June 18th, 2013
12:21 PM ET

China's grand canal plan

By Global Public Square staff

We know that China does infrastructure better than anyone in the world. Their trains, their roads, their airports, their subways have been built at amazing speed on a grand scale and with great foresight. Well, the next great Chinese infrastructure project is a canal. But this canal won't link two Chinese cities together with a waterway. This canal will link the Atlantic Ocean to the Pacific Ocean.

Sound familiar?

Yes, we have one of those already, in Panama. But a Chinese company wants to help build another one. The "HK Nicaragua Canal Development Investment Co. Ltd." will help finance a Nicaraguan canal at a total cost of about $40 billion.

Geographically, a canal there might seem to make sense.  It's just 12 miles from the Pacific to Lake Nicaragua...and from the lake a river flows to the Caribbean...and thus to the Atlantic.  But we don't know if that's the route the canal would take.

For Nicaragua as a nation, the canal seems to make sense.  The canal's proponents claim that the effort would almost double the nation's per capita GDP, which last year was just $3,300. But why build a canal when we already have another one just a few hundred miles away?

Well, here's one reason: there's so much demand for the Panama Canal that between waiting time and transiting, the average time to get through the canal is more than 25 hours.*

Here's another: the biggest cargo ships that can go through the Panama Canal are called "Panamax." Each Panamax ship can carry about 4500 shipping containers. But there are newer, bigger ships, called post-Panamax. The newest ships on the block – so-called "Triple E's" – can hold more than 18,000 containers...that's four times the capacity of a Panamax ship.

Watch the video for what shipbuilder Maersk says 18,000 containers would look like stacked in Times Square.  The first "Triple E" will be delivered on June 28. These ships obviously have to find other routes since the Panama Canal can't accommodate them...and that's exactly what they are doing.

In the meantime, Panama is frantically trying to revamp its canal to accommodate bigger ships (but it still won't be able to accommodate the biggest ships). This massive effort will just about double the canal's capacity...and cost more than $5 billion.

Now, when the Panama Canal is widened – and if the Nicaragua Canal project actually comes to fruition – those post-Panamax ships will obviously need somewhere to dock to pick up goods and to drop them off.

And therein lays the problem for the United States.

By 2015, when the enlargement of the Panama Canal is expected to be complete, only 10 of the Unites States' approximately 55 major commercial ports will be ready for the bigger ships, according to KC Conway, chief economist for the United States for Colliers International.

But will that be enough? Listen to this:

In just 18 years times, 60 percent to 70 percent of shipping will be on the bigger post-Panamax ships, says Conway, the author of Colliers' North American Port Analysis. And a report from the U.S. Army Corps of Engineers says that over the next 30 years, U.S. imports are expected to grow four-fold and exports more than seven-fold.

The U.S. needs to keep up with that demand and to stay competitive with the rest of the worlds' ports. And yet, the American Society of Civil Engineers gives America's ports a C rating.

That shouldn't be the case. The U.S. collects a federal harbor maintenance tax of about 0.1 percent on each container that comes into port. That money is supposed to go back to the waterways, most importantly, perhaps, helping U.S. ports stay competitive. But for the last twenty years Congress has diverted more than half of those funds, Conway of Colliers says.

Congress does not seem to understand that this kind of spending is an investment in the nation's future economic growth. If we don't modernize our ports, the new big ships won't dock there and we will be the losers.

*An earlier version of this piece had an incorrect average wait time to get through the Panama Canal.  The Panama Canal authority’s own figures say that the average is 25.66 hours for waiting time and transiting combined.

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Topics: China • What in the World?

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soundoff (51 Responses)
  1. clacevedo577

    I'm curious as to how the issue of earthquakes and volcanic activity, which ultimately resulted in Panama's selection for the current canal site, has changed sufficiently to make Nicaragua a viable location.

    June 18, 2013 at 1:00 pm | Reply

      Volcanoes in the Pacific-Atlantic area are INACTIVE in Nicaragua.

      June 18, 2013 at 9:11 pm | Reply
      • vatoloke

        Dream on.
        These are only two, of numerous articles on the subject found in 'google'.
        "Apr 29, 2012 – Activity increases at Nicaragua's Masaya Volcano- making noise like a jet"
        "Volcano activity of December 27, 2012 – San Cristobal volcano, Nicaragua erupting (video). Last update: December 28, 2012 at 12:09 am by By Richard Wilson"

        June 19, 2013 at 11:10 am |
  2. JAL

    This seems like a good idea to me. Saves fuel, creates new partnerships, adds jobs in Central America, lowers shipping downtime and increases shipping capacity.

