Asean firms hope Pinglu Canal will open China market, but fear flood of imports

Southeast Asian firms are optimistic about the Pinglu Canal, which opened earlier this month, potentially providing a shortcut for Chinese imports into China's second-largest economy. However, they fear the flood of Chinese exports may overwhelm the canal and the region's trade. The 134.2-kilometer canal, costing US$10.8 billion to build, is the first man-made waterway connecting a river to the sea since the People's Republic of China's founding in 1949.

It can accommodate vessels up to 5,000 tonnes and is designed to save over 5 billion yuan in transportation costs annually. Businesses like Vietnamese coffee chain Trung Nguyen Legend hope the canal will streamline their logistics, which currently involve a circuitous route with occasional delays. However, concerns have been raised that the canal might exacerbate the trade imbalance between China and Southeast Asia.

While the canal could facilitate two-way trade, it may primarily benefit Chinese exporters, potentially worsening the region's trade deficit with China. Analysts suggest that the canal could deepen Southeast Asia's economic ties with inland China, and trade accords like the Regional Comprehensive Economic Partnership (RCEP) could ensure the canal's benefits are evenly distributed.