HUG Magazine 2019 EN - Issue 3. (№15) by PAIGEO - Pallas Athene Innovation and Geopolitical Foundation

“In the 21st century, a cohesive Eurasia will be of key importance in the new world order. The next decades will be centred around connectivity and complexity both in geopolitics and the world economy, and the role of geography will become more important. The ‘Atlantic’ maritime era, dominant for the past five hundred years, is being replaced by a new land age, the age of Eurasia, which builds on long-term sustainable growth.”

HUNGARIAN GEOPOLITICS

2019

HUNGARIA N G EOPOLITICS

2019 3

THE AGE OF A NEW EURASIA BUILT ON LONG-TERM SUSTAINABLE GROWTH CHINAâ&#x20AC;&#x2122;S ROLE IN THE NEW WORLD ORDER EURASIAN ECONOMIC BELT BELT AND ROAD INITIATIVE 2019/III.

ISSN 2498-647X

GEOGRAPHY OF RAIL FREIGHT TRANSPORT EURASIAN ECONOMIC CORRIDOR GEOGRAPHY OF THE SILK ROAD

FOREWORD

Dear reader! In the period of six years that has elapsed since the announcement the New Silk Road (‘Belt and Road Initiative’, hereinafter referred to as BRI) in 2013, considerable financial investments and plans have been made to actually set up an economic belt extending over the new Eurasia. The China Development Bank has set aside some $900 million for hundreds of projects. Examining the main nodes and economic corridors of the new infrastructure network being created within the framework of the BRI-related major projects and the scheme has an important opportunity for connectivity also for Hungary. The Kazakhstan-Khorgos dry port, which has set the ambitious goal of becoming the world’s largest dry port, is the most important Eurasian gateway and a major logistics hub on China’s overland trade route. In the context of the construction of the Budapest-Belgrade railway line, constituting an element of the BRI concept, it can be treated as a kind of example for Hungary. The Port of Piraeus in Greece will be one of the main distribution centres of goods, from where they are expected to reach Hungary on the Belgrade-Budapest railway line. Eurasia’s main artery The BRI project is planned to be implemented in several phases, resulting in economic corridors linking Europe with Asia. In our research, we examine the Eurasian Economic Corridor, which links China to Europe via Kazakhstan, Russia, Belarus and Poland and which is a network based on an already functioning rail link, to achieve a detailed and scientifically grounded picture of the Belt and Road initiative, its current results and its future. 10,000 kilometres of field work, a unique research. Preparations for the first phase of the project started in 2018. During the months that have passed since, we have prepared field work, collected information on major players and nodes, held meetings with the most important companies and market players. In the first phase of field research, our researchers left from Beijing to go along the route in China and Kazakhstan in the summer of 2018. Then came Russia, Belarus and Poland in the second phase of field research, completed in September, 2018. In the meantime, it became clear that adequate, detailed maps of BRI corridors and their functioning routes were still unavailable. We wanted to learn about specifics, which goods and in what volumes moved on the corridors linking Europe with Asia. We wanted to get

familiar with the official regulations and economic policies of countries where the infrastructure project traverses, and we mapped the logistics hubs and industrial parks along the route. The project would endeavour to present specifics, trade projects already implemented within the initiative, seeking answers primarily to questions such as: Why is rail transport worthwhile to companies in spite of the fact that its price is about threefold of that of maritime transport? What goods are transported by rail by China? What benefits does it offer compared to maritime transport? What competitive situation does rail freight transport create and what new questions does it raise in China-Europe relations? What capacity/utilisation do major logistics hubs/ports operate at? What does the implementation of the above-mentioned projects mean to Hungary, how can it position itself in the context of the above projects? The research aims at highlighting and documenting the answers given to these questions from several different angles. The research greatly differs from scientific analyses based on sources; its aim is a practical approach, which draws a written conclusion on the given topic on the basis of on-site research and experiences. The present issue of HUG magazine presents these results, outlining that the future is about a long-term, sustainable Eurasian growth! Yours faithfully,

