Transport infrastructure key to domestic, export growth

By Frank-Jürgen Richter

Business Times, January 29, 2014

I noticed recently that Jaguar Land Rover (JLR), a group now owned by Tata of India, had increased its exports enormously. JLR increased sales over the last year by 15 per cent in North America, 24 per cent in China, 5 per cent in Europe and 15 per cent in the UK, and it is doing this while being a responsible and sustainable firm. It is not surprising that many praise Tata for investing in the UK and making this possible.

Well, that is indeed true for Tata group, but in general, investment by India in the UK over the last year saw the value of projects rise by 10 per cent, leading to 4,000 new jobs and safeguarding 3,000 others. China invested 24 per cent less though still creating 2,000 new jobs; and Japan invested 30 per cent more, creating 3,000 new jobs.

The UK’s inward investment data from China, India and Japan are dwarfed by the massive influx to the UK from the US and its European near-neighbours. That is true also of the UK’s outward investment (mainly to the US and Europe); and its export figures in general relate most heavily to near-neighbours rather than to distant shores. Importantly, this tends to hold true for most nations. Researchers find that we tend to understand best our local markets – mainly at home, then across one border, and after that the nations afar. Such general knowledge has deep relevance for all our futures.

Let me turn first to Europe. During the 1980s, the idea of Trans-European Networks gained momentum within the “single market”: the Ten-T project. Of course, its progress was´slow with national arguments; yet presently, about half the EU transport budget, some 26 billion euros (S$45.19 billion), are allocated to this task from 2014 to 2020. Transport infrastructure is considered fundamental for the smooth operation of the internal market, for the movement of people and goods and for the economic, social and territorial cohesion of the EU. Their planning stops at the EU boundary – it plans “motorways of the seas” to boost short-sea shipping, and extensions by land for roads and rail links to the north to Russia, to the east into Central Asia and south to the Maghrebin link across North Africa.

Second, looking to the US – transport enabling came from the 1956 Inter-state Highways Act which saw the laying of 75,000 km of high quality roads across America costing some US$500 billion (in present terms). It is presumed that today’s weak exporting by the US is due to their strong internal market enabled by its well developed road infrastructure. In contrast, its rail structure lacks general coherence and investment. Nonetheless, there are rail highways carrying high freight tonnage coast to coast that contribute to US wealth.

Finally, I turn to Asia, which covers a wide expanse of the globe and holds a huge fraction of its population. Asia comprises many countries, and all wish to have a say about economic and social development. The UN oversees many development programmes, including transport. UN-Escap (Economic and Social Commission for Asia and the Pacific) has been working diligently towards a pan-Asia integrated transport plan reaching from the Pacific to the “shores” of Europe – a line that reaches north from the Gulf States to the Baltic (including the Russian Federation). Even the Millennium Goals addressed a part of this Asian programme as the goals sought to increase the well-being of landlocked states. China becomes a strong exemplar in these developments.

Modern China has strongly developed its transport infrastructure. Since 1950, its rail infrastructure has quadrupled to 92,000 km; its national trunk highways have grown to 100,000 km; its water transport systems are being integrated across river, short-sea and oceanic shipping. Predicated on transport, its economic growth has been impressive. China boasts many extremes –in rural areas, people still depend on non-mechanical transport, while in Shanghai, it has the world’s fastest commercial train: the maglev system travelling at 430 km/h. Of the world’s top 10 tonnage ports, only Rotterdam (fourth) is not in Asia, with Shanghai, Singapore and Tianjin being first, second and third respectively.

The River Yangtze provides a backbone for trade: its 3,000 km of commercially open waters are now fully regulated – traffic sails on the right side, there are 6,000 solar-powered buoys to aid night travel, and most of the river is covered by radio for navigation support and hazard avoidance. Security is high and flows of goods increase year by year.

Even with this impressive growth, China still encounters issues, such as week-long traffic snarls caused by trucks carrying coal. To ameliorate such issues, China’s high-speed rail systems (for passengers) will allow the separation of people and freight flows with the latter still moving on the older, slow-speed lines but now travelling consistently faster by not being side-lined in preference of passenger trains. In certain areas, China has designated specific freight-only roads, such as the five-lane 270 km highway from Junggar to Xinghe in Inner Mongolia, allowing 100-tonne coal trucks to move safely without the encumbrance of traffic.

China is opening up its “inner space” in a coherent way. China’s wealth depends ultimately on its people – the State through its provision of infrastructure will support migration to new towns as China develops from an agrarian to a technological society. Through the new developments, it is possible that the people of China will not have to endure their present massive relocations to coastal economic powerhouses to search for work: officials expect about 3.6 billion person-trips this new year season! In the future, they will be enabled to develop new economies in the centre and in the west of China, thereby uplifting its GDP by internal trades, and importantly raising their feeling of “well-being”.

The writer is founder and chairman of Horasis, a global visions community.