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On Track: The New Silk Road

China’s emergence as a global trading powerhouse has created a wide number of opportunities for logistics and transportation providers. Aramex is among many who have capitalized on the emergence of this new Silk Road.

The rapid, exponential expansion of the Chinese economy isn’t so much a miracle as the inevitable conclusion of a centralized, goal-oriented enterprise and economy, something many analysts have been predicting would propel it to the status of global superpower. As we’ve witnessed in the last decade in particular, the results of this growth has been staggering.

Earlier in 2010, China surpassed Japan to become the world’s second largest economy with a nominal GDP of $5 trillion – or nearly 10% the planet’s total GDP – and is currently enjoying growth rates of 10% per year. Perhaps more importantly for the logistics industry, though, is China’s status as the world’s second largest trading nation. At the end of 2008, China's global trade exceeded $2.4 trillion, and it is the largest exporter of goods in the world and the second-largest importer. It’s combined purchasing power was estimated in 2009 at $8.77 trillion. According to the European Central Bank, China’s relative share in world trade (about 7%) is now about 30% higher than its share in world output.

 

For many logistics providers, the world has experienced a sizeable shift to the East, and the opportunities are helping facilitate a new Silk Road. According to Zhuang Guangping, writing in China Economic Daily, “Large-scale logistic enterprises have expedited their steps in market access and expansion” throughout the last five years, while also “enlarging the scale of investment and making more efforts in mergers and acquisitions and have increased their investments, sped up their construction of fundamental facilities for logistic purposes, increased their branches, and began to extend their networks nationwide.”

 

For its part, China has been investing heavily in its infrastructure, particularly highways, cargo terminals and railways, of which 90,000 new kilometers have been added in the last five years, to help expedite the increasing need for express logistics solutions. Logistics is certainly a flourishing industry domestically; in 2009, eight of the 108 applications on the ChiNext stock exchange in Beijing were logistic providers. There are now, according to State Administration for Industry & Commerce, in excess of 700,000 registered providers of logistics and associated services in China. The China Economic Information Network reports that the country’s logistics expenses accounted for 18.3% of GDP in 2008.

 

 

 

Read more in past issues:-

1. On Track: Eruption Disruption

2. On Track: 20/20 Vision - Logistics at the end of 2020

3. On Track: The Logistics of e-commerce

 

 

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