Norbert Csizmadia Pallas Athene Innovation and Geopolitical Foundation Chairman of the Board of Trustees HUG’s Editor-in-Chief

table of contents

The age of New Eurasia built on long-term sustainable growth

The 70 th anniversary of Chinese-Hungarian diplomacy

Hungarian model 2.0

The Belt and Road Initiative

Geography of Rail Transport: the Eurasian Economic Corridor

Rail Freight Transport in Numbers

China: The Departure Point of the Iron Silk Road

110

Kazakhstan â&#x20AC;&#x201C; The Strongest Link in Central Asia

124

Russia: Beyond the Trans-Siberian Railway

132

Belarus: A Rail Transport Hub

144

Poland, the European Gate of Chinese Goods

156

Hungary: a potential winner of rail freight transport

164

The physical geography of the Silk Road

180

Belt and Road: A Chinese World Order by Bruno MaĂ§ĂŁes

184

The New Silk Roads by Peter Frankopan

188

Ancient Hungary

194

Book recommendations

The age of New Eurasia built on long-term sustainable growth

Author: Norbert Csizmadia

In the 21 st century, a cohesive Eurasia will be of key importance in the new world order. But what does the term Eurasia actually mean? What does it mean in the geographical space, in geological terms and by which historical parameters can it be described? How can we interpret it in geopolitical terms and how do international global institutions use the term Eurasia?

How do global institutions view Eurasia? Taking an institutional approach, we have examined which group of countries are meant by Eurasia in the various global institutions and international organisations. This can also be regarded as a sort of political geographical approach. The World Bank lists 12 former countries of the Soviet Union under Eurasia, namely: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. However, it basically uses the “Europe and Central Asia” delineation during its operations. The definition of Eurasia by the OECD includes 13 countries: Afghanistan, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. In other words, this is a much smaller geographical frame than the geological or physical geographical approach. Although the UN also uses the term of Eurasia, in the territorial division applied during its work, “Europe and

Central Asia” is used, to which 18 countries belong: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Armenia, Azerbaijan, Georgia, Belarus, Moldova, Ukraine, Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Serbia, Macedonia, and Turkey. The IMF does not use the expression Eurasia in a territorial division linked to it activities. Europe is a separate region, Asia forms a territorial unit with the Pacific region, while Central Asia appears together with the Middle East in the organisation’s division. Geopolitical approach Among the geopolitical and geostrategic concepts regarding Eurasia, the views of Halford Mackinder, the geographer and politician regarded as the “father” of geopolitics and geostrategy, are worth mentioning, who developed several theories explaining the effect of geography on world politics and global events, namely the Pivot, Heartland, and later the Lenaland theories. In the centre of his successive theories revised in the light of the current

events of world politics is Eurasia, which he gives different names (Pivot area, Heartland) in his works. According to his theory/theories, the key to a position of global power is the influence exerted on Eurasia. In other words, “Who rules Central and Eastern Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island commands the world.”. In his book entitled The Grand Chessboard, Zbigniev Brzezinski, an American geostrategist with Polish origins writes the following about the region: “Eurasia is the globe's largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world's three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa's subordination (...). About 75 percent of the world's people live in Eurasia, and most of the world's physical wealth is there as well, both in its enterprises and underneath its soil. (...) After the United States, the

next six largest economies and the next six biggest spenders on military weaponry are located in Eurasia. All but one of the world's (...) covert nuclear powers are located in Eurasia. The world's two most populous aspirants to regional hegemony and global influence are Eurasian.” In his work entitled Strategic Vision, Brzezinski maintains the timeliness of these claims and emphasises that the US needs to pursue a geostrategy regarding Eurasia, which has been politically activated, as this region poses the most direct political threat to the global status of the US and, at the same time, to global geopolitical stability. And this geostrategy must address the region as a single unit. Eurasia can be traced back to a much older connection The term Eurasia is originally a physical geographical and geological expression, by which the supercontinent formed by Europe and Asia is meant. Regarding the geochronological (geological) background of the Eurasian supercontinent, it is worth