    June 18, 2013 at 3:41 pm | Reply
    • Joseph McCarthy

      I agree, JAL. This canal, when built, can lift Nicaragua out of it's poverty and finally bring prosperity to it's people. This is also where Ronald Reagan failed most miserably to thwart Nicaragua's plans for a democracy and reestablish a heinous military dictatorship in the 1980's. Thank goodness for that failure!

      June 18, 2013 at 5:52 pm | Reply
    • Joe M.

      Larger canal locks will require a larger volume of water that is released from the highest point in the system (Lake Nicaragua?). That country is already enduring a shortage of clean drinking water which is mostly drawn from Lake Nicaragua which has become an open sewer due to its use as Nicaragua' s common cesspool. Passing ships will only add to the pollution of the lake. What Nicargua needs badly is action to divert waste away from Lake Nicaragua so that the lake can recover from all the waste dumped into it and slowly become a source of reasonably clean water for drinking. This canal plan seems to be very poorly conceived.

      June 19, 2013 at 12:47 pm | Reply
      • tony p

        They can build canals nowadays with side reservoirs that keeps re-using the same water

        June 24, 2013 at 5:43 pm |
    • Joe M.

      The USA can expand its docking capacity to accomodate larger cargo ships by creating "Mulberry Harbors" which were employed in a matter of days at the D-Day Normandy invasion of World War II. This is probably the cheapest and quickest way to expand docking capacity. They will have to be made more permanent than the Normandy prototype by making the structures more robust by gradually strengthening them.

      June 19, 2013 at 1:13 pm | Reply
  3. Maersk

    CNN must have hired another typical American kwok zucking kwok zucker as writer. How can a Chinese company project become a China's canal?

    June 18, 2013 at 3:51 pm | Reply
    • dzerres

      Probably like the Panama Canal was a us project and a US canal (remember the US Canal Zone where John McCain was born – on US soil?) until we "gave" it back to the Panamanians.

      June 18, 2013 at 9:07 pm | Reply
      • Christian Mendoza

        Do not speak without knowing the history of the Isthmus... The Canal Zone was never US Soil, they learned to love it and held closed as to wanting to never let it go but again .... History, invading territorry does not make it yours... you paid rent, low rent for may years but the relationship is Over with, get out !

        June 19, 2013 at 10:14 am |
    • Sean B.

      Maersk- the Chinese are doing this globally. They're positioning themselves as the world's main facilitator on shipping. Check out their activity in Sri Lanka. Their mercantilism, which is indicative of a self-conscious rising global power, is dominating their foreign policy currently.

      June 18, 2013 at 10:55 pm | Reply
  4. ohoyotohbi

    "Infrastructure? What's that?" Seems to be the common response among politicians. Defense? Now, there's a word they know.

    June 18, 2013 at 9:36 pm | Reply
    • Roger dodger

      Sadly, I agree with you. America is crumbling before our eyes.

      June 18, 2013 at 9:53 pm | Reply
      • Lyndsie Graham

        And it will continue to do so Roger, unless we vote these right-wing politicians out of office. Unfortunately, that is quite unlikely to happen to the detriment of us all and the back-room deals will go on and on and...........!

        June 19, 2013 at 8:18 am |
      • tildejac

        I totally agree with you. We should do what China does, if someone gets in the way of a infrastructure project, put them in a re-education camp until they learn to get out of the way of their leaders. Lets get rid of the courts and paying people nonsense, we can become global leaders in infrastructure as well.

        June 19, 2013 at 11:56 am |
  5. Socrates

    It is a fantastic idea. I know the area and, certainly that there is a need for another canal. The Panama Canal can't hold big ships. This project is going to create many new jobs in Nicaragua.

    June 18, 2013 at 10:18 pm | Reply
  6. Nathan

    We would not need a new canal if Americans would stop buying all Chinas crap!

    June 18, 2013 at 10:46 pm | Reply
    • Cecil

      China crap? Got anything better?

      June 19, 2013 at 12:11 am | Reply
      • Fuster

        Actually, anything is better than products made in China

        June 21, 2013 at 3:04 am |
    • nochina

      The global community and the world person do not know many evildoing of China

      June 19, 2013 at 2:51 pm | Reply
      • Cecil

        Find me a people group that do no evil and I will give you one dollar.

        June 19, 2013 at 4:00 pm |
  7. Sean B.

    I wish-

    -that Reagan would have realized that screwing unions and cutting taxes for the rich doesn't help anyone but the rich
    -that Bush II was never elected so we wouldn't have drained our budget in 2 pointless occupations
    -that the GOP would would stop being sociopaths and cooperate so that we would have a functioning government. I suppose this wish requires that my fellow Americans stop being so damned dumb and that our southeastern region depopulates itself, though.

    June 18, 2013 at 10:58 pm | Reply
    • Southern Man

      It looks like the Southeastern Ports are doing a pretty good job for Post-Panamax ships and have a number of port improvement projects underway. Many seem to be doing this quite efficiently in terms of tax dollars. I'm pretty sure that we don't need to depopulate ourselves.

