social development, China prioritized transport development as a key national strategy. In 1985, the State Council decided to collect port construction fees on goods handled at major coastal ports, which constituted one of the major funding sources for port development.

Reform on the port management system was also initiated, under which ports administered by local governments were told to support themselves, cargo owners were allowed to build special-purpose terminals for their own use, and provinces and municipalities were encouraged to raise funds for the construction of ports.

Besides, Chinese ports were encouraged to make use of foreign capital, World Bank loans, and Japan’s Overseas Economic Cooperation Fund, which not only helped secure the badly needed funds for port construction, but also introduced advanced engineering management models and cutting-edge port equipment into the ports to boost their cargo handling efficiency. Those measures motivated various parties at multiple levels and gave a significant boost to port construction.

Breakthroughs and innovations had been made through emancipating the mind and seeking truth from the facts, Huang said. “The old economic system hampering the development of transport capacity was reformed and new systems and mechanisms were put in place to promote the transport sector’s growth.”

Before China’s reform and opening up, the transport industry, including infrastructure construction, was subject to “highly centralized planning and management, sometimes even semi-militarized management,” said Huang. As a result, “enterprises worked just to complete their designated tasks and had no right to make management decisions, so they lacked the impetus to improve management and service quality.”

During the period when China implemented a planned economy, four harbor engineering bureaus took charge of the construction of ports in north, northeast and east China and those along the Yangtze River, respectively. Due to imbalanced regional development, some of the bureaus experienced hardships due to a lack of investment in some areas. Then, the Second Harbor Engineering Bureau, which was responsible for port development along the Yangtze River, was encouraged to participate in port construction in coastal areas and even in bridge construction in addition to water projects. The move injected vitality into the bureau, “due to a change in the mentality,” said Huang.

Coastal and inland ports were under the transport ministry’s direct management before the Third Plenary Session of the 11th CPC Central Committee. The ministry launched a pilot program on the reform of port management systems in the early 1980s. Beginning from the mid-1980s, institutional reform was carried out gradually at coastal ports and major inland ports. Thus, the administration of 13 coastal ports and 25 ports along the Yangtze River were delegated to the cities where they were located, so that they were now mainly overseen by local governments under a central-and-local dual administration scheme, and were given the right to make their own decisions regarding operations. Besides, the ports fully opened up to the whole country, providing services to all ships in a non-discriminatory manner.

“Delegated administration of ports virtually meant structural adjustment of the interests of various parties, including the interests of both central and local governments, as well as those of port managers,” Huang said. “When such bottlenecks were broken, breakthroughs were made in port development, too.”

Building socialist market economy was arduous pioneering work. The late Chinese leader Deng Xiaoping’s speeches during his inspection tour of south China and the 14th CPC National Congress in 1992 made it clear that China would establish a socialist market economic system. Afterwards, reform of the port management systems was furthered. Government responsibilities were separated from those of port enterprises to ensure the principal status of enterprises on the market.

In 1996, the State Council approved a plan for deepening reform of the country’s water transport management system. The plan proposed restructuring port authorities, which featured the mixture of government administration and enterprise management, into enterprises. Then, the Transport Ministry rolled out a pilot program for reforming port systems in seven aspects – overall management, financial management, asset management, investment, public security, pilotage service and cargo handling.

In 2001, the General Office of the State Council issued a notice, requiring that the administration of all centrally administered ports and those under the central-and-local dual administration scheme be delegated to local governments, and that government functions be separated from enterprise management. By the end of 2003, 34 ports, including Qinhuangdao and Dalian, had basically achieved the goal of such separation of responsibilities.

Beginning from the mid-1980s, the Chinese port industry spent more than ten years to complete the delegation of administration and the separation of government functions from enterprise management, after the last port, Qinhuangdao, completed the task in 2003, Huang said.

“We’ve firmly implemented the decisions made by the CPC Central Committee and the State Council, and restructured the port system in all aspects,” said he. “Ministries, provinces and municipalities have worked together to promote the growth of Chinese ports, which are flourishing today.”

Long-term strategic planning for ports’ sustainable growth

“To ensure the transport sector’s fast and healthy growth, we must set clear strategic goals, formulate reasonable long-term plans, design feasible steps, and make unremitting efforts to implement them,” said Huang.

