Pinglu Canal to deepen ASEAN-China manufacturing links: report

Lower costs may raise export pressure.

China’s Pinglu Canal is set to strengthen manufacturing links with ASEAN by lowering inland shipping costs and improving access between western China’s industrial base and Southeast Asian suppliers.

CGS International said the 134km inland waterway in Guangxi is nearing completion and is expected to open by end-2026, giving southwestern Chinese provinces their shortest maritime outlet to the South China Sea.

The report said the canal should shorten routes by about 560km compared with the traditional path through Guangdong, helping to cut fuel use, transit times, and logistics costs.

The firm said manufacturing would see a more structural impact than other sectors because the canal improves connectivity between ASEAN producers and inland Chinese factories.

It added that the new route should deepen supply-chain integration with western China for manufacturers in Vietnam, Thailand, and Malaysia, particularly those supplying automotive parts, electronics, and consumer goods.

CGS said the canal would also support raw material flows into China’s industrial heartland, including Indonesian nickel for electric vehicle and battery production, Malaysian rubber for Guangxi’s tyre makers, and Indonesian coal for power generation.

The bank added that upgraded navigation standards would allow vessels of up to 5,000 tonnes, helping to lower per-unit transport costs further.

At the same time, the report warned that the manufacturing gains will not be one-sided for ASEAN.

Cheaper maritime access from Guangxi means Chinese products such as construction materials, consumer electronics, and processed food could become more price-competitive in Southeast Asia, increasing pressure on smaller ASEAN producers in labour-intensive industries such as textiles, ceramics, and furniture.

CGS said the canal should generate annual logistics savings of more than RMB5.2bn for southwestern Chinese provinces and strengthen the Beibu Gulf’s role as a secondary maritime gateway to China’s interior.