Malaysia and China agreed on Friday to resume construction of a multi-billion dollar rail project after months of negotiations that have strained ties between the two trade partners.
They agreed to reduce the cost of the East Coast Rail Line (ECRL) to 44 billion ringgit ($10.68 billion) from the original pricetag of 65.5 billion ringgit, the prime minister’s office in Malaysia said in a statement.
China is planning to launch a road and rail freight service to Pakistan through the multi-billion dollar China-Pakistan Economic Corridor, a move which could raise concerns in India.
The new line will start from Lanzhou, capital of northwestern China's Gansu Province, travelling through Kashgar in Xinjiang Uygur Autonomous Region to the Gwadar Port of Pakistan, Xu Chunhua, director of Lanzhou International Trade and Logistic Park, was quoted as saying by state-run Xinhua news agency.
The new line will start from Lanzhou, capital of northwestern China's Gansu Province, travelling through Kashgar in Xinjiang Uygur Autonomous Region to the Gwadar Port of Pakistan, Xu Chunhua, director of Lanzhou International Trade and Logistic Park, was quoted as saying by state-run Xinhua news agency.
For over two millennia, technology and politics have shaped trade across the Eurasian supercontinent. The compass and domesticated camels helped the “silk routes” emerge between 200 and 400 CE, and peaceful interactions between the Han and Hellenic empires allowed overland trade to flourish. A major shift occurred in the late fifteenth century, when the invention of large ocean-going vessels and new navigation methods made maritime trade more competitive. Mercantilism and competition among Europe’s colonial powers helped pull commerce to the coastlines. Since then, commerce between Asia and Europe has traveled primarily by sea.
Against this historical backdrop, new railway services between China and Europe have emerged rapidly. Just 10 years ago, regular direct freight services from China to Europe did not exist. Today, they connect roughly 35 Chinese cities with 34 European cities.3 Rail services are considerably cheaper than air and faster than sea, as Figure 1 illustrates, and could provide a compelling middle option for more goods in the coming years. Rail’s share of cargo by value is already growing, increasing 144 percent during the first half of 2017, as compared to the same period in 2016. A study commissioned by the International Union of Railways estimates that China-Europe rail services could double their share of trade by volume over the next decade.
It's not on a boat, it's not on a plane, it's on a train. The newest way to send your freight from China to Europe involves spending 15 days on a train that doesn't have a buffet car in sight.
On 3 January in Yiwu in eastern China, a bright orange locomotive pulling 44 containers laden with suitcases, clothes and an assortment of household goods set off on a 7,500-mile (12,000km) journey to western Europe.
Ten containers were taken off at the German cargo hub of Duisburg. The rest made up the first cargo train from China to arrive in London at Barking's Eurohub freight terminal.
London is the 15th European city to find its way on to the ever-expanding map of destinations for China's rail cargo. Last year, 1,702 freight trains made the voyage to Europe, more than double the 2015 figure.Yiwu Timex Industrial Investments, which is running this service with China's state-run railways, says prices are half that of air cargo and cut two weeks off the journey time by sea.
Market demand
The UK's biggest supermarket, Tesco, doesn't have any goods on this particular train but does use rail to carry toys, electrical goods, homeware and clothing from China to European rail hubs such as Bratislava in Slovakia and Krasnaje in Belarus.
Alistair Lindsay, Tesco's head of global logistics, says the supermarket prefers shipping its goods because this is the most environmentally friendly way, as well as offering the best value for money, but that "where we need to move products quicker we have that option to do it by rail".
This decision would normally be driven by customer demand for particular products, he says.It demonstrates how market demand and the realities of globalisation are increasingly allowing China's President Xi Jinping to realise his ambitious plan to revive the ancient Silk Road.
Trade route
For centuries the fabled trade route from the ancient capital of Xian provided a link to the bustling markets of European cities such as Istanbul and Venice.
In the 21st Century China has become the world's biggest exporter, with the export of goods totalling $2.28 trillion (£1.85tn) in 2015.
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