Will China Be The Big Winner After Completion Of Panama Canal Work?
Posted by Neil Payne on February 8th, 2010Today a team of local workmen in Panama will start to dig a hole partfunded by Japan, aided by Latin American cash and big enough to hold the world’s biggest Danish-owned, South Korean-built megaships. The ultimate winner, though, will be China.
The work, which coincides with the start of Panama’s dry season, is the latest phase in a $5.25 billion (£3.3 billion) project to widen the country’s famous canal — an expansion plan that could comprehensively reshape the flow of world trade and could even scupper Warren Buffett’s $34 billion “all-in” bet on American railways.
Work on deepening the Panama Canal begins amid more evidence of China’s roaring recovery from the global slump. Over the weekend, the closely watched Centre for Forecasting Science at the Chinese Academy of Sciences predicted that the country would return to double-digit rates of GDP growth this year. More critically for world trade, imports and exports are expected to grow by 19 per cent and 17 per cent, respectively.
Will Widening The Panama Canal Lower Import/Export Costs Worldwide?
These are precisely the sort of figures that have given new momentum to the Panama project — mooted a decade ago when Panama took possession of the canal from the United States. The aim is to increase vastly the canal’s capacity, in terms of both size and number of vessels. By doing so, shipping industry veterans say, it will re-establish the global importance of the isthmus.
The idea for an expansion began before China’s economic growth had truly begun to boom. The plans were drawn up in expectation of steady growth in Japanese exports to the United States and a rising tide of raw materials heading across the Pacific from Brazil.
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