What’s the Pinglu Canal, China’s new gateway to Southeast Asia?

Beijing, China – China is opening its first modern river-to-sea canal for navigation on Wednesday, a project that aims to dramatically cut down shipping distances between the country’s southern hinterland and Southeast Asia, a region that serves as a critical trade partner.

The Pinglu Canal is located entirely in Guangxi, the region in China’s far south bordering Vietnam and overlooking the South China Sea.

This 134km (83-mile) waterway links the Xijiang River with the Beibu Gulf, the northwestern arm of the Gulf of Tonkin stretching between southern China and northern Vietnam. It gives vast areas of southwest China, including provinces such as Yunnan and Guizhou, a shorter route to the sea and to Asian markets.

The first such canal built by communist China, Pinglu is a part of the New International Land-Sea Trade Corridor: A project involving southern Chinese provinces aimed at linking areas in western and southwestern China with Southeast Asian countries and global markets. The land-sea trade corridor is itself a part of Chinese President Xi Jinping’s Belt and Road Initiative, a web of highways, ports and railroads seeking to connect China with Europe and Africa.

According to local authorities in Guangxi, the canal will shorten the shipping distance between inland areas of southwest China and Southeast Asian countries by about 560km (350 miles) and reduce logistics costs by 18 to 30 percent.

Estimates by Zhang Zhiwen, deputy secretary-general of the Guangxi government, indicate that transport costs alone will come down by more than 5 billion yuan annually, or about $700m.

The region’s vice chairwoman, Lu Xinning, describes these returns as “tangible gains” that reduce operating costs and boost domestic and foreign trade.

The canal will allow the passage of ships with a capacity of 5,000 tonnes. Its estimated cost is about 72.7 billion yuan, equivalent to about $10.8bn.