400 million years of unity: Eurasian plate

noting that it became a separate continent circa 400 million years ago. Eurasia extends over an area of approximately 55 million km2 accounting for 36.2% of the Earth’s surface. The area hosts more than two-thirds of the world’s population, i.e. over 5 billion people. In plate tectonic terms, Eurasia means not merely the land area of Europe and Asia but also the Eurasian plate, which is one the seven great plates forming the Earth’s lithosphere. The Eurasian plate includes, among others, the eastern side of the northern part of the Atlantic Ocean, the Arctic Ocean, and the Sea of Japan. The Eurasia plate is the largest contiguous area on earth. In the Cenozoic Era, when the smaller crust plates (Arabian and Indian) joined Eurasia, our longest east-west mountain belt was created ranging from the Pyrenees to the Himalayas, also called the Eurasian mountain belt. A 9000-km-long contiguous physical geographical unit If we take a look at a current geographical map of the world in its status following the most recent ice age and the contiguous belt located between the 40-50° north latitude and extending from the Carpathian Basin to the Pacific Ocean, we can see a more than 9000-km-long contiguous belt, the so-called Steppe belt! 20-24 million km2 of this

area is geologically and physical geographically unchanged territory and, thus, was possible to cross. It is also the most important traffic route, the socalled “Puszta” route (Grandpierre Attila, 2019), which has large river valleys with fertile soil and lies in a moderate and subtropical belt. And this meant a millennial-long link to the east-west connection of the ancient Silk Road. In her book entitled The Prehistory of the Silk Road, Elena Kuzmina states that the “main route” of this ancient Silk Road passed through the steppe between China and the Carpathian Basin. According to Attila Grandpierre’s research, the two poles of the main route of the ancient Silk Road were the Carpathian Basin and China. It was along this ancient Silk Road where the most important innovations and technologies of past eras were created, including advanced agriculture, irrigation farming, metalworking, and advanced pottery, and it was also here that the pair of spiral, the Chinese yin-yang symbol representing cosmic unity was born. The ancient Silk Road was also the main route of philosophy at the time. The land between the Carpathian Basin and the Pacific Ocean was dominated by an ancient natural world view, in which the highest value was universal life, which was family-centred, community-based, and close to nature.

The age of New Eurasia built on long-term sustainable growth

9000-km-long continuous steppe belt

40,000 years – 9000-km-long continuous belt

Based on this, we can speak of four great eras of the Silk Road, described in Attila Grandpierre’s book, Ancient Hungary – The rise of the peoples of the Carpathian basin and the Silk Road: the 40,000-year-

old Palaeolithic Silk Road, the 7000-year-old prehistoric Silk Road, the ancient and medieval Silk Road existing from the 2nd century BC until the 17th century, and the New Silk Road in the 21st century.

THE ANCIENT AND THE NEW SILK ROAD Today, advanced science supports the fact that the rise of the peoples of the Carpathian Basin and the that of the peoples of the Silk Road are linked to each other due to the shared Eurasian ancient culture, communication and transportation system, and standardisation, because now is the time to understand the higher quality of the ancient knowledge. The most important concept of Attila Grandpierre’s book is that the ancient history of the Carpathian Basin is closely linked to that of the Silk Road because the rise of our people is also intertwined with the rise of the peoples of the Silk Road. Why now? – Long-term sustainable growth Because it is today, in the 21st century that multidisciplinary sciences were born, which are suitable for providing an exact scientific basis for a healthy ecological world view. The fusion of new holistic sciences forms a unity: this is the fusion of music, folk tale, genetics, archaeology, physical geography, physics, biology, theology, history, and psychology. Because the East Asian world view is fundamentally different from that of the West. While the Western world view is regarded as materialistic, the East Asian one is based on life communities and is nature-cen-

