The central region is seeking new southward maritime routes. Can the Xianggui Canal recreate a Yangtze River Economic Belt?

Ask AI · How will the Pinglu Canal and the Xiang-Gui Canal change the logistics landscape in central China?

21st Century Business Herald reporter Li Guo Zhang Xu Wu Wenxi reports from Chengdu, Beijing, and Wuhan

In late March 2026, as the first canal built in China after the Beijing-Hangzhou Grand Canal, the Pinglu Canal has already begun the final round of equipment commissioning and testing. It is expected to start impoundment and trial operation in June and may open to navigation by the end of this year.

Meanwhile, whether it is the Xiang-Gui Canal, a key component of the Han-Xiang-Gui passage, or the Zhejiang-Jiang Canal and the Gan-Guang Canal—critical waterway projects that connect the mid-reach Yangtze River water system with the Pearl River water system—or the Jinghan Canal, which addresses the “bottleneck” problem in the Jingjiang navigation channel of the middle Yangtze River, all of them are still at the preliminary demonstration stage.

In interviews with reporters from 21st Century Business Herald, experts believe that the construction of a canal involves not only investment issues, but also the protection of the ecological environment along the route, the comprehensive utilization of water resources, and—most importantly—how much logistics incremental growth and regional economic incremental growth it can truly unlock. However, experts continue to actively call for more inland canals to be built during the “14th Five-Year Plan era” (15th-Five) or before 2035, with the Xiang-Gui Canal attracting the highest level of public support.

(Information photo from the construction site of the Pinglu Canal)

Among all the canal projects still under discussion, the Xiang-Gui Canal is considered one of the most likely to be approved.

The planned starting point of the Xiang-Gui Canal is Yongzhou, Hunan, and its planned endpoint is Guilin, Guangxi. The canal will be 300 kilometers long. After completion, it will open a north-south water transport corridor, effectively shortening the distance by about 1,200 kilometers for transporting goods from the middle and upper reaches of the Yangtze River region to Beibu Gulf waters.

Especially since construction of the Pinglu Canal began in 2022, some have argued that if the Xiang-Gui Canal can be built, not only will the future transport capacity of the Pinglu Canal be further enhanced, but central China will also gain another north-south coastal outflow route.

At the national two sessions in 2023 and 2025, the Hunan provincial delegation both proposed the construction of the Xiang-Gui Canal in the form of motions submitted by the entire delegation. In 2023, it submitted a proposal titled “Proposal on Supporting Accelerated Promotion of Xiang-Gui Canal Construction.” In 2025, it submitted “Proposal to Include the Xiang-Gui Canal in the National ‘15th Five-Year Plan’.”

Although the Xiang-Gui Canal has not been included in the national “15th Five-Year Plan,” related work has not stopped. According to a report by Hubei Daily, at 3 p.m. on March 6, 2026, during the full meeting of the Hubei delegation to the fourth session of the 14th National People’s Congress and the Media Open Day activities, Li Dianxun, deputy secretary of the Hubei provincial Party committee and governor of the province, proposed that Hubei will further improve the cooperation mechanism among Hubei, Hunan, and Jiangxi, and focus on advancing major cross-regional infrastructure projects such as the Han-Xiang-Gui inland waterway transport corridor. Through coordinated and integrated systems, they will enhance the overall development effectiveness of the Yangtze River’s middle-reach urban agglomeration.

Zeng Gang, dean of the Institute of Urban Development Studies at East China Normal University, told reporters from 21st Century Business Herald that, overall, among several inland canals currently planned, the Xiang-Gui Canal has relatively strong strategic necessity, technical feasibility, and expected economic returns.

“Xiang-Gui Canal is a decisive project for connecting the Yangtze and Pearl River water systems and building the ‘Four Vertical and Four Horizontal’ high-grade national waterway network’s Han-Xiang-Gui corridor. Without the Xiang-Gui Canal, the Han-Xiang-Gui corridor cannot be fully connected end-to-end. The strategic necessity of building the Xiang-Gui Canal is clearly evident,” Zeng Gang said. “The preliminary demonstration for the canal has been relatively thorough. From 2021 to 2022, special studies have already been systematically completed on the alignment plan, navigation standards, water resources allocation, environmental impact, and more. More importantly, the Xiang-Gui Canal will significantly enhance the status of ports along the route such as Yueyang, Changsha, Xiangtan, Hengyang, and Yongzhou. Cargo will no longer need to detour via the Yangtze River to go to sea from Shanghai. Instead, it can directly travel from the Xiang River downstream to Beibu Gulf, shortening voyages and reducing time costs. This will enable Hunan—an inland province that is ‘not along the border and not along the coast’—to truly reach from river to sea. Neighboring regions such as Hubei and Chongqing will also benefit economically.”

