Beijing, China – China is opening its first modern river-to-sea canal for navigation on Wednesday, a project that aims to dramatically cut down shipping distances between the country’s southern hinterland and Southeast Asia, a region that serves as a critical trade partner.
The Pinglu Canal is located entirely in Guangxi, the region in China’s far south bordering Vietnam and overlooking the South China Sea.
This 134km (83-mile) waterway links the Xijiang River with the Beibu Gulf, the northwestern arm of the Gulf of Tonkin stretching between southern China and northern Vietnam. It gives vast areas of southwest China, including provinces such as Yunnan and Guizhou, a shorter route to the sea and to Asian markets.
The first such canal built by communist China, Pinglu is a part of the New International Land-Sea Trade Corridor: A project involving southern Chinese provinces aimed at linking areas in western and southwestern China with Southeast Asian countries and global markets. The land-sea trade corridor is itself a part of Chinese President Xi Jinping’s Belt and Road Initiative, a web of highways, ports and railroads seeking to connect China with Europe and Africa.
The real gain: Savings in distance and cost
According to local authorities in Guangxi, the canal will shorten the shipping distance between inland areas of southwest China and Southeast Asian countries by about 560km (350 miles) and reduce logistics costs by 18 to 30 percent.
Estimates by Zhang Zhiwen, deputy secretary-general of the Guangxi government, indicate that transport costs alone will come down by more than 5 billion yuan annually, or about $700m.
The region’s vice chairwoman, Lu Xinning, describes these returns as “tangible gains” that reduce operating costs and boost domestic and foreign trade.
The canal will allow the passage of ships with a capacity of 5,000 tonnes. Its estimated cost is about 72.7 billion yuan, equivalent to about $10.8bn.
This means cities and industrial areas far from the coast in southwest China will become closer to maritime trade routes. The new trade corridor does not serve Guangxi alone; it is connected to a broader network extending to Chongqing in southwest China, Chengdu in Sichuan province, Guizhou and Yunnan, before goods reach the ports of the Beibu Gulf and, from there, overseas markets.
These changes come at a time when trade between China and Southeast Asia is growing rapidly. According to China’s General Administration of Customs, bilateral trade in the first half of 2026 reached about 4.34 trillion yuan, or about $640bn, an increase of 18.2 percent year on year.
At the southern end of the canal, container-handling capacity at Beibu Gulf Port rose from 2.28 million TEUs in 2017 to 10.06 million TEUs in 2025, with a shipping network covering major Southeast Asian ports.
From waterway to industrial hub
Guangxi is also working to build what it calls the “Pinglu Canal Economic Belt”, with the aim of attracting industries and spreading them out along the new corridor, while linking them to ports, transport networks and supply chains.
The targeted sectors include non-ferrous metals and critical minerals, modern green chemicals, as well as artificial intelligence and information technology. Industrial zones are also being developed near ports, reducing the distance between production sites and shipping centres.
The process of organising and directing shipping sources has already begun to generate new commercial activity. A train loaded with sodium bisulfate recently arrived from Chongqing, the major industrial and transport hub in southwest China, at the port of Nanning, the capital of Guangxi province. After the canal opens, direct commercial sailings are scheduled to begin to the port of Can Tho in southern Vietnam.
On the operational front, Guangxi has adopted a tiered transit-fee system that gives operators a grace period before imposing nominal charges.
Until December 31, 2026, commercial vessels will pass through the three water gates along the canal completely free of charge. Starting January 1, 2027, a fee of one yuan, about $0.14, will be charged for each tonne of a vessel’s capacity every time it passes through these gates. This trial rate will remain in effect until September 2031.
River vessels can sail directly to the berths of Qinzhou seaport without needing to transfer their cargo to other ships, enabling a seamless transition from river to sea.
Resettlement: Another side of the canal project
Building a canal of this scale would not have been possible without addressing a sensitive human dimension: Relocating thousands of families from their land. According to official sources, the resettlement process involved 2,764 households comprising 11,228 people across four counties and county-level cities in Guangxi. In Hengzhou alone, evacuation agreements were signed for 368 homes, which were completely demolished over a total area of 84,200 square metres (906,321 square feet), with 1,221 people temporarily resettled.
The process was not managed solely through financial compensation. Instead, 21 different housing models were designed in accordance with residents’ customs: The orientation of reception rooms, crop-drying areas, poultry enclosures and storage rooms for agricultural chemicals. In Shaping, the largest town in the resettlement project, residents were given four-storey homes covering 420sq metres (4,520sq ft), some with commercial storefronts facing the street.
Still, there is a sense of loss among many, even if mitigated by hope for the future.
In Xinfu, where the village of Fenghuangping once stood, one resident who was forced to leave said: “There is no longer a village called Fenghuangping, but with the Pinglu Canal, tomorrow will be better.”
Some families moved seven-century-old trees to the new site of their homes, including a 217-year-old camphor tree.
The resettlement process was carried out within 39 days, but it was linked to promises of jobs at the construction site and vocational training for residents of the relocated areas.
How geography is reshaping trade security
Straits and maritime corridors have long been the arteries of power in the global economy, but they are also among its most sensitive points of weakness.
The Hormuz crisis embodies this paradox: The passageway through which about one-fifth of the world’s oil supplies flow can, when threatened, become a factor that paralyses trade and redraws its routes.
Faced with that backdrop, countries around the world are trying to develop alternative routes and supply chains – pipelines, storage facilities and transport corridors that reduce the dependence of nations on just one or two routes.
The Pinglu Canal is China’s latest endeavour to do just that: Build an alternative, shorter and faster route to a critical market.
