GBA Brief

Making tracks: Guangzhou grows its transport network

As the provincial capital of Guangdong, and with a location at the head of the Pearl River estuary and the heart of the Greater Bay Area, Guangzhou’s focus on becoming a key transport hub makes strong strategic sense. 

With the impact of slower foreign trade starting to be felt in some sections of Guangzhou’s manufacturing sector, as well as a sharper slowdown in China’s car-making industry, the city is countering with an industrial upgrade and the promotion of emerging sectors like new energy vehicles and 5G base stations. But that is not enough.

The services sector, which posted double digit growth between January and July, is taking up some of the slack and helping to keep Guangzhou on a steadier growth path. Transportation, warehousing and postal services are a part of the surge, highlighting their growing significance to Guangzhou’s wider economic health. 

Over past few months, several new transport projects have been announced. Two of Guangzhou’s metro lines will be extended to neighbouring Foshan and Dongguan. An additional toll road will be built to speed traffic flows to Guangzhou Baiyun International Airport, where a second terminal opened last year. Construction of Terminal 3 will start next year, in a bid to handle 140 million passengers annually by 2035. New railway lines are being built for commuters within city limits and new bullet train lines are going in between Guangzhou, Shenzhen and Dongguan. High-speed trains that run through Guangzhou already connect the city to 18 provinces directly. 

Inside the city, the idea is to shorten transit times to about half an hour between the suburbs and the downtown areas. The improvements to public transport will support population growth in the suburbs and reduce some of the impact of congestion and localised environmental damage. 

As Guangzhou’s metro extends its reach it is also teaming up with property developers through the railway-plus-property model, which helps bring in capital to fuel its expansion. Retailers and tourism providers know firsthand how improved access can be a game changer too. 

More than a decade ago Guangzhou embarked on its plan to build out its logistics network (roads, railways and distribution parks) and to attract major domestic and foreign logistics players. Following years of improvements, the investment is paying off. Last year, transportation, warehousing and postal services produced an added value of nearly Rmb160 billion, ranking number one nationwide. Sales of postal services led the year-on-year growth, at an expansion clip of 28%. Express delivery (classified under postal services) showed the strongest growth, with more than 5 billion items handled last year, the highest among all mainland cities. 

At the heart of a huge consumer market and a cluster of production lines of so many different types, Guangzhou is seen as an ideal location for logistics firms to run their delivery centres. Booming e-commerce has bolstered the expansion of courier services in the region as well. Direct benefits apart, the city’s transportation expertise adds to its appeal to investors and helps to cement Guangzhou’s status as one of the leading cities in the GBA.