China is Central Asian Rail Funding Does Not Add Up
Much has been made of China’s Belt and Road policy and the supposed economic benefits for Central Asia. A case in point is the CR Express (China Rail Express) system of containerized intercontinental rail freight between China-Europe and China-Central Asia. Much media copy has fallen for the Khorgos policy hype, and much research has taken China state media reports on the volume of containers transported at face value.
The main problem is that there are no official statistics available on goods transported from China to other countries by rail. We have examined statistical data sources from the European Union and found that the volume of rail freight trade between China and Europe falls below the level reported by China. We also have examined the role that China has played in developing rail infrastructure in Central Asia. We find that while China has increased its trade relationships with the five Central Asian republics, foreign direct investment (FDI) capital stock remains very limited. In terms of rail corridor and rail infrastructure development specifically, China’s contribution has been negligible.
One of the promises of China’s Belt and Road Initiative (BRI) investment was to build infrastructure that would facilitate trade between Central Asia and China, replacing Soviet-era industrial infrastructure that favored Russo-centric trade institutions and practices. China’s policy promises for the region were of supply-side led infrastructure development. However, in rail freight almost no infrastructure investment has taken place. In addition, demand-side GDP and trade growth remain the primary economic drivers of rail freight transport volume, not vice versa.
Research analysis has focused on the development of road and rail transit corridors that would reduce transport costs and times, thereby front-loading economic growth. However, in reality China has had a very limited role in regional rail transport infrastructure development, and even after the introduction of the BRI, China has provided virtually no funding for new projects in the region. One study even found that for the BRI in the Commonwealth of Independent States (CIS), the spatial spillover effects of transport infrastructure development have actually been negative.Continue Reading