Asset-heavy industry, which requires massive long-term investment, is perhaps safer in state-owned hands
THE recent default of Dandong Port Group on its Yuan1bn ($151m) bond has stoked concern over the solvency of the broader Chinese port industry. But fear not — it was just an individual case.
Having handled nearly 2m teu in 2016, the port — situated in Liaoning province in northeast China, right next to the North Korean border — ranked 81 in Lloyd’s List’s latest top 100 box ports. But containers only accounted for about 25% of Dandong’s total throughput, of which more than 60% was dry bulk cargoes.
Of course, DPG’s failure to meet its debt payment has reflected a string of problems that can also be found at other Chinese port companies, namely the excessive regional competition and hefty financial burden incurred from aggressive expansion efforts in building new facilities.