tred, and a huge civilisational potential lies in this life-centred world view. The permanent growth of national economic production, which is one of the main instruments to achieve the primary goal of Western civilisation, that is the growth of power, entails more disadvantages than benefits with respect to our well-being above a certain limit – this is the ecological threshold. The difference between the Eastern and Western approach is that while the West has always strived for modernisation, the East has maintained traditional values, and in this new world order, traditions are given more and more importance. China has been building an ecological civilisation since 2007, which is the 21st-century continuation of organic thinking, ancient Chinese philosophy, and ancient Eurasian knowledge. The creation of the New Silk Road provides even greater advantages to the peoples living along the Silk Road. “This can lead to the rise of Eurasia. Ecological civilisation can become more effective than modern civilisation if it creates its scientific basis building on local circumstances and developing a distinct culture. As the revival of ancient Greek knowledge enabled Europe to be a world leader during the Renaissance, so could be returning to ancient Eurasia’s knowledge system and morality – which are of an even higher

The age of New Eurasia built on long-term sustainable growth

quality – the most important key today.” The ancient world view, ancient knowledge, philosophy, wisdom, religion, folk music, folk tale, common traditions of the peoples of the Silk Road hold a set of ecological values. A deeper understanding of the ancient high culture in the folk music of the Silk Road could foster the rise of the region’s peoples and the beginning of a new Renaissance. Civilisational eras – the New Eurasian era Throughout history, we can speak of different cycles, such as the 60-year-long Kondratiev wave, the 100-year-long periods, the cycles of 250 and 500 years (solar cycles) or even longer cycles lasting for 2200 years. When examining how civilisational eras have changed throughout history, we can see that the river valley civilisations from the east to the west emerged first (the Chinese civilisation between the Yellow and Blue Rivers, the Indus valley civilisation, Mesopotamia established between the Tigris and Euphrates Rivers, and the Egyptian civilisation along the Nile), followed by the rise of the peoples of the Mediterranean Sea’s internal part during the age of ancient Greece and the Roman Empire. From the mid-5th century AD, economic development shifted from the seas to the land for a thousand years and led to the rise of Europe, Asia, and

the city-states. The Silk Road flourished as a trading route between the 11th and 15th centuries. In the late Renaissance, sailing, discovering new territories, searching for raw material (and especially gold) assumed an increasingly important role, and thus, the Age of Discovery began. A 500-year-long new Atlantic era began in 1492 with the great discoveries and Vasco de Gama’s journey, in particular. The countries located near the ocean rose, while the importance of inner landlocked territories dropped. The various trading companies – at first the Portuguese and Spanish, and later the Dutch, French, and British trading companies – colonised more and more land in the Far East, and with the spread of and trade in opium (geopium), the economies of China and Asia began to decline for centuries. The 19th century was clearly the age of the British Empire, while the 20th century was dominated by the US. Besides the Atlantic era, the Pacific era also emerged and became increasingly significant up until the mid-2000s when the eastern part of Asia started on a path of rapid growth, and from 2013, another land era, the age of Eurasia began. In this new world order, the gate regions on land become significant again and the middle is on the rise again.

The economic center of gravity moves eastward

Source: WECG – World Economic Center of Gravity, NUS

New perspective of the world – new maps

Source: Fudan University – The Political Map of the World

The shifting centre of gravity of the world economy The gravitational centre moves east In his article published in 2011 and entitled “The Global Economy’s Shifting Centre of Gravity”, Danny Quah, a former professor at the London School of Economy and Political Science and the dean of Lee Kuan Yew Public School, National University of Singapore, models the shift of the global economy’s centre of gravity, observed from Earth's surface, based on the average of the locations of economic activity. For his calculations, he identified and used the total value of global gross domestic product (GDP), the world’s urban agglomerations with over one million inhabitants, and its rural hotspots. Based on these calculations, while the gravitational centre of the world economy used to be in the middle of the Atlantic in 1980, in 2008, it was located along the same longitude as that of Izmir and Minsk. This change appropriately reflects the economic growth of East Asia and China, which are the main causes of the shift. Estimating the economic output of the nearly 700 locations examined, the author concluded that by 2020 the centre of gravity will be located just between India and China. The rate of the change, observed from Earth's surface, would be a shift of 9,300 km from the position in 1980. Therefore, the developed and rich countries of the past century should pursue a policy of openness towards