The late Chinese leader Deng Xiaoping, the chief architect of China’s reform and opening up, had emphasized transport development and given important instructions on specific issues concerning transport development plans and preparation work. During a meeting with some officials in June 1989, he proposed setting up a taskforce to conduct research and work out the development strategy and plan for China’s basic industry and transport sector for the first 50 years of the 21^st century, and called for taking strong measures to ensure a sustainable growth.

Accordingly, the Transport Ministry attached great importance to research and formulation of the transport development strategy, and worked out a plan for developing trunk roads, main shipping lanes, land and water transport hubs, and supportive systems in about 30 years beginning from the 8th Five-Year Plan period (1991-1995), Huang said.

Then, after the 15^th CPC National Congress, the transport ministry proposed a three-step development strategy at a national transport meeting held in January 1998. The first step was to break bottlenecks and significantly ease the overall transport crunch and its restriction on the national economy by the early 21^st century. The second step was to make the transport industry’s capacity basically meet national needs by around 2020. The third step was to achieve modernization and reach the level of medium developed countries by the mid-21^st century, or the 100^th anniversary of the founding of the People's Republic of China.

The meeting proposed that China should build a comprehensive national transport system and conduct research on road and water transport development strategies and industrial policies, and make proper adjustments to relevant development plans at appropriate times accordingly.

“Since the 1990s, we have enhanced research regarding the transport sector’s overall goals, long-term development plans and strategic steps,” said Huang. In particular, China has developed a sophisticated system of trunk roads, shipping lanes, land and water transport hubs, and supportive facilities, including the Shanghai international shipping center, major coastal shipping hubs, and 45 road transport hubs, said he.

Thanks to the guidance provided by the long-term strategy and proper planning, Chinese ports grew at a fast pace in the 21^st century.

In 2006, the State Council approved a layout plan for coastal ports. Under the plan, China was to build five modern port clusters in the Bohai Economic Rim, the Yangtze River Delta and the Pearl River Delta, as well as on the southwestern coast, equipped with comprehensive multimodal transport systems for handling containers, coal, oil, iron ore, grains and automobiles, and for providing RO/RO and passenger transport services. In 2007, the State Council approved and released a layout plan for national inland waterways and ports, setting the target of building a network of 19,000-km high-grade inland waterways.

“Chinese ports have been transformed,” said Huang. He listed five major changes in the past 40 years.

First, more ports have been planned and built. Beginning with the construction of a terminal in the Shekou Industrial Zone in Shenzhen, south China’s Guangdong Province, China has built the ports of Shenzhen, Rizhao, Tangshan and Yancheng since its reform and opening up. Both the layout and service capacities of the ports are quite balanced, Huang said.

Second, ports have experienced a huge expansion. From 1978 to 2017, ports’ throughput grew from 280 million tonnes to 14 billion tonnes, container throughput rose from zero to 238 million TEU, and the number of berths increased from 735 to 27,578. “The growth rates were unprecedented in China and rarely seen in the rest of the world,” said Huang. “We’ve spent just a few decades catching up with developed countries and becoming one of the leaders in port development.”

Third, ports have made innovations in cargo handling. They have developed systematic processes for handling containers and dry and liquid bulk cargoes, and are capable of receiving container ships with a capacity of more than 20,000 TEU, 400,000-DWT ore carriers, and 400,000-DWT oil tankers, with their handling efficiency and service quality ranked among the world’s highest.

Fourth, progress has been made in port construction technology. China owns world-class port construction technology for various geological conditions, no matter rock, soft soil, silt or sand.

Fifth, ports have been restructured. Many ports have been moved out of urban areas and world-leading new port areas have been formed through structural adjustment.

Port development has facilitated China’s opening up, cultivated talents and help more areas become more prosperous. Since the beginning of China’s reform and opening up 40 years ago, many fishing villages have transformed into new cities and even emerged as international metropolises. For instance, in 1980 Shenzhen was a poor, backward border town, with just a few narrow streets and about 30,000 residents. Today, it has grown into a modern metropolitan city, with a population of 20 million and per capita GDP in excess of $20,000, and is a paradise for innovators and entrepreneurs.

“Without the superiority of the socialist system, China would not have made such great achievements,” said Huang. “And without reform and opening up, transport development would not have had such a good momentum; without Chinese people’s support and expectations, there would not have been such a great impetus for transport development.”

Nevertheless, “there’s still a long way to go, and we must implement the reform and opening-up policy through the process of building China’s strength in transport,” Huang noted.