Lu Yi, dean of the Institute of Intelligent Transportation and Modern Logistics at Changsha University of Science and Technology, is also confident about the construction of the Xiang-Gui Canal. “The ‘National Outline for Building a Comprehensive Multi-Level Transport Network’ issued in 2021 clearly sets out the Han-Xiang-Gui corridor and puts forward target requirements by 2035. To complete the planning at that time node, then over the next 10 years, the Xiang-Gui Canal will be built.”

Wang Lei, deputy dean of the China Institute for Development of Central China at Wuhan University, told reporters from 21st Century Business Herald that canal construction is a systematic project, and regions along the route should play a better coordinating role. “At present, Hubei, Hunan, and Jiangxi all have realistic needs for building the canal. For example, Hunan’s main goal is to open an outflow to the sea by going south through the Guangxi Pinglu Canal. Hubei is trying to bypass the Jingjiang River segment of the Yangtze. Although Jingjiang has completed the second phase project for dredging and channel improvement, in practice it cannot handle 10,000-ton cargo vessels. This leads to the bottleneck problem in the middle segment between Jingzhou and Wuhan.”

Wang Lei suggested that, on the basis of strict demonstration and assessment, the canal projects of the three provinces should be packaged together and launched for construction at the same time. For example, if Hubei’s canal is opened first, it will impact Hunan’s Chenglingji Port. This means that the canal projects in Hubei and Hunan must be planned together as a package. That way, even if Chenglingji Port’s functional role declines on the main navigation channel of the Yangtze, opening a route south to connect to the sea can still provide compensation. “Therefore, you cannot build one first and put the other two on hold, or have it be ‘built during the 15th Five-Year Plan’ on this side and ‘built during the 16th and 17th Five-Year Plans’ on the other side.”

Lu Yi compares the role that the Xiang-Gui Canal can play to a “vertical Yangtze River Economic Belt.” He told reporters from 21st Century Business Herald that, from west to east, the Yangtze River forms a horizontal economic belt across China’s geographic map. If the Xiang-Gui Canal can be successfully built, it could create a vertical economic belt linking Shaanxi, Hubei, Hunan, Guangxi, and Guangdong, covering nearly 24% of the country’s population and total economic output and about 11% of its land area.

“It’s similar to the roles of a bow, a string, and an arrow,” Lu Yi said. “In the Yangtze River Economic Belt, the eastern coastal areas are the bow; the central and western regions are the string; and the Yangtze River is the arrow shot toward the ocean. As for the vertical Yangtze River Economic Belt, in which the southern coastal area represented by Guangxi is the bow, and the central and western regions are the string, the arrow is the Han-Xiang-Gui corridor—but this arrow still lacks the key link provided by the Xiang-Gui Canal.”

When it comes to the Yangtze River’s middle-reach urban agglomeration, Lu Yi believes that after the Xiang-Gui Canal is completed, the middle-reach region will have two waterway corridors to the sea: the eastbound Yangtze River corridor and the southbound outflow corridor via Beibu Gulf. And after the construction of the new Grand Canal—including the Xiang-Gui Canal—there will be a new gold-standard waterway, reshaping the regional economic development pattern.

For Hunan, Lu Yi said that currently, Hunan has only 163 kilometers of national-level high-grade waterways, and those are shared by Hubei and Hunan. After the Xiang-Gui Canal is completed, Hunan will have a national-level inland water transport corridor along the Xiang River spanning 935 kilometers. At that time, the port status of cities along the Xiang River such as Yueyang, Changsha, Xiangtan, Zhuzhou, Hengyang, and Yongzhou will be significantly enhanced. Meanwhile, this water transport corridor will work together with land transport corridors such as railways and highways along the route to produce a “composite effect,” forming a golden corridor that will promote high-quality development of corridor economy and corridor-region economy. This will fully tap Hunan’s waterway potential and raise Hunan’s status as a comprehensive transport hub.

Not only has the Xiang-Gui Canal attracted extremely high attention; reporters from 21st Century Business Herald also noted that since 2020, the regions along the waterways involved have continued to call for the canal construction to be started as soon as possible.

In 2021, the Jiangxi provincial government issued the “Opinions on Advancing Transport Power in Jiangxi Province.” One of the main tasks was to “build the Zhejiang-Jiang-Guang Canal.” It said, “Re-establishing Jiangxi’s advantage in north-south water transport by redeveloping the Zhejiang-Jiang-Guang Canal is of great significance. It can effectively enhance our province’s locational advantages, help advance the construction of the Jiangxi inland open-type economic pilot zone, and promote the economic and social development of the whole province.”

At the Jiangxi two sessions held in January 2026, Wang Qianhu, Party secretary of the leadership group and director of the Jiangxi provincial Development and Reform Commission, said that the “15th Five-Year Plan” will accelerate efforts on the preliminary work for the Zhejiang-Jiang-Guang Canal.