the East regarding issues related to world economy and leadership. In addition, many global issue – such as ensuring further growth of global economy – are likely to remain decisive in the 21st century, however, change is expected to occur in other matters, too, be it political influence or military intervention. We can see the shift’s direction on a map illustrating the change of the Earth’s economic balance of power, but it is even more apparent on the world map that China uses as the world’s new political map. On this map, we can observe a contiguous Eurasian continent, and it appears in a new perspective that the American continent is located north of Asia since if we fly from New York to Shanghai, the shortest route is through the North Pole. And if we track the centre of civilisations on this map from the east to the west, then to the north and again to the east, we end up having a full circle. That is why we need new maps and a new point of view in order to understand the interlinked processes in this 21st-century world order. Is the future of Asian? The world became European in the 19th century, “Americanised” in the 20th century and now, in the 21st century it is becoming irreversibly Asian. It is, in fact, a multi.civilisational order, connecting five billion peo-

The age of New Eurasia built on long-term sustainable growth

We live in a multipolar world order

The multipolar world order offers many opportunities

The new world order has brought about the rise of the East

Source: Worldmapper

ple through commerce, finance, and infrastructure networks, which together make up 40% of global GDP. China will not be the sole leader in this system as Asia will return to the stable multipolar order which already existed well before European colonisation and American dominance, and accordingly India and South East Asia will become major economic

and strategic centres. And Asiaâ&#x20AC;&#x2122;s strengthening will, in return, transform the business and cultural scene in North America, Europe, South America, and Africa. We must prepare for looking at the world and the future from an Asian and Eastern perspective for the time will come when it will be not Asia which

Innovation centers of the new world order

Source: Geofusion â&#x20AC;&#x201C; Mapping of the 21st Century

The age of New Eurasia built on long-term sustainable growth

10 years from now: 6 out of the TOP 10 countries are asian

Source: visualcapitalist.com

produces for the West, but the West will produce for Asia, and, what is more, when Asian people will not like to live as the Westerners, but Western societies will want to have a similar stability and leaders with a long-term vision as the Asians do. Pharag Khanna’s new book entitled The Future Is Asian and published in 2019 presents this inevitable global Asianisation through detailed analyses, data, and maps. Khanna provides a convincing picture of the balanced global system based on shared responsibility by America, Europe, and Asia, and, with his characteristic clarity and on-the-scene reports, offers important guidelines to those corporate leaders who do not wish to concentrate on China only, but wish to exploit the future business potential in the whole of Asia. However, if we add that in this new polycentric world order, the two most important passwords are Connectivity and Complexity and the two strongest global commercial regions are Europe and Asia, then we can conclude that it is, in fact, not the century of Asia but the century of Eurasia in terms of connectivity. The future is Eurasian! Bruno Maćčes, in his book entitled Dawn of Eurasia, published in Hungarian by Pallas Athene Books, claims that this era will be the age of not Asia or

