On this episode of China Uncensored,
what’s five times the price of a cargo ship
and not quite as good?
Why, it’s China’s freight train to Europe!
All aboard for OBOR!
Hi, welcome to China Uncensored,
I’m your host Chris Chappell.
Well, chalk another one up for
China’s central planning masterminds.
They’ve built a network of railways
to connect exporters in China
with markets in Europe.
And vice versa.
Sort of.
It’s called the New Eurasian Land Bridge ––
or NELB, for short.
It’s a terrible acronym
for an impressive-looking set of rail lines.
They run some seven and a half thousand miles
across Eurasia,
stretching from eastern China to western Europe.
How does it work, you ask?
Let’s take a look at this helpful cartoon
from state-run China Daily.
“I’m a bottle of British whiskey,
heading to China by China Railway Express.
See you on board.”
“What a journey to Yiwu.
18 days and 7500 miles.”
But for this British whiskey bottle,
it’s also a journey of the heart.
But how does Ms. Vitamin
feel about Mr. Whiskey?
“And, of course,
now we’ve run into each other.”
“I’m just glad we’re making a contribution
to the country’s economic growth.”
How patriotic.
But what is that economic contribution exactly?
Well, the New Eurasian Land Bridge
should have been called
the Freight Line Overland Path instead.
Because from an economic standpoint,
it’s a FLOP.
Sorry, Ms. Vitamin.
One big reason is small capacity.
A freight train can only carry
a fraction of the cargo of a container ship.
According to Forbes,
the total capacity of the NELB over an entire year
represents at best just four days’ business
for the Port of Shanghai.
So if you plan to transport large amounts of stuff,
boats can’t be beat.
Shipping is also cheaper.
Much cheaper.
Rail freight on the NELB costs up to
five times as much as sea transportation.
Plus, rail’s got another snag—
the freight cars have no heating or air conditioning.
Some of the train lines cut across parts of Russia.
So for example,
Spanish olive oil producers selling to China
need to wrap the bottles in blankets
to keep them from freezing and exploding.
Local wildlife would be devastated
if there was an olive oil spill.
Of course, for the locals,
it means pre-marinated chicken.
So if the cartoon we watched earlier was accurate,
Mr. Whiskey would be looking on in horror
as all of his friends froze to death.
But even when temperature-sensitive goods
are bundled in blankets,
for some products rail is still
only an option in spring and fall,
when the weather’s mild.
That’s why Spanish food and beverage producers
are saying thanks but no thanks to the NELB.
Chinese oil importers could always try local sources.
“Cooking oil in China is recycled from the gutters.”
On second thought,
they should just bring in the olive oil on ships.
Fans of the Eurasian rail link point out
that rail is twice as fast as sea,
and half the price of air.
Well, it is definitely faster than a cargo ship.
But as far as being cheaper than flying...
The wildly exaggerated claim
made by my favorite Chinese state-run media
the Global Times, says freight train cargo
“costs one fifth the price of sending goods by air.”
But the Global Times also says
China is a champion of human rights...
so let’s just take that with a cargo container of salt.
According to a professor at the University of Sydney,
it could end up costing just as much
to send your cargo container
on an 18-day trek on the FLOP train,
as it would on a one-day jaunt
in a climate-controlled airplane.
And that’s because “Chinese subsidies for the NELB
are rumoured to be as high as 50%.”
That means the price being charged right now
doesn’t reflect the real economic cost.
And while Mr. Whiskey’s journey makes it seem l
ike most of the goods on the railway
are being transported from Europe
to Chinese markets,
that’s not really what’s happening.
A little over a year after
the Madrid-Yiwu Express started running, 3
9 trains had gone from China to Spain,
but only 8 trains returned to China
with Spanish exports.
And so it’s not surprising that
Tom Holland from the South China Morning Post
says that “Compared to sea or air,
the Europe-China freight service
just makes no economic or environmental sense,
either coming or going.”
But if the numbers don’t add up, then why do it?
The New Eurasian Land Bridge is a core part of
Xi Jinping’s One Belt One Road initiative.
He plugged it hard in front of 29 heads of state in Beijing,
during last year’s “Belt and Road Forum”––
or BARF.
One Belt One Road, or OBOR,
is about building huge infrastructure projects
around the world––
like seaports, bridges, tunnels and train lines.
It’s supposed to make China look like
a benevolent and cooperative rising power
that uses its own cash to create jobs
and increase trade in other countries.
But it’s also about projecting soft power
and giving China more leverage
in future negotiations.
As well as finding more markets
for Chinese exports.
And like I said last week
in our episode about the 16+1 countries,
China’s got an increasing interest in Europe.
Which means projects that make no economic sense,
turn out to be an investment worth making.
Oh, and what happened with
Mr. Whiskey and Ms. Vitamin?
They lived happily ever after,
in the kind of store that stocks their alcohol
right next to their medications.
So what do you think about
the New Eurasian Land Bridge?
Leave your comments below.
Thanks for watching this episode of China Uncensored.
Once again, I’m your host, Chris Chappell.
See you next time.
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