As China’s economy continues to slow, it is turning to infrastructure spending once again to boost growth. Port development is part of this effort since active ports are expected to result in a more vibrant economy.
With an eye towards tapping China’s growing cruise industry, the Shekou subsidiary of the China Merchants Group is harnessing the potential of its new Port-Park-City (PPC) urban development model. The PPC model promises substantial foot traffic and employment through its cruise homeports.
However, high capital requirements and the many risks involved suggest that perhaps only state-owned enterprises may be willing to undertake these projects. Indeed, with overcapacity and market risks looming, the survival of homeports depends not only on patient capital, but also operational excellence and an ability to differentiate. (This report in Chinese.)