The Current Status And Trends Of China’s Border Port Economy Development – Analysis

By He Yan

Border ports serve as crucial gateways, connecting a country to the outside world and facilitating foreign exchanges and economic cooperation. Over the years, as global trade has grown and evolved, China’s border ports have also transformed. They have shifted from a traditional “channel economy” to a more dynamic, value-added, and sustainable “industrial economy”. However, geopolitical tensions and rising trade protectionism present new challenges in the current global climate. Policies like import restrictions and higher tariffs in some countries affect China’s port economy. These shifts also mean that border ports now face even greater demands for further development.

The shift in the industrial economic development of China’s border ports from the traditional “channel economy” to the “industrial economy” is reflected in many ways.

One key area of growth is in logistics and tourism. As transportation infrastructure in border cities continues to improve, both sectors have become significant and rapidly growing components of the port economy. For example, in places like Yunnan, industries such as cross-border tourism, shopping, e-commerce, and logistics are rising quickly, showing strong growth trends. At the same time, the increased convenience of cross-border logistics has facilitated the export of local specialty products, further boosting the economic development of border regions. Specifically, data from Yunnan’s entry-exit border inspection stations shows that the total number of entry and exit passengers reached 24.77 million for the year, marking a 64.5% year-on-year increase. The number of transportation vehicles (including cars, ships, planes, and trains) was 3.42 million, up by 21.6%. Notably, Kunming Changshui International Airport, the busiest airport of entry in Yunnan, saw a passenger flow of 2.97 million, a 137% increase compared to the previous year.

Another significant development is the progress in manufacturing. Border port regions are gradually establishing industry chains centered around processing and manufacturing. Several border cities have already developed industrial clusters that include agricultural product processing and deep processing of mineral products. For example, regions like Xinjiang, Yunnan, and Guangxi have advanced the “Port +” model, leveraging local resource advantages such as coffee, fruits, and minerals to closely integrate the processing industry with the transfer of industrial chains. The trade data for intermediate goods is an important indicator of how well the industry and supply chains are converging. According to data released by the General Administration of Customs, China’s imports and exports of intermediate goods with ASEAN have increased from RMB 605.32 billion in 2004 to RMB 4.08 trillion in 2023. In the first three quarters of 2024, China’s trade in intermediate goods with ASEAN reached RMB 3.23 trillion, marking a 9% growth. This growth is particularly evident in sectors like electronics, automotive manufacturing, and textiles, where close cooperation between China and ASEAN countries is driving the expansion of intermediate goods trade across the industrial chains.

The third area is the shift and promotion of policy focus. The 14th Five-Year Plan for Port Development emphasizes the need to focus on the systemic, overall, and coordinated nature of reforms, enhance policy alignment, and strengthen the sharing and utilization of port facilities and data. It also advocates for shifting the focus of port functions from focusing on openness to emphasis on management. Recently, China’s Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued a notice to expand the implementation scope of the export refund policy for ports of departure. The new policy will cover 37 ports of departure and departure ports.

China’s port economy has made significant progress, but there are still challenges that require careful attention.

First, there is some overlap in functions and homogeneity in industries between certain ports. As of December 31, 2023, China had 315 approved open ports, including 129 waterway ports (53 river ports and 76 seaports), 103 land ports (21 rail ports and 82 road ports), and 83 airports. In regions such as Inner Mongolia, Guangxi, and Yunnan, there is intense competition due to the homogeneity of port functions. Taking Yunnan as an example, the economic development of its border ports is relatively underdeveloped, with technology-intensive port industries still in their infancy. Currently, the region mainly focuses on labor-intensive industries like light textile processing and garment manufacturing. However, neighboring countries also have a strong focus on labor-intensive industries, creating competition due to the similarity in industrial types and limiting the growth potential of port industries. Additionally, “emerging” ports in regions like Guangxi, such as Pingmeng, Longbang, and Shuolong, primarily import products like seafood and cashews. These small, dispersed processing enterprises face significant homogeneity competition. The lack of industrial diversity and insufficient synergy makes it difficult to form agglomeration effects, posing multiple challenges to the development of cross-border industrial and supply chains.

In addition, the lack of supporting services such as finance, insurance, and legal support, as well as the shortage of specialized talent, also hinders the sustainable development of the port economy. In certain regions, for example, industrial development is limited by the availability of essential resources, making it difficult to secure land or forest resources for projects. Local fiscal imbalances have worsened, making it increasingly challenging to raise funds for infrastructure projects like industrial parks and logistics hubs. Furthermore, some border counties face severe aging and depopulation in border villages. Due to economic constraints, the local residents’ enthusiasm for participating in cross-border trade is relatively low.

To address these issues, a multi-faceted approach should be taken with tailored strategies for each region. The first is the strengthening of the overall top-level design and functional layout of ports, clarifying their positioning, and enhancing coordination with established land ports, other sea and airports, as well as counterpart ports.

Second, the focus needs to be on promoting the coordinated development of international trade and industrial chains, deepening collaboration across industry platforms. Efforts should be made to extend the industrial chains within port-specific industrial parks, fostering a deeper integration and coordinated development of the park’s industry chain with international trade and industrial chains. This will help create a more connected, efficient cross-border industrial chain and supply chain. Strengthen the element guarantees required for infrastructure development, such as land, forest resources, and capital, to expand the space for industrial growth.

Third, it is crucial to encourage border residents and businesses to participate in cross-border trade and explore the potential for the growth of such trade. Support the construction of border trade zones and points, and use the development of border trade as a foundation to innovate and expand cross-national and cross-regional trade flows. Policies should be adapted to local conditions to stimulate the vitality of border trade.

Final analysis conclusion:

Over the years, with the increasing demand and quality improvement of global trade, the industrial economic development of China’s border ports has shifted from the traditional “channel economy” to a more value-added and sustainable “industrial economy”. While significant improvements have been made in the development of China’s port economy during this transition, there are still issues that require caution. At the same time, the volatile international situation has raised higher demands for the development of border ports.