Ships, and the Chinese goods that sail on them…

I bicycled along the harbour shore in Titanic Quarter today in an unseasonably cold breeze. As always, my eyes were drawn to the ships at dock on the other side of the harbour. These ugly brutes, these unsung workhorses of the maritime world, are the capillaries through which a huge proportion of international trade flows. Almost every manufactured good sold in Ireland comes off one of these ships into one port or another. I spotted the flag of the Marhsall Islands, by all accounts more a tropical hell than a paradise in the middle of nowhere in the Pacific, a bleak chain of atolls famous mainly for being a nuclear test site and beset by poverty and squalor, and wondered at it flying in the Port of Belfast. The Yasa Aysen is owned by a Turkish shipping company.

 

Shipping is the oldest truly transnational business. It was the St. Gabriel of globalisation, having operated at a truly global scale for at least four generations, powered at first by the telegraph cable, later replaced by shortwave radio, now replaced by communications satellites, and like everything else profoundly impacted by the internet.

 

We never see them in Belfast, but there are some enormous ships coming in and out of China these days; on the route to South America they run manufactured goods one way and soya the other. On the routes to Rotterdam and Long Beach they mostly run empty back to China. There is some demand but shipping costs are low because of the amount of empty space. The West mainly exports invisible goods to Asia. This looks to me like a dangerously one club strategy. There are exceptions – Germany remains a power exporter, the Netherlands and the Nordic countries also punch way above their weight. Even the US exports quite a bit of high-end manufacturing equipment to China. But neither the UK nor Ireland makes very much that people in Asia actually need. To me, this is a problem.

 

Anyone with any doubts where the workshop of the world is in the early 21^st Century should look at this chart on Wikipedia of the world’s busiest container ports. 6 out of the 8 busiest container ports and the world are Chinese. Chinese dominance is broken only by Singapore at number 2 and Pusan in South Korea at number 5. 9^th place goes to Dubai, a massive hub for middle-men selling Chinese goods to Africa, India and Europe.

 

Where do Europe and North America figure? Rotterdam comes in 10^th –  Rotterdam does a lot of things but a big part of what it does is take Chinese goods off big container ships, and send them up the Rhine by barge. The biggest American container port is Los Angeles at number 17, again a massive recipient of Chinese manufacturing exports.

 

But the big story from these figures is how much Chinese trade is not dependent on Europe and North America, a fact forgotten by too many in the West. So great is the Far East’s dominance in this list, that it is obvious that most of China’s trade in goods, by volume if not by value, is with other Asian countries. And nearly all of Africa is awash with Chinese goods, as anyone who has been there recently can attest to.

 

What is perhaps more surprising is just how much of a minnow India is. Its only container port in the top 50 is Mumbai, way down at number 26. India is growing in manufacturing strength, but its manufacturers remain vastly more focused on the domestic market than China’s. India’s great export strength is its capacity to export the skills of its English-speaking middle-class via the internet. The Indian white-collar workforce is growing fast, and while in the main their standard of living is not high by Western standards, it remains more than adequate enough to buy Indonesian-made televisions and Chinese-made tea sets. Expect Mumbai to keep moving up that list fast in the years to come.

 

The increased importance of imports from other parts of Asia for Indians’ standard of living has already had one positive real world outcome. The piracy problem in the Straits of Malacca, through which passes 40% of the world’s trade and 40% of the world’s oil, has been stamped out. India’s navy joined those of Indonesia, Malaysia and Singapore, all countries whose militaries have long and deep histories of distrust, in a multinational anti-piracy effort that worked. The settlement of the Achenese conflict doubtless also helped.

 

With shipping through the Straits secure, traffic management might become the next nightmare to confront the world’s busiest shipping lane. Remember, 60% of the world’s population lives in Asia, indeed the majority of the world’s population lives between the longitudes of Karachi and Tokyo, that is between 67 and 140 degrees East. As Asia’s middle-classes continue to grow, perhaps the long floundering proposals for a canal across the Isthmus of Kra might finally gain traction?

 

One point worth noting is the explosive growth in regional Chinese ports in recent years. China has been exploding economically. Could it overheat? Has it overheated? No country in history has gone forever without a serious economic crash and China’s run of fortune will at some point come to an end, at least temporarily. One of the remarkable things about China in comparison, let’s say, with the 19^th Century USA, is the stability of its economic growth. Contemporary China’s contrast with the booms and busts of the years of the deadwood American Presidents could not be starker. But what will eventually make it go off the rails? One looks at numbers like these and comes to the conclusion that its just going to keep cooking until a bubble pops. What happens then? If I were the foreign affairs guru in the Head of Government’s office of any country in the world, that’s what I would be trying to work out.