Tracking China’s Manufacturing Might
We all know that water transport is cheaper than road or rail transport, but before the advent of containers, water transport did not have a significant advantage over rail.
This was mainly because water transport faced a bottleneck at the docks, relying on dockworkers to manually load and unload cargo piece by piece. It took six days to load a transatlantic cargo ship, ten and a half days to sail, and another six days to unload, meaning that half of the shipping time was spent at the docks. Moreover, 60%-75% of the shipping cost occurred when the ship was docked.
Everything changed with the container revolution. Dock operations were moved to factories, and ports ceased to be logistical bottlenecks. Containers became conveyor belts between factories, making the global supply chain possible.
Today, international trade is no longer dominated by raw materials and finished goods as it was 50 years ago. Instead, intermediates have become the mainstream of maritime transport. In the trade structures of various countries, over 70% consists of parts and semi-finished products. Thanks to containers, global manufacturing has become an integrated network.
Now, here comes the question: In a manufacturing system based on containers, which infrastructure is the most important?
The answer is deep-water ports and highway networks. The former ensures the trunk transportation of the manufacturing supply chain, while the latter connects the capillaries of the supply chain.
Deep-water ports are essential because the larger the ship, the cheaper the unit transport cost of containers, thus reducing manufacturing costs. The same principle applies to highway networks: the smoother and faster land transport is, the lower the costs will be.
The first to benefit from the container revolution was Japan. In 1966, Japan passed the “National Trunk Highway Construction Act,” embarking on massive highway construction projects. Leveraging its advantageous coastal ports, Japan developed five major industrial regions: Keihin, Nagoya, Hanshin, Setouchi, and Kitakyushu. These regions enabled Japan to surpass the United States and become the new global factory.
Vessel Movements Around Japan
Following Japan, the Four Asian Tigers learned from its success and similarly utilized the cost advantages of deep-water ports and highway networks to develop manufacturing industries. From the 1980s to the 2000s, Hong Kong Port, Singapore Port, Busan Port, and Kaohsiung Port consistently ranked among the top five in global container throughput.
Of course, manufacturing is a labor-intensive industry. Even with ports and highways in place, a large labor force is indispensable. Fortunately, the Four Asian Tigers are all densely populated regions. Singapore and Hong Kong have populations in the millions, Taiwan has around 20 million people, and South Korea has a population of about 50 million.
The size of the population determines the complexity of manufacturing clusters. The Four Asian Tigers were unable to replace Japan as the new global factory because Japan’s population is in the hundreds of millions, not just tens of millions.
After joining the World Trade Organization (WTO), China succeeded Japan as the new global factory, supported by its billion-plus population.
So here comes the question: India also has a billion-plus population and joined the World Trade Organization (WTO) as early as 1995. Why hasn’t India become the world’s factory?
China’s Yangtze River Delta and Pearl River Delta, with their natural harbors adjacent to densely populated hinterlands, are the ideal answer for the “container era” and a uniquely advantaged hub for manufacturing.
The primary condition for a good port is deep and wide waters, which means it must be backed by mountains and face the sea. Sandy or muddy coastlines cannot form natural deep-water ports because large ships cannot approach. However, the issue with mountain-backed ports is that they often lack plains, have narrow hinterlands, and low population density, which hinders the development of manufacturing industries.
A classic example is Rio de Janeiro, one of the world’s three great natural ports. While its port conditions are globally unmatched, the surrounding area is mountainous, with insufficient population to support the development of manufacturing clusters.
Slope Map of Rio de Janeiro, Brazil
Places with good ports are often mountainous and constrained by narrow land, lacking expansive hinterlands. On the other hand, river deltas with vast plains and dense populations, tend to have sandy or muddy coastlines, which lack the conditions for building deep-water ports.
For instance, the densely populated Ganges Delta in Bangladesh has a coastline covered in sediment and mudflats accumulated over millennia. This forces its main port, Chittagong, to be located over 100 kilometers away from Dhaka, the population center.
A good harbor and a vast plain are mutually exclusive—you can only have one or the other. Either there are many mountains and narrow land, or there are many people but no harbors. This is a contradiction in terms.
Therefore, in Japan and the Four Asian Tigers, the coastal areas that are mountainous and have narrow land have developed strip-shaped coastal industrial zones, rather than contiguous industrial clusters in the inland plains.
That was the case until the Pearl River Delta (“PRD”) ushered in the era of reform and opening up.
The PRD is truly blessed by nature: the coastline is mountainous with numerous excellent harbors, the hinterland consists of vast plains with a large population, and the eight river outlets to the sea form a natural canal network. The PRD is simply the perfect place for developing a manufacturing cluster.
Vessel Movements and Slope Chart of the Pearl River Delta
While the PRD stands as the natural mecca of manufacturing, the Yangtze River Delta has grown into a deliberately nurtured hub.
Compared to the PRD, where ports often have deep waters of more than 15 meters, the mouth of the Yangtze River, even after dredging, leaves Shanghai’s Waigaoqiao Port with a water depth of only 12 meters. That’s why Shanghai had to build the Yangshan Deepwater Port, connected by a cross-sea bridge to the outer waters of Hangzhou Bay, so that ultra-large container ships could dock.
