Khorgos set to become China’s Silk Route to Asia-Europe

Updated 01 December 2015

Khorgos set to become China’s Silk Route to Asia-Europe

RIYADH: China’s One Belt, One Road initiative for Asia-Europe rail freight could deal a big blow to the existing Asia-Europe air cargo traffic.
SEZ Khorgos-East Gate is located near the Kazakh-Chinese border. The project includes the Khorgos international center for cross-border trade, a dry port and industrial zones.
The Kazakh-Chinese terminal at the port of Lianyungang will handle 250,000 TEUs (twenty foot equivalent units). The ongoing work on the creation of a logistics center will enable it to handle up to two million TEUs.
The groundwork for this landmark movement was laid on Aug. 31 in Beijing when Chinese President Xi Jinping and Kazakh President Nursultan Nazarbayev signed an agreement to build stronger ties between their countries.
Subsequently, on Sept. 3, Xi welcomed Nazarbayev to China for his state visit to participate in the country’s V-Day celebrations.
Xi called for improved bilateral cooperation in capacity building, investment, trade, energy, infrastructure and high technology. He also pitched in for making full use of financing mechanisms such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund.
The AIIB has an initial capitalization of $50 billion, while the latter has a development fund of $40 billion.
John Lin, director of the Shanghai International Shipping Institute, said the initiative supported two key policy objectives of China.
“From my point of view, the central government is using this campaign to kill two birds with one stone. The first is to raise the political and commercial influence in neighboring countries in Asia, as well as Africa and Europe.
“The second is to sustain the steady growth of the Chinese economy by mobilizing, reallocating and transferring the surplus production power of Eastern China to Western China and to the neighboring poorer countries.”
To this end, China is planning to invest $600 million in joint logistics projects with Kazakhstan Railways (KTZ) over the next five years for the development of Khorgos-East Gate special economic zone (SEZ), reports Think Railways.
Khorgos Gateway, a new free-trade zone on the Kazakhstan-China border, represents a good example of China’s drive to connect its inland provinces with central Asia and Europe by land. The growth in rail freight will check the air cargo traffic as overland transit time and costs fall.
“I don’t see rail really competing with ocean but definitely with air. We think it will take one percent possibly of sea freight but maybe up to 10 percent of the air freight,” said Darryl Hadaway, chief financial officer of NVOCC startup Silk Route Rail.
He said that with the opening of Khorgos, shippers could operate a hub-and-spoke system for Asia-Europe rail cargo, since the DP World-run facility would be consolidating cargo from across China onto block-trains with single destinations. Silk Route Rail is planning to take advantage of this by taking ownership of containers to serve multiple customers with time-definite, two-way services.
Khorgos Gateway Deputy Chief Executive Hicham Belmaachim explained that the project, which combines a dry port with logistics and industrial zones, would benefit shippers looking for an alternative to established sea and air networks.
He said: “The main difference with Khorgos is that we have a container yard to store boxes coming from different Chinese provinces, which is something new for this region. By storing containers to prepare block-trains with single destinations, you will improve frequency and regularity and it will be much faster.”
Khorgos Gateway will also allow shippers and their freight service providers to load and unload containers in a demarcated area that includes an industrial zone for manufacturers seeking to benefit from duty-free exports to Russia.
“We’re providing land so factories can produce cargo with the stamp ‘Made in Kazakhstan,” said Belmaachi. “The main advantage of this is that when you produce here you are able to enter the whole customs union area, including Russia, duty-free.”
Although Khorgos Gateway is funded by the Kazakhstan government, it demonstrates how China’s One Belt, One Road initiative is helping coordinate the growth of previously underdeveloped trade routes.
The policy is an attempt by China to connect 65 countries via land, sea and rail through transport infrastructure investments totaling $50 billion, which could eventually add $2.5 trillion to China’s trade over the next decade. This is more than the value of China’s total exports in 2013 and represents a new gateway to growth and development.


Squabbles erupt as G7 leaders open summit in French resort

Updated 25 August 2019

Squabbles erupt as G7 leaders open summit in French resort

  • Disputes on trade, climate may eclipse Macron’s agenda
  • EU’s Tusk warns of lack of global unity, spars with Johnson