      BTW – it's a bit of a stretch to blame our economic troubles on Reagan. If you want to blame someone, blame Al Gore his dadgum interweb has made it possible for a truly global economy where any job can be outsourced easily.

      June 19, 2013 at 3:59 pm | Reply
  8. j. von hettlingen

    Growth at all costs and the environment has to bear the brunt! They are building mammoth ships to double transport capacities. Every time there's an accident there's also a disaster.

    June 19, 2013 at 6:50 am | Reply
  9. paofpa

    US Ports

    Fareed, you are referring to a balance sheet; you know, cause and effect. One side will say it is business problem and the US should stay out; the other will say money the will be better off spent elsewhere. The current government does not like numbers.

    Support will cost votes on either side.

    June 19, 2013 at 10:23 am | Reply
  10. netsandwiggles

    This seems like a very big story to me. There is a lot of sub-text wrapped up in this.

    It occurred to me, as I read this, that China may be more adept at really large-scale projects that will be more and more essential in a hyper-globalized economy. America's lack of investment in these sorts of projects is really going to start to hurt in the coming decades; and the longer we go without undertaking such projects, the harder they'll be in the future.

    To undertake such grand projects, not only would the U.S. have to muster the will to do so, it would also have to curtail the militarism that is swallowing this nation and draining its treasure and dignity.

    June 19, 2013 at 12:14 pm | Reply
  11. nochina

    The global community and the world person do not know many evildoing of China

    June 19, 2013 at 2:52 pm | Reply
  12. Not as dramatic as it sounds

    I took a quick gander at the Collier Report and don't see the same level of drama as depicted in this CNN report. It looks like the major ports are getting ready for Post-Panamax shipping or have improvement programs well underway. These programs will accelerate as the Nicaraguan canal project and planned Panama Canal improvements take place. There really is no need to be breathless about this one. Perhaps CNN should follow the crazy TV weather people and start an EXTREMEinfrastructureimprovementcenter!

    June 19, 2013 at 3:54 pm | Reply
  13. Mario

    If the Panama Canal can not be improved to meet the challenges of the world commerce,so the new canal to be constructed in Nicaragua its a great idea.No matter who is going to build it. it will serve the international community as a whole.Is it true that a Chinese company is managing the Panama canal?If that is true why do we have to be oppose that the Chinese build the new one in Nicaragua.They have the money to do it,don't they?

    June 19, 2013 at 6:23 pm | Reply
  14. txwiseman

    The chinese are not doing this out of the goodness of their heart. They will be making 100X the money they are investing in the project.

    June 19, 2013 at 9:36 pm | Reply
  15. Deutsche Bier

    The US tax money are used for making the best jet fighters, best missiles and bombs, the biggest espionage networks, paying for wars globally, and fat contracts for war contractors. Ports and airports? Nah.. We don't need to spend on those. Maybe we can just outsource the ports and airports to China.

    June 20, 2013 at 5:39 am | Reply
    • Joseph McCarthy

      You forget Deutsche Bier, that if China was not financing a huge part of our spending deficit already, we'd have close more schools and libraries, curtail police and firefighting, let our infrastructure crumble even further and deeply curtail Medicare, if not eliminate it altogether just so we can go on with this needless military spending and our useless wars overseas!

      June 20, 2013 at 8:30 am | Reply
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    June 20, 2013 at 11:40 am | Reply
  17. Elise

    No! No, China should not finance that. We have enough great banks in the West to finance this for ourselves and for our future generations.

    June 21, 2013 at 12:26 pm | Reply
    • Joe M.

      You appear to forget Elise, that China is financing a huge part of our deficit without which this country's economy may well collapse. Let the Chinese go through with it, I say!

      June 22, 2013 at 8:02 am | Reply
  18. Mac

    Good on China, I say they look for alternatives to the Suez Canal too. A canal from Morocco to Somalia or just use 283 camels per container.

    June 22, 2013 at 11:33 am | Reply
  19. vistar hornbill

    You got it right on the nail's head. The American Congress is so concentrated in resisting any good Government iniatives just for the sakes of opposing President Obama. This is not good as we can all clearly see. US economy should have been much better, the recovery faster if not for the incompetence of these old mules in teh Congress.

    June 22, 2013 at 9:25 pm | Reply
  20. vistar hornbill

    If you have been observing China's subtle but consistent investment expansion, you would come to realise a patter is emerging.

    I think China have been preemptying future hindrance to its overseas business investment plans, Chinese companies are quietly buying up or opening big companies in the word in third world countries in Africa, and even in America. I think they have something like US$3.5 trillion in hard currency to spent. And they are doing it while America continues to be bogged down in the middle east, and in a ridiculourn US Congress.. For China, It s like planting the seeds of fortune while the sun is shining, and when its stormy on the opposite side..

