Xinhua Insight: Eurasian rail network boosts trade, opens China's interior

On a foggy Friday morning in Zhengzhou City, a train loaded with 80 Bentleys and Land Rovers pulls in, drawing a large crowd.

Fresh off an 18-day journey from Hamburg, Germany, the train was the first dedicated solely to shipping vehicles from Europe to Zhengzhou City in central China's Henan Province. The city is a hub for several major Chinese railway lines.

Setting a milestone for the city, a port for vehicle imports in China, the train is also a response to the country's calls to develop its railway network to Europe.

"Since October, we've had four trains travel from Zhengzhou to Europe each week and vice versa," said Yuan Weidong, chairman of Zhengzhou International Hub Development and Construction Co., Ltd (ZIH), an operation platform for the trans-Eurasia express in the city.

"It is estimated that 240 trains will travel down the line by the end of the year, a much bigger number than the 156 in 2015," he added.

The bigger number is in line with a five-year plan released by the National Development and Reform Commission (NDRC) on the issue in October.

According to the plan, around 5,000 trains will run between China and Europe via the network per year by 2020. It reiterated that the China-Europe rail network is a crucial part of the development of the Belt and Road Initiative, a strategic plan to connect China with the vast Central Asian and European markets.

OPENING UP THE INTERIOR

As one end of the Zhengzhou-Hamburg Line and a pivot in China's rail network, the inland city of Zhengzhou is now connected to the world and has been a key beneficiary of railway trade.

"Our customers can get their vehicles in 20 days or so after placing their orders," said Jia Weiqiang, chairman of Zhengdeyuhua International Trade Co. Ltd, which has imported more than 400 luxury vehicles in the past two years through the railway.

"That saves a month compared to sea shipping and improves the efficiency of capital turnover," said Jia.

So far more than 700 vehicles worth more than 1 billion yuan (146 million U.S. dollars) have been imported from Europe to Zhengzhou through the railway, according to ZIH figures.

For the first time, Jin Baoliang, a manager of a trading company from the costal city of Tianjin, ordered 10 Land Rovers through the Zhengzhou-Hamburg Line instead of via sea routes.

"We can receive more types of vehicles and components through the railway and it is really fast," said Jin, adding that rail transport brings down costs by at least 30,000 yuan per luxury vehicle, even though railway transportation expenses are twice those of shipping by sea.

The network also offers Chinese people access to various foreign products, such as beverages. "You can't get all these types of German beer elsewhere in supermarkets," said local Zhao Jianhua, who was picking out beer at an exhibition center for imported goods in Zhengzhou.

The rail network launched in August 2011 with the opening of the Chongqing-Duisburg Line, which starts from the southwest China metropolis of Chongqing.

By the end of June, 1,881 trains had traveled the 39 lines of the network, connecting 16 Chinese cities with 12 foreign cities and bringing in around 17 billion U.S. dollars in trade over the years.

Zhengzhou, capital of Henan Province, home to more than 100 million people, will further its rail network with major coastal Chinese cities in the east to consolidate the city's status as an important pivot in the Belt and Road initiative, said Yuan.

"Utilizing Zhengzhou as a traffic hub shortens the process for trade," Zhao Wenming, general manager of ZIH, said. "It also cuts the cost for transportation."

With all the plans being implemented, the China-Europe rail network is set to have an important role in opening up China's interior.

MARKET RULES

Despite the rapid development, however, the trans-Eurasia rail network is not without its problems. As the NDRC said in the plan, the network has been plagued by high costs, disorderly competition and a supply-demand imbalance.

"Not all of the lines are regularly delivering goods back and forth," said a customs official in Khorgos, a major gateway. "A lot of trains returned to China empty because of a lack of goods."

Wasted transportation capacity is partly due to the division and overlapping of lines, which has led to a situation in which cities vie for cargo with the help of local government subsidies, leading to overreliance on the subsidies.

Better regulation has been added to the agenda by state planners, as the five-year plan issued by NDRC emphasized streamlining the 39 lines down to the three main routes of the China-Europe express in order to improve service and the network as a whole.

After all, for many, the market remains the key factor.

"No more than 10 percent of China-Europe trade is actually made via railways at the moment, despite the rail network," Zhao Wenming said. "That reflects the need to further open up the market for railway trade in China."

Wei Jigang, researcher at the Development Research Center of the State Council, agreed. "We should make sure that the market plays the major role. Setting up more import ports is also necessary," he said.

"Businesses involved in railway trade should also be encouraged to explore the market themselves," he added. "Only by doing so can they attract more goods with more accurate services." Endi