BIARRITZ, France: Squabbles erupted among G7 nations on Saturday as their leaders gathered for an annual summit, exposing sharp differences on global trade tensions, Britain’s exit from the EU and how to respond to the fires raging in the Amazon rainforest.
French President Emmanuel Macron, the summit host, planned the three-day meeting in the Atlantic seaside resort of Biarritz as a chance to unite a group of wealthy countries that has struggled in recent years to speak with one voice.
Macron set an agenda for the group — France, Britain, Canada, Germany, Italy, Japan and the United States — that included the defense of democracy, gender equality, education and the environment. He invited Asian, African and Latin American leaders to join them for a global push on these issues.
However, in a bleak assessment of relations between once-close allies, European Council President Donald Tusk said it was getting “increasingly” hard to find common ground.
“This is another G7 summit which will be a difficult test of unity and solidarity of the free world and its leaders,” he told reporters ahead of the meeting. “This may be the last moment to restore our political community.”
US President Donald Trump had brought last year’s G7 summit to an acrimonious end, walking out early from the gathering in Canada and rejecting the final communique.
Trump arrived in France a day after responding to a new round of Chinese tariffs by announcing that Washington would impose an additional 5% duty on some $550 billion worth of Chinese imports, the latest escalation of the tit-for-tat trade war by the world’s two largest economies.
“So far so good,” Trump told reporters as he sat on a seafront terrace with Macron, saying the two leaders had a special relationship. “We’ll accomplish a lot this weekend.”
Macron listed foreign policy issues the two would address, including Libya, Syria and North Korea, and said they shared the objective of preventing Iran from obtaining nuclear weapons.
Trump later wrote on Twitter that lunch with Macron was the best meeting the pair has yet had, and that a meeting with world leaders on Saturday evening also “went very well.”
However, the initial smiles could not disguise the opposing approaches of Trump and Macron to many problems, including the knotty questions of protectionism and tax.
Before his arrival, Trump repeated a threat to tax French wines in retaliation for a new French levy on digital services, which he says unfairly targets US companies.
Two US officials said the Trump delegation was also irked that Macron had skewed the focus of the G7 meeting to “niche issues” at the expense of the global economy, which many leaders worry is slowing sharply and at risk of slipping into recession.
French riot police used water cannons and tear gas on Saturday to disperse anti-capitalism protesters in Bayonne, near Biarritz. A police helicopter circled as protesters taunted lines of police.
The leaders themselves were gathering behind tight security in a waterfront conference venue, the surrounding streets barricaded by police.

Spat over ‘Mr. No Deal’ Brexit
Macron opened the summit with a dinner at the base of a clifftop lighthouse overlooking Biarritz, where a menu of piperade, a Basque vegetable specialty, tuna and French cheeses awaited the leaders.
Adding to the unpredictable dynamic between the G7 leaders are the new realities facing Brexit-bound Britain: dwindling influence in Europe and growing dependency on the United States.
New Prime Minister Boris Johnson will want to strike a balance between not alienating Britain’s European allies and not irritating Trump and possibly jeopardizing future trade ties. Johnson and Trump will hold bilateral talks on Sunday morning.
Johnson and Tusk sparred before the summit over who would be to blame if Britain leaves the EU on Oct. 31 without a withdrawal agreement.
Tusk told reporters he was open to ideas from Johnson on how to avoid a no-deal Brexit when the two men meet.
“I still hope that PM Johnson will not like to go down in history as Mr.No Deal,” said Tusk, who as council president leads the political direction of the 28-nation European Union.
Johnson, who has said since he took office last month that he will take Britain out of the bloc on Oct. 31 regardless of whether a deal can be reached, later retorted that it would be Tusk himself who would carry the mantle if Britain could not secure a new withdrawal agreement.
“I would say to our friends in the EU if they don’t want a no-deal Brexit then we’ve got to get rid of the backstop from the treaty,” Johnson told reporters, referring to the Irish border protocol that would keep the border between Northern Ireland and EU member Ireland open after Brexit.
“If Donald Tusk doesn’t want to go down as Mr.No Deal then I hope that point will be borne in mind by him, too,” Johnson said on his flight to France.
Johnson is trying to persuade EU leaders to drop the backstop from a withdrawal agreement that was negotiated by his predecessor but rejected three times by the British Parliament as the United Kingdom struggles to fulfill a 2016 referendum vote to leave the bloc.

‘Not the way to proceed’
Despite the Brexit tensions, diplomats played down the likelihood of Trump and Johnson joining hands against the rest, citing Britain’s foreign policy alignment with Europe on issues from Iran and trade to climate change.
“There won’t be a G5+2,” one senior G7 diplomat said.
Indeed, Johnson said he would tell Trump to pull back from a trade war that is already destabilising economic growth around the world.
“This is not the way to proceed,” he said. “Apart from everything else, those who support the tariffs are at risk of incurring the blame for the downturn in the global economy, irrespective of whether or not that is true.”
Anti-summit protests have become common, and on Saturday thousands of anti-globalization activists, Basque separatists and “yellow vest” protesters marched peacefully across France’s border with Spain to demand action from the leaders.
“It’s more money for the rich and nothing for the poor,” said Alain Missana, an electrician wearing a yellow vest — symbol of anti-government protests that have rattled France for months.
EU leaders piled pressure on Friday on Brazilian President Jair Bolsonaro over fires raging in the Amazon rainforest.
Even so, Britain and Germany were at odds with Macron’s decision to pressure Brazil by blocking a trade deal between the EU and the Mercosur group of Brazil, Argentina, Uruguay and Paraguay.
A spokesman for German Chancellor Angela Merkel said not concluding the trade deal was “not the appropriate answer to what is happening in Brazil now.”
The UK’s Johnson appeared to disagree with Macron on how to respond. “There are all sorts of people who will take any excuse at all to interfere with trade and to frustrate trade deals and I don’t want to see that,” he said.