Experts warn of overcapacity crisis in China's ports

BEIJING - Overcapacity in China's ports will be more severe than that in steel and cement in the near future, experts have warned.

"Central and local governments must now pay attention to the consequences of redundant port construction," said Wang Shouyang, director of the Center for Forecasting Science at Chinese Academy of Sciences on Tuesday.

According to the center's annual forecast on the world's top 20 container ports, negative growth is expected in Hong Kong, Kaohsiung and Dalian.

Ten out of the world's top 20 container ports will be in China, 7 in the top 10. Growth rate of container throughput, however, is in decline, according to the report.

Wang pointed out that, container throughput, a barometers of a nation's economic vigor, went down last year in China, partly due to overcapacity.

"Overcapacity in the port industry is a headache that we must deal with in the 2016-2020 period," he said.

Prof. Kuang Haibo, with Dalian Maritime University in northeast China, said 2016 could be a "turning point" for China's ports as they slump from profits to losses.

"Too many city governments counted on new ports to boost local GDP data. That's a bad idea," Kuang said, urging local policymakers to "keep their hands off ports" and "let the market do its job."

In Kuang's opinion, overcapacity and poor service are the major bottlenecks in China's port industry. The slowdown in Dalian is typical of the industrial situation in the northeastern rust belt, he added.

China's port industry grew rapidly before the global financial crisis. After plunging in 2008 and 2009, it quickly rebounded but the growth has been slow recently.

Global rating agency Moody's forecast last year that Chinese ports would continue to face pressure in throughput, "on the back of economic re-balancing and ongoing capacity additions."

Xie Gang of the Center for Forecasting Sciences suggested that ports take the Belt and Road Initiative as an opportunity.

"Policymakers should avoid further redundancies and overcapacity," Xie added.

The center also released reports on passenger and cargo throughput of China's top 20 airports.

Airport passenger throughput is expected to grow fast this year, and cargo throughput should have huge market potential, according to the reports.