Europe but clearly of Eurasia. Bruno Maćčes, the author of the book entitled Dawn of Eurasia: On the Trail of the New World Order states that the dissolution of the bipolar world order led not only to the reunification of a formerly divided Europe but also to a stronger connection between the Old Continent and Asia. China plays a priority role in this, having opened its economy to global capitalism after the collapse of the Berlin Wall and creating today a new geographical entity, Eurasia through the infrastructure investments and closer economic cooperation of the Belt and Road Initiative. The supercontinent extends from Lisbon to Shanghai or even Jakarta. Robert D. Kaplan presents the most original views on the new role of Eurasia in his book entitledThe Return of Marco Polo’s World. The American journalist and strategist has long been interested in the destiny-shaping role of geography. In his view, Eurasia’s new connectivity in the form of roads, railways, gas pipelines, and optical cables mean that the old territorial categories, such as Central, East, or South Asia, are loosing their meaning as geopolitical concepts. Thanks to the interplay of globalisation, technological development, and geography, the Eurasian supercontinent is becoming a changing and “fluid” but concrete entity. Eurasia finds a meaning it has not had before.

The connection between Europe and Asia is the strongest

Source: Parag Khanna – The Future is Asian

The weaker Europe is, the stronger Eurasia becomes. Eurasia’s countries are linked to each other infrastructurally, commercially, and financially. This is the world that the 13th-century explorer, Marco Polo knew – as also suggested by the title of Kaplan’s book. China’s great strategy recognises that trade is mightier than a sword – just as Pax Mongolica did, which was able to rule the multicultural whole of Eurasia. Sovereignties can multiply and city-states flourish – just as Singapore, Dubai, or Bukhara in Marco Polo’s time. And what has worked once, can be repeated again. Peter Frankopan states in his new book, New Silk Road that a new Eurasian supercontinent has developed. David Gosset writes about a new Renaissance era, more precisely a new Chinese Renaissance age realised by the Belt and Road programme. Geography plays a central role again! We need a new geographical and economic approach, a long-term sustainable economic way of thinking, which is Eurasian and builds on fusions. Zhouying Jin, the Director of the Center for Technology Innovation and Strategy Studies at the Chinese Academy of Social Sciences, claims in her book entitled The Future of Humanity that the so-called hard and soft technology complement each other in the same way as the yin-yang principle in Chinese philosophy and thinking. The most important goal of global civilisation is to switch to sustainable de-

The future is eurasian!

We need new maps

The age of New Eurasia built on long-term sustainable growth

We live in the age of fusions

Source: Geofusion â&#x20AC;&#x201C; Mapping of the 21st Century

velopment and growth by using green technologies, artificial intelligence and manufacturing technologies. This could bring forth the civilisation of greatness, which is based on the Chinese ecological civilisational way of thinking. Just as Wang Zhihe writes about this question in his book. The multipolar world harbours potential â&#x20AC;&#x201C; the most important megatrends We are living in a new world order: a new age of globalisation has begun: the age of technology and knowledge. In this new age, we are talking about the rise of geography, where geopolitical processes are replaced by geoeconomic trends and countries compete for markets rather than territories. This is an age of networks and fusions, where a complex approach becomes the key in the interconnected world. In order to understand the processes of this new era, we need maps. Maps are continuously evolving, but their meaning and significance remains unchanged. In our new 21st-century world order, network maps showing global economic hubs gain increasing importance. For example, maps which present not countries but the air routes of 182 airline companies or the results of international research partnerships and scientific works. Or the connection map of Facebook used

Where connectivity...

...and complexity are the main keywords

Source: visualcapitalist.com

by 2 billion people; these are all network maps with lines and intersections in hubs, which indicate the 21st centuryâ&#x20AC;&#x2122;s key axes and centres that is cities.

New geofusional world order – new renaissance

On 21st-century maps, there is another element, too which connects places and continents: These are the infrastructure lines. Today in the world, there is 1 million km of underwater internet cable, 2 million km of gas pipeline, a 4-million-km-long railway network, and a 64-million-km-long road network. These networks will be the most important lines on our maps. And it is no accident that China’s longterm geostrategy is to find a way of placing the axis of world economy from the oceans back to land. And if we place cities, the “powerhouses” of the 21st century on these connectivity maps, we end up having the complex geofusional map which best describes our 21st.century Anthropocene world map. The 21st century is the age of knowledge and creativity, where individual ideas and innovations are the most important currency. And the countries which do not have enough knowledge will be forced to buy it, even though knowledge is becoming more and more expensive. We are witnessing the rise of geography, and geoeconomy – the combination of economy and geography –, in particular, is gaining significance. Paul Tucker, the former Deputy Governor of the Bank of England was asked during the Tacitus Lectures held in March 2016 in London who the winner countries, nations, communities, and leaders of the 21st century might be. He replied that those countries which harmonise their financial, that is

