China’s push for high-speed railway upgrades across Eurasia will help the manufacturing powerhouse ship goods both ways, despite heavy pressure on supply chains, analysts said.
Sino-foreign cross-border freight railways may be in line for upgrades following approval from the China Development Bank in December to support construction work, according to China’s state-backed, Chinese-language Financial News website. The bank would offer “key” support for warehousing, logistics parks, distribution networks and multimodal transport projects, according to the report.
China’s signature cross-border freight route is the 12,000-kilometer China-Europe Railway Express.
Upgrades would be aimed at making trains faster and adding tracks along the 11-year-old route, experts said. They said improvements could ensure that trains run despite war in Ukraine and cover for sea routes snarled by shipping backlogs during the pandemic.
That would mean all made-in-China exports can reach markets in Europe more smoothly, they said, while China could better secure resources from across the continent.
COVID-19 lockdowns and the war in Ukraine have created perhaps the biggest combined challenge to supply chain trade out of China "in living memory,” said James Berkeley, managing director of the advisory firm Ellice Consulting in London. Sea freight still works, he said, but the railway “clearly provides an alternative.”
Supply chain upsets sparked by China’s lockdowns in the major commercial hubs of Shenzhen and Shanghai are slowing shipments of products from phones to building materials to motor vehicles. Chinese authorities ordered Shenzhen shuttered in March, and Shanghai, with a population of about 26 million, closed weeks later.
Russia’s February invasion of Ukraine has since disrupted some cross-continental railway traffic and contributed to shipment delays in Europe.
Railway upgrades would fit with Chinese President Xi Jinping’s Belt and Road Initiative, the Financial News said. The eight-year-old, $4 trillion-plus initiative calls for building up infrastructure in scores of countries to improve trade routes.
The number of China-Europe Railway Express trains had exceeded 50,000 as of January, “making positive contributions to the high-quality development of the Belt and Road Initiative,” said Liu Pengyu, spokesperson for the Chinese Embassy in Washington.
China-Europe freight train trips increased in April while maintaining “smooth and stable operation,” the state-run China Daily recently reported. The article also cited a Chinese National Development and Reform Commission official who said the number of trips rose 3% month-on-month to 1,170. A record of 15,183 train trips were made along the route last year.
The railway through Poland, Belarus and Russia remains open now, despite the war in Ukraine and pressure from the West against doing business with Russia, according to the Chinese state-monitored Global Times news website.
“Since the outbreak of the Ukraine crisis, China-Europe Railway Express has encountered short-term difficulties, but overall, the operational risks are generally controllable,” Liu said.
"This is one of the alternatives for China to secure their supplies,” said Chen Yi-fan, assistant professor of diplomacy and international relations at Tamkang University in Taiwan. “And China after all is linked with Russia and the European continent altogether, so this is a good way to control the so-called heartland over there.”
European Union exports to China hit a peak last year of $239 billion, while EU imports from China topped out last year at $506 billion, the European bloc’s government said.
China has kept up relations with both Russia, a historic friend, and Ukraine during the war.
Those ties should help with improvements along the railway, where China has ample technical experience, Chen said. Officials in Europe should look at China’s ambitions as a chance to upgrade their own railway systems, he said.
“I guess they need to go all the way, so they need to first [get] Russia’s permission and then maybe Ukraine's,” said Alicia Garcia Herrero, chief Asia-Pacific economist with the French investment bank Natixis.
But Garcia said Chinese officials might face barriers to any cross-border railway work in Western Europe, where environmental groups have already made connections tough.