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Plain sailing toward 2020

WITH the central government's backing, Shanghai is on a fast track to become an international shipping center by 2020.

The effort will include integrating port resources in neighboring Jiangsu and Zhejiang provinces and the development of financial services for the shipping sector, said the State Council, China's Cabinet.

This means Shanghai, which has become the world's No. 1 cargo port and No. 2 container port thanks to the Yangshan Deep-Water Port, must focus more on quality than quantity for future growth.

The Cabinet called on Shanghai to develop more high-end financial services, such as ship financing, leasing, marine insurance and capital settlement, all sectors in which the city lags far behind other major shipping hubs.

"It's not sustainable to put all the emphasis on being the world's No.?1 in cargo traffic or infrastructure while not considering added value and the impact on the environment and traffic levels," Li Xiaonian, a maritime law researcher at the Shanghai Academy of Social Sciences, wrote recently.

Li wrote transport companies are relying too much on roads to move containers from local terminals to the point, causing congestion and pollution, which calls for the construction of more railways and better river connections.

Shipping lines, badly hit by the global financial crisis, said the government endorsement could bring benefits for their long-term development. Optimized port resources and services could improve efficiency, lowering logistics costs for shipping firms, said Li Shaode, chairman of Shanghai-based China Shipping Container Lines Co.

"This will create a 'cluster effect' for the shipping business in Shanghai and the Yangtze River Delta region, attracting more volume and in turn increasing business and profitability," Li said.

The Chinese mainland had five of the world's top 10 ports by volume in 2008, and analysts said there is a need for Shanghai to become a global hub to reflect this situation.

Shares in China Shipping and Shanghai International Port (Group) Co, the operator of the local harbor, both surged 10 percent in Shanghai yesterday.


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