monetary policy, economic policy, and geopolitics (Tucker, 2016). The age of the geoeconomy An important geopolitical factor of the 21st century is that the former unipolar world is evolving into a multipolar world order. Geoeconomy determines world economic trends as the fusional intersection of economics, social sciences, and geography. Currently we are witnessing the rise of geoeconomy, a competition which takes place in the form of commerce but follows the logic of war. Geopolitical competition transforms global economy, the global balance of power, and governance. Military strikes are replaced by economic sanctions, and military alliances by commercial systems competing against each other. The probability of currency wars are much higher than that of occupying territories, and manipulating the price of certain raw materials (e.g. oil) proves more effective than conventional armaments race. All this leads to the conclusion that we are witnessing the rise of geoeconomy, a competition which takes place in the form of commerce but according to the rationale of war. Geoeconomy is the antithesis of globalisation and its greatest victory at the same time. The interdependency and connectivity of countries are growing to an extent where the possibility, for all, of being excluded equals in severity a war conflict.

The age of New Eurasia built on long-term sustainable growth

We live in the age of fusions and networks We live in the age of knowledge, the era of geoeconomy in a fusional world. We can observe fusions in gastronomy, music, science, and architecture, among other fields. Fusions are also important because something new is born out of the interaction of the most unlikely things. In the case of gastro-fusions, for instance, we can speak of a fusion when the East meets the West. And in this fusional era, in this geofusional age, data (big data) will be the “raw material” of the 21st century, and knowledge, creativity, and experience represent the new services. With new actors and new partnerships, great things will come from small things and former peripheries will become centres. In addition to network connectivity, the most important element is measuring complexity. MIT researchers first published the The Atlas of Economic Complexity in 2012. Ricardo Hausmann, who gave a keynote lecture during the Regional Studies Association’s (RSA) annual conference held in June 2017 in Dublin, presented the latest results of his research. The most important factors in measuring economic complexity are what a given country exports and how the exported product itself integrates into the global product space. According to Hausmann, two factors matter: one of them is knowledge and highly-qualified workforce, while the other is the exporting product itself, that is the share of industries with a high added value in the export structure of a given country. This new competition for economic complexity is led by Japan, followed by Germany. The top 10 countries come from three regions: South East Asian countries (Korea, Singapore), Nordic countries (Finland, Sweden, Norway) as well as Central and Eastern European countries (Hungary, Austria, Czech Republic, Poland, and Slovakia). That is also why it is essential that in the age of globalisation, new knowledge, and technology, innovation is highly represented so that the region can grow and prosper in the 21st century through connectivity. Good Country Index What makes a country successful and good? Simon Anholt, one of the world's most well-known country brand experts examines countries and cities. The subjective Good Country Index, designed by him, analyses how much good a given country can do in the world and how much value it can create thereby. In the competitiveness ranking developed by him, Hungary has risen by 50 places over the past two years, reaching the 12th place in 2018. The in-