    June 22, 2013 at 10:02 pm | Reply
    • vistar hornbill

      correciton –

      If you have been observing China's subtle but consistent investment expansion, you would come to realise a patter is emerging.

      I think China have been preemptying future hindrance to its overseas business investment plans, Chinese companies are quietly buying up or setting up big ventures in third world countries likein Africa. Even in America. I think they have something like US$3.5 trillion in hard currency to spent. And they are doing all tghese investments while America continues to be bogged down in the middle east, and in a ridiculourn US Congress.. For China, It s like planting the seeds of fortune while the sun is shining, and when its stormy on the opposite side..

      June 22, 2013 at 10:05 pm | Reply
  21. vistar hornbill

    So, China investment in the Nicaragua canal is a step forward, of course after careful planning and considerations by Chinese investors. You can say the Chinese will outwit the Americans and make big money from this US$40 billion investment. Clever. But its small change, China still has plenty of hard foreign currency left in the bank vault.

    June 22, 2013 at 10:15 pm | Reply
  22. vistar hornbill

    America would do well to erase their fantasy that China is only good at making cheap labour products. China's recent announcement to liberalise their economy, to allow more private enterprises to takeover from Government, is going to take the country to a higher economic achievement level.

    This is one of the ways China is already moving forward in upgrading its economy:-

    " High-end industry, research and development are biggest attraction

    Over the past three decades, many foreign companies set up manufacturing facilities in China because of the country's low labor costs, turning the world's most populous nation into a global factory.

    That is now looking like history.

    As China pledges to turn itself into an innovative economy as part of a transformation in its economic growth model, encouraging foreign companies to invest in high-end industries, the world's second-largest economy is gearing up for a move into the upper end of the global chain. (China Daily) "

    June 23, 2013 at 9:35 pm | Reply
  23. Marco Hsiao

    [The Nicaragua Canal is wonderful]

    1400 years ago, the Sui Dynasty (AD 581 – AD 618) of China built longest canal in history (about 2000 km). One route was for transporting food from southeast to capital, the other was to reinforce northeast frontier war. It is used for 1100 years until sea route was more economic practical.

    Now the Panama Canal is too crowded. Panama Canal is short but in highland, Nicaragua Canal is long but in lowland. The Nicaragua project is a nice thing. It also includes 2 sea ports, one railway system, an oil pine line and two free trade zones. After it is completed the traffic between China (Mainland + ROC Taiwan + Hong Kong + Macau) and Brazil, Venezuela, Cuba, eastern US and eastern Canada would be far better.

    US$ 40 billion might be not enough; it would need the financial support from Chinese Government; however US$ 120 billion (+ 15 years) should be OK to complete it; then the company enjoys 50 years revenue, and would bring lots of attaching benefit to Nicaragua; and world sea route would be better.

    June 24, 2013 at 9:41 am | Reply
  24. vistar hornbill

    Wall Street analysts are 'white washing' an imminent financial disaster , by targeting China's decision to hold tight on money supply to Chinese banks. One financial media headlined US as the best place for investment a few days ago. I laughed at it.

    China monetary tightening is timely and increasing lost of confidence of investing in US. This effect if it coincides with the debate on America's National debt default ceiling, would sent the Dow Jones crashing to a new low.

    US national debt disappointingly never went down at all. It is now US$17 trillion. I estimated US$25 trillion, would be the dead end for America. By which time Fed's money printing machine isnt going to help either, because nobody would buy US treasuries or US$ anymore.

    June 24, 2013 at 10:46 am | Reply
  25. Andrew

    No China. China has no place in the West. We must not allow Chinese finance to mingle with the USA. We should not forget that China stole Hong Kong from Great Britain. It was not democratic decision, but the Chinese murdered many to steal Hong Kong. USA should help Great Britain to give them back Hong Kong. We live in the NATO alliance and China has no place in here. Thank you.

    June 25, 2013 at 3:50 am | Reply
    • Max

      So you're saying there was no blood when Britain took command of Hong Kong? Or that they even had a right to be there?Also, Hong Kong was signed over, complete with a ceremony. Prince Charles and Tony Blair were even there for that matter.

      July 1, 2013 at 7:03 pm | Reply
  26. John

    You are forgetting that Nicaragua has a border problem in its caribbean waters with Colombia, that being the case, they cannot use the canal without having to cross Colombian waters... which right now is not a possibility... I even read that Colombia has declared the water around some of its islands a national park and has beefed up its military presence in the area due to illegal (or what they call illegal) fishing by Nicaragua's boats... this is a 19th century fight which has even gotten to the international court...

    June 25, 2013 at 8:14 am | Reply

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