The solar panel trade dispute between Brussels and Beijing finally came to an end at the end of July and with it both powers have managed to steer clear of a potential trade war over a plethora of other goods ranging from Chinese steel to French wine. The positive news continues with the first freight train from the eastern city of Zhengzdou arriving in Hamburg-Billwerder – the European bloc’s third largest trading hub – after traversing over 10,000km across Eurasia, passing through Kazakhstan, Russia, Belarus and Poland.
The trip was supervised by the Zhengzhou International Land Port Development and Construction Company, while the logistics for the European leg of the journey were handled by German rail operator Deutsche Bahn Schenker. “The growing Chinese goods traffic, together with the ongoing shift from production-intensive industries to the Chinese hinterland, offers a lot of potential,” said Deutsche Bahn CEO Rüdiger Grube. “DB Schenker in Asia is in an excellent starting position.” The crossing was completed in just 15 days, which completely eclipses the 30 – 40 day wait for goods required by container vessels to cover the same distance. “It is not only the type of goods that are changing but also the means of transport,” Grube told Bloomberg reporters at the arrival ceremony in Hamburg. “If you look at the €66bn worth of goods exported to China from Germany per year and the €77bn imported from China and compare it to the zero-point something of market share Bahn has, you can see what kind of potential there is.”
There is considerable demand throughout Europe for governments to spend money developing high-speed rail (HSR) to alleviate congestion in busy city centres and improve trade links between the 28 member states. China on the other hand continues to outspend the rest of the world with a $300bn (€224bn) investment to lay 17,000 miles of new HSR, which it claims will be fully operational by 2020. With all the obvious benefits for both trade and passenger transport, rail looks to be the solution to bridging the gap across Eurasia and reviving the historic Silk Road trading routes of the past. But if this dream is ever going to become a reality it will require Russia to show willing and be prepared to strengthen ties with China. In a recent article for Voice of Russia Dmitry Mikheyev, a former senior fellow at the Hudson Institute expressed the need for his country to take the lead in the development of a trans-continental HSR network. The Trans-Siberian Railway (TSR) is already quite a beneficial cargo transportation route today, but the journey takes time. The route is capable of transporting around 100m tonnes each year, but without further investment to develop the network greater capacity is impossible. China has already expressed its willingness to foot the bill for the expansion in exchange for the natural resources which the country is in desperate need of if it wants to continue growing at its current rate. “Russians sit on an immense treasure trove of natural resources that they cannot properly use,” explains Mikheyev. “Europe moreover has excess industrial capacities and some 25 million skilled workers currently unemployed and craving for real jobs.” With the recession in Europe continuing to worsen, for Italy, the next member state creeping ever closer to going the way of Greece, a long term investment in a such a project could provide the stimulus the region needs. Russia on the other hand depends too heavily on Europe and the economic climate there is having a knock-on effect on the country.
Mikheyev’s colleague at the Hudson Institute Jun Isomura argues that “Eurasia is a dream.” In his opinion there are too many obstacles facing the project, which was originally drafted by the UN Economic and Social Commission for Asia and the Pacific back in 1999. Problems like the standardisation of the loading gauge, which varies from region to region. Russia currently uses a 1.52mm gauge, while Europe and China both use a 1.435mm. Neither is likely to want to make the switch, especially Russia, which still holds huge influence in Central Asia and standardisation could lead to Russia being by-passed. The real problem is not a lack of means, but a lack of motivation. For the project to be realised it will require cooperation, something which is in short supply.