In April 2025, the “Implementation Opinions on High-Quality Development of ‘Shipping Zhejiang’” issued by Zhejiang Province also proposed “planning and promoting the Zhejiang-Jiang Canal.”

Zeng Gang, meanwhile, believes that inland provinces relying solely on newly built canals may not be the optimal or only path to realize “connecting rivers to the sea” and promote regional economic development. Current successful practices have already shown two clear approaches: one is canal construction that is “born out of water,” and the other is the inland port model that is “thriving due to land.” Specifically, the canal plan involves huge investment and a long cycle, but the returns are also extremely far-reaching. It is suitable for provinces with a strong waterway foundation and that are committed to handling bulk commodity transshipment and heavy industry. The inland port plan, however, places more emphasis on ‘soft connectivity.’ Its investment is relatively smaller and results are faster, making it suitable for all inland regions that are eager to open up to the outside world. It can help ease and resolve the currently urgent problems of logistics timeliness and facilitation.

In Zeng Gang’s view, a rational strategic decision should take both into account and develop them in coordination. For example, while places such as Jiangxi and Hunan are planning the Gan-Guang Canal and the Xiang-Gui Canal, they can fully develop international inland ports in their provincial capital cities to form a modern logistics system characterized by “canals as the trunk and inland ports as the branches.” The canal scheme maximizes the advantages of large-scale, low-cost water transport, while inland ports ensure that cargo is efficiently distributed into the “capillaries,” and use institutional innovation to break through bottlenecks in the last mile. Only by combining canal schemes with inland port schemes can inland regions pave a golden road toward the world.

(Overview table of domestic canal construction progress)

There are different voices in academia regarding the construction of inland canals.

In 2024, a paper titled “Comments on the Public Opinion of China’s ‘Crazy Digging’ of Canals,” authored by Lu Dadao, a member of the Chinese Academy of Sciences and former director of the Chinese Geographical Society, drew widespread attention. It offered different views mainly from aspects such as the amount of investment required for canal construction and the actual transport capacity after completion. In the same year, Wang Jixian, former head of the Department of Geography at the University of Hong Kong, also put forward similar views, arguing that before building a canal, it is necessary to effectively estimate the added transport capacity in the future. A canal cannot simply shift freight that used to travel by road and rail, nor can it fail to form new logistics demand.

Zeng Gang told reporters from 21st Century Business Herald that building inland canals involves risks and challenges that cannot be overlooked. First, insufficient effective demand. With the promotion and application of AI technologies, the establishment of high-quality development strategy targets, and also the entry of real estate construction into a new stage of structural adjustment, the likelihood that the total volume of freight in China will continue to rise substantially is decreasing, which in turn reduces demand for inland canals characterized by transporting bulk commodities such as coal and sand. Second, inland canals do not match future freight market demand very well. As new quality productive forces rise in importance within the national economy, future freight market demand will show a fast (speed) and stable (steadiness) trend, while inland canals are constrained by factors such as waterways and water conditions, making it difficult to achieve flexible (small-batch), fast (door-to-door) and reliable (less affected by nature) transportation. Third, investment return risk is not small. Inland canal investment is huge. It takes a long time from planning to operation, and returns are slow. The huge investment costs and potential debt risks cannot be ignored.

Wang Lei tends to support building inland canals. He believes that a canal not only has transportation functions, but also provides composite functions such as agricultural irrigation, ecological improvement, and people-to-people exchanges. The most direct is that building a canal can generate investment-driving benefits, and that role cannot be ignored.

Lu Yi believes that, globally, all major cities are located along large rivers and ports. Therefore, whether it is the Pinglu Canal or the Xiang-Gui Canal, they cannot be evaluated solely by their investment return rate. After a canal is built, it not only can effectively reduce social logistics costs, but also has low channel maintenance costs, essentially no scrapping cycle. Its economic value far exceeds that of building highways or high-speed rail lines of the same length. In particular, the potential socioeconomic benefits generated—such as the strip-shaped economy, corridor economy, hub economy, and river-basin economy—are immeasurable.

Reporters from 21st Century Business Herald learned that regarding canal development and construction, the Ministry of Transport will adhere to the principle of “one river, one policy,” focusing on improving capacity and efficiency for already built and under-construction canals. It will implement the quality improvement and upgrading project for the Beijing-Hangzhou Grand Canal, and promote integrated development among the Jianghuai Canal, Pinglu Canal, industries, and regional economies. While better leveraging canal functions, it will also maintain a problem-oriented approach and make scientific decisions. It will guide local governments to conduct scientific and prudent pre-study and demonstration for canal projects such as Xiang-Gui, Gan-Guang, and Zhejiang-Jiang, across the Yangtze and Pearl River water systems, and deepen the analysis of the comprehensive benefits of the proposed projects.