Maritime Professional News:

China gets more interested in building a rival Panama Canal

by Martin Rushmere

Sep 26, 2012, 11:36PM EST

Behind the puff and hot air new developments take place

A “ho-hum” reaction has greeted a recent announcement of developments in building a second overland rival to the Panama Canal. President Daniel Ortega has given approval to the plans for a $30 billion rail/water connection from Puerto Corinto on the Pacific and Monkey Point on the Caribbean.

Nothing much to raise the pulse rate, admittedly. Central American countries are constantly proposing grand schemes that are forgotten as soon as they are unveiled.

But then along comes the news that Hong Kong-based Xinwei Telecom will handle the financing. A joint venture will be set up, HK Nicaragua, to do the construction and the rest of it.

Place this along with the announcement about a year ago that another group of China venture capitalistsare beavering away to get Colombia to build its own “canal” and the inference is clear that China is certainly going to be involved in a canal that can compete with the de facto US-controlled canal.

To some extent, the ventures are vehicles for planners and consultants to rake in huge sums, uncaring whether anything will result. A transport economist in Central America has been quoted as saying , “My own hypothesis is that these guys are really more interested in getting feasibility studies done and getting consulting fees than in getting any dry canal done.” A US economist, Paul Bingham of CD Smith, tells me, “At referenced current cost of $30 billion, [the Nicaragua canal] is almost 6 times the cost of the current Panama Canal expansion, for perspective.  While that funding level for infrastructure might be possible in global financial markets in general these days, investors would want to see what they could expect in terms of a return, given the newly expanded Panama Canal and ‘dry Canal’ alternatives that still exist in other locations across the continent from Columbia up to, and including the rail land bridge in the USA. “

Absolutely. But the nagging feeling is growing that the Chinese are getting more serious about finding another way to counter US hegemony.