As we can see, aside from Shanghai Port—which has defied the odds—the largest port in the YRD is the Ningbo-Zhoushan Port, which is backed by mountains and faces the sea, and both Ningbo and Zhoushan are already at the edge of the YRD.
Still, the Yangtze River is the third largest river in the world, with an annual runoff of 960 billion cubic meters—1.7 times that of the Mississippi River in the U.S.—and an average annual sediment transport of 113 million tons, only one-third that of the Mississippi.
As a result, the Yangtze has unparalleled navigability. The Waigaoqiao Port at the river’s mouth can accommodate 80,000-ton container ships, and 34,000-ton container ships can reach deep into the Yangtze hinterland, all the way to Nanjing Port.
Yangtze River Delta Vessel Movements and Slope Chart
After more than 3,000 years of continuous development, the YRD is crisscrossed with canals. Its river network density is on par with, if not surpassing, that of the PRD. In 2024, it handled 6.45 billion tons of cargo, five times that of the global runner-up, the Pearl River; eight times that of the Grand Canal (Beijing-Hangzhou); and thirteen times that of the Mississippi River.
It is precisely because of the Yangtze’s unrivaled inland river navigation that, in 2024, Suzhou Port handled 9.67 million TEUs, becoming the world’s only inland river port to break into the global top 30.
Suzhou Port
Inland waterway shipping brings about an unparalleled cost advantage.
First and foremost is the cost of factory construction and equipment upgrades. You have to understand that a lot of factory equipment is oversized, and transporting such oversized, overlength, overweight, and overwidth items is classified as “special transport” in the road transport industry.
Road transport not only requires special permits, but also needs to be reported to governmental agencies. Roads along the route must be closed, heights surveyed, and some street lights or traffic signals that are too low have to be temporarily removed and then reinstalled afterward. It’s extremely troublesome and very expensive.
But if a factory is built right next to a canal, with its own internal dock, equipment can be directly lifted ashore by water transport. Isn’t that both convenient and cost-effective?
After the factory is built, bulk raw materials and components can also be shipped in and out via waterways, saving a significant amount of costs.
To illustrate: transporting 1 ton of cargo over 100 kilometers costs 260 yuan by road, 100 yuan by rail, but only 13 yuan by water. A 5,000-ton cargo ship with a crew of just five has the same capacity as a convoy of 333 trucks and 666 drivers.
Take steel coils, for example—famously known as “better starve than haul a coil” among truckers. Transporting even a single steel coil by road is nerve-wracking, but by water, you can easily ship hundreds at a time—cheaper and safer.
That’s why in the Yangtze River Delta, many automobile factories are built along canals, each with its own dock, so shipments of steel coils can be directly transported from the dock to the production line, at a cost far lower than road transport.
And it’s not just steel coils—sand, coal, iron ore, petroleum, and even containers can all be shipped straight to the factory dock, making manufacturing costs much lower compared to road transport. And lower costs mean greater competitiveness.
Now you know why so many provinces and cities are digging canals—because canals represent opportunity and mean that manufacturing industries from the Yangtze and Pearl River Deltas can be relocated. That’s why, compared to the idea that India, Southeast Asia, or Mexico will be the next “China,” I have more confidence in places like northern Jiangsu, Anhui, and Henan.
Greater Yangtze River Delta Vessel Movements
Thanks to the Grand Canal and the Huai River system, these inland regions—northern Jiangsu, Anhui, and Henan—have excellent waterway conditions, offering access to both the Yangtze River and the sea. They are well positioned to absorb transferred manufacturing industries and to integrate with the Yangtze River Delta, forming an even larger manufacturing complex.
Looking around the globe, the only inland waterway network that’s even comparable is Europe’s, but the entire EU’s annual inland shipping volume is just 380 million tons—only 1/17th of the Yangtze River, and less than half of the Pearl River.
Compared to Europe, the United States is even less integrated—the Mississippi Delta’s canals are not a true network, and the industrial regions on the East and West coasts are disconnected and isolated, making it impossible to form manufacturing clusters like those in China’s Yangtze and Pearl River Deltas.
The American manufacturing system and the Great Lakes industrial belt, once built on rail transport, are long gone—overtaken four decades ago by Japan’s manufacturing, leaving only the Rust Belt behind.
The next era will undoubtedly be led by China. An industrial cluster system is taking shape across China’s vast plains, spearheaded by the Yangtze River Delta and Pearl River Delta regions, with inland waterway networks as its backbone.
The Mississippi River is not the Yangtze, nor can it ever become the Yangtze. Without the exponential cost reductions enabled by dense inland shipping networks, U.S. manufacturing cannot compete with China. The more complex the final product and the greater the number of intermediate components required, the larger China’s cost advantage grows.
Even if Trump imposes tariffs and retreats into isolationism, smuggling would render domestic U.S. production unprofitable. Any effort to revive American manufacturing will ultimately crumble like a mirage under the colossal gap between Chinese and American industrial ecosystems.
The containerization revolution is fundamentally a transformation of production relations. The global economic shifts it has triggered serve as proof of “production relations reacting upon productive forces.” Productive forces equate to combat capabilities. Just as the Soviet Union lost the Cold War, the fate of U.S.-China competition was sealed the moment America’s productive forces fell behind China’s.
Editor: huyueyue
