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Opportunities and challenges of Shanghai Port in the economic globalization Director of Shanghai Municipal Port Administration Bureau, XU Pei-xin - Speech at PorTech Asia 2007

(Morning, October 24th,2007)

Dear honored ladies and gentlemen:

Good morning!

First of all, I'd like to introduce a few famous figures in the port sector that participated in the discussion today: Chairman of the Board, Qingdao Port Group, Mr. CHEN Hong-xian and Deputy Director of Ports Administration of Shenzhen Municipality Mr. MA Zhi-yong .

In accordance with the meeting's agenda, the topic we are discussing now is: "Opportunities and Challenges in the economic globalization". I would like to firstly talk about my understanding on this issue and then ask other several guests to express their opinions.

In my opinion, since China joined WTO, the impact of economic globalization on China 's port has been growing day by day, which is conspicuously manifested in the following areas:

First of all, economic globalization has pushed the coastal ports to the fast lane of high-speed development.

Most direct impact of economic globalization to China's ports is manifested mainly in the following three aspects: first is expanding scale of international trade and promote the development of the export-oriented economy with an increase of port throughput; second is acceleration of the transfer of industrialization of world's developed countries to Chinese coastal zones so China becomes important base of the world's manufacturing industry while transport of ores, crude oil, coal, chemicals and other raw materials and energy rapidly expanding and transport of container growing at a high-speed; the third is China's coastal ports are integrated into the world logistics system, which puts forward higher requirements on port efficiency, service content and service levels and has accelerated the modernization process of coastal ports. These effects are intertwined with each other and have promoted China to enter an unprecedented new stage of enormous construction and development. Many coastal ports, located at the transportation routes of raw materials and the energy and major nodes of container transportation, have doubled cargo throughput or container throughput in almost every three years in recent years. This year's container throughput has reached more than 100 million TEUs. Adding on Port of Yingkou that has just exceeded 100 million tons this month, there have been a total of 14 ports with cargo throughput of more than 100 million tons.

Secondly, economic globalization has pushed forward the cooperation between the regional ports.

Subject to the effect of economic globalization, regional economic integration has become an increasingly obvious trend and leaders of more countries and regions have realized that strengthening cooperation between the neighboring countries and regions is very important. Along with the further opening up of regional markets, trade between regions is more intimate and regional cooperation between the ports has been put on the agenda. The ASEAN Free Trade Area Port Cooperation Agreement signed this year marked the cooperation between coastal ports in China and its neighboring countries and regions will open a new chapter. This will become the new development opportunity for the development numerous ports.

Thirdly, economic globalization has also brought serious challenges to China 's ports.

Rapid development of economic globalization has brought some new problems to China 's development of economy and ports:

-- "Made in China" export products are facing challenges of "trade protection barriers" from a number of countries and the enormous amount of trade surplus gradually forces RMB to revaluate. Therefore, export-oriented economy is difficult to be sustained and we must change in a timely manner to economy of expanding domestic demands, which requires coastal ports to change development focus correspondingly and improve the capacity and level of service for the economy of inland Midwest areas.

-- The expansion of industries that are mainly based on high consumption of raw materials and energy has led to serious damage of the ecological environment and serious waste of resources. Therefore, it is necessary to speed up the transformation of the mode of economic growth, speed up the adjustment of industrial structure and pay more attention to ecological and environmental protection and safety, which requires coastal ports to pay attention to the risk of scale expansion and appropriately adjust the pier structure while at the same time paying more attention to ecological and environmental protection and safety of port.

-- The layout of heavy chemical industry in China 's coastal areas has aggravated the acceleration of construction of infrastructure of coastal port cities for competing large projects. At the same time, as a result of homogenization of urban industrial structure and quality, ports' structure and pursued objectives are identical and are blindly in pursuit of big-port scale. The competition between ports is very fierce. Today, under the guidance of the scientific concept of development and in the circumstance of major changes in overall national development strategy, coastal ports are required to have scientific planning, rational division of labor, strengthening regional cooperation and concentration on enhancing the overall competitiveness of port group.

This shows that the economic globalization and regional integration have and will continue to bring rare development opportunities to China 's ports; but at the same time, some of the problems brought by economic globalization force us to give further thoughts, early planning and timely transition on the ports. Whether external environment or national policy, it is a tough challenge to the current development mode of pursuing throughput and expansion scale.

(October 24,2007)

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