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ON
February 22, a freight train from Madrid
arrived in Yiwu, a city of 1.2 million,
175 miles southwest of Shanghai, which has
been growing at an exponential rate, and
in 2014 its combined imports and exports
were valued at US$23.7 billion, a 28.6 per
cent year-on-year increase.
The
train, bearing a cargo of wine and olive
oil on its backhaul return leg, joins four
other rail routes offered between China
and Europe by consortia of European, Eurasian
and Chinese companies, writes Mike Flanagan,
CEO of Clothesource, a garment industry
consultancy outside of London.
They
all claim to be faster than ocean freight
and cheaper than air on cost and on paper
least they appear to be just what apparel
companies need in today's fast-fashion era,
said Mr Flanagan in New York's Sourcing
Journal Online.
A
week before the train's return home, the
United States found it had no money to pay
for customs posts on a planned new bridge
between Detroit and Windsor, Ontario, the
busiest transit point for the world's two
biggest trading partners.
Canada
is already paying for the bridge, which
it will get back through the bridge tolls,
so on February 18, it announced it would
buy the Americans their customs posts as
well and just take a bit more out of the
tolls. America hasn't yet found the money
to man the post, but it has until about
2022 to find a way.
Does
this support the claim overheard from a
Chinese associate noting that China forges
ahead with ambitious and daring new projects,
while the US is suffering from "declinism"?
The
round trip took three months, and for half
of that the train sat in Madrid waiting
for a return load. No one is sure whether
the wait was to find cargo or to prevent
the wine it carried back from freezing on
the land journey through the Russian midwinter.
The
Madrid-Yiwu journey averaged 16 miles per
hour slower than the world's first city-to-city
train, 185 years before. It had to stop
three times to move each of the 82 containers
onto different bogeys (the rail gauge changes
at three borders), and for the 16 times
the engines needed changing. The journey
shaved just a few days off the ocean and
seems to have cost about five times today's
sea freight rates.
For
all the effort going into finding a commercially
viable land route, trains currently carry
just 0.1 per cent of the total China-Europe
traffic each year.
The
Madrid-Yiwu route looks unappealing commercially,
and one suspects its unsuspecting Chinese
taxpayers risking their money on it. But
it is just one of an extraordinary number
of proposed transport links with Chinese
money behind it.
Chinese
media reported in late 2014 a plan to spend
$46 billion on a network of railways, highways
and pipelines across the Karakoram Mountains,
linking Beijing with Islamabad and deep-water
Pakistani ports at Karachi and on the Gulf
of Oman.
Israel
still believes construction of a China-funded
$2 billion railway line from Eilat on the
Red Sea to the Mediterranean is a live possibility.
The "Red-Med" line is likely to
take five years to build, and will provide
an alternative route from the Indian Ocean
to Europe, bypassing the security problems
of the Suez Canal, where Sinai jihadists
have attacked ships in the past year.
Last
August, the state-owned China Harbour Engineering
Company visited Panama to explore building
and financing a fourth set of canal locks,
allowing access to 18,000-TEUers. Canal
administrator Jorge Quijano said a decision
on the fourth set of locks "could come
within the next five years with estimates
running at $10 billion to get the job done
in 10 years.
In
June 2013, Nicaragua's president agreed
to a 50-year concession with the Hong Kong
Nicaragua Canal Development Investment Company
(HKND) for an Atlantic-Pacific canal through
Nicaragua. Fronted by Wang Jing, an almost
unknown Chinese telecom entrepreneur with
no recorded infrastructure construction
experience.
HKND
says the $50 billion project ("world's
largest infrastructure project ever"
will be finished by 2019, allowing passage
for ships of up to 400,000 tonnes several
times the size of 18,000-TEUers.
In
May 2014, Chinese media reported a plan
promoted by the Chinese Academy of Engineering
for a 10,000 mile high-speed line from Beijing,
through Russia and a 130 mile tunnel under
the Bering Strait to Alaska, and through
Canada into California. At a potential cost
of $300 billion, it's hard to decide who
would oppose it most: US generals apoplectic
at the idea of a land border with Russia,
US environmentalists or the American public.
But
these proposals aren't primarily a matter
of commercial viability - or even engineering
sanity, though I'll bet serious money no
one is going to build a Bering Strait tunnel
any time soon. There is certainly some engineering
machismo in all of them - and it's easy
to take bold financial risks when (as I
suspect is true of them all) the money you're
risking belongs to 1.3 billion other people.
What
matters is that the proposals all demonstrate
China's belief that its prosperity for most
of this century will continue to depend
on trade with the outside world, and with
Europe and North America in particular.
The
contrast with the United States isn't about
who's more financially bold, it's that China's
rulers see foreign trade as central to its
future. In the US, on the other hand, foreign
trade is way down almost everyone's list
of priorities, present company excepted.
Mike
Flanagan, CEO of Clothesource, a garment
industry consultancy, with a comprehensive
database about sourcing for the apparel
industry.
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