ternational perception of countries has a decisive impact on their economic and diplomatic success, and vice versa. The Good Country Index examines not only what makes a country successful but also what makes it good, that is how and to what extent the world’s countries contribute to the long-term future of our planet and humanity as well as to our well-being. This complex index measures how positive or negative the functioning of individual countries is in the global space. Simon Anholt, who talked about the characteristics of good countries at the invitation of PAGEO three years ago in Hungary as well, addresses in his study entitled Nation-brands of the twenty-first century, published in The Journal of Brand Management, the phenomenon that in this new age of globalisation all countries have suddenly become competitors for tourism, investment, talent, and attention. Another internationally acclaimed strategic thinker, Thomas L. Friedman wrote in the New York Times that we should forget the term "developed and developing countries" since in the new world order those countries matter which captivate people’s imagination, have high added values; the countries which have a goal, a vision, and their own model. More and more new rankings of competitiveness are published in which Hungary performs very well. Novel approaches and new indexes gain importance and there is a functioning Hungarian model. Over the past 7 years, there have been 12 significant turns in economic history from the tax policy for families through monetary policy and a competitive bank system to sustainable growth. Hungary has a vision! This is a country where the objectives of economic policy, monetary policy, and geopolitics, and thus national strategy are harmonised and point in the same direction. This is what is recognised in many places and scientific workshops in the world! This is called the “Hungarian wonder” and according to Thomas L. Friedmann’s analysis, Hungary occupies a stable position on the 21st-century world map. Global cities – The age of urban networks Today in the world economy, 147 global company generate 40% of global GDP and nearly 700 companies produce 80% of global GDP. These companies are concentrated in cities, where especially creative workforce is available. Besides strategic companies and nation-states, the new powerhouses of the 21st century will definitely be the cities.

64 global cities produce 70% of the global GDP

Source: Connectography – futuremap.org

Urban population in the World between 1950-2030

Today, in the age of the rise of cities and urban networks, there are 64 global urban regions and megaregions which together produce 80% of global GDP. If the world’s top five global cities (New York, Los Angeles, Tokyo, Paris, and London) formed a single state, this fictive area would be the third largest economy in the world after the US and China. Based on international forecasts, the rates of urbanisation will shift towards the global east and south by 2030.

Growth axes and belts are evolving, whose centres are cities from the Boston-New York-Washington axis through the new European “Hanseatic League” and the Asian Pearl River delta (Hong-Kong-Shenzhen-Canton) to Singapore. In the new competitiveness rankings, the cities along Asia’s eastern shoreline will gain increasing significance, and if we also take into account the new type of competitiveness factors, such as connectivity, creativity, knowledge, technology, innovation, integration in global trade,

European connections of the New Silk Road

Source: saját szerkesztés

welfare factors, security, liveability, and the rate of green areas, Singapore and Shanghai will undoubtedly lead the list. City-states played an important role in history: they engaged in active trade and functioned as economic, educational, and cultural centres, for example, in the Renaissance period. We can think of the importance of Venice or Genova, whose greatest advantage was their location and whose primary goal was to join the global economy and trade. Just like now, in the age of the new Renaissance: roads, belts, cities, networks, and centres. What is of relevance to us is that the Carpathian Basin also functions as such a natural area. The future city network of Budapest will be constituted not by the Vienna-Budapest axis but by the whole of the Carpathian Basin. That is also why it is essential to develop closer links between the cities and centres of the Carpathian Basin through motorways, infrastructure developments as well as educational and cultural partnerships. It is no coincidence that our cities have developed a programme for modern cities and Hungarian villages, through which complex economic development programmes can be implemented. This development also includes viable rural towns and villages, which gain similar importance as

parts of the network; just as the spokes of the wheel and the air between them. We must extend this to the entire Carpathian Basin. Since the Carpathian Basin functions as a single natural, cultural, and economic unit and belt with natural borders (the Carpathians), great natural features, and an excellent geostrategic position. Let us connect the Carpathian Basin with infrastructure lines to achieve the closest cooperation in the age of interconnectivity. Today, Budapest is a capital of nearly two million inhabitants, constituting an economic zone with nearly four million people. It is the capital of a country of 10 million, the centre of the Carpathian Basin with 24 million people and of the Visegrad Four with 64 million people, which, combined with Slovenia and Croatia, has a population of 72 million people and is the centre of the 16+1 initiative affecting 128 million people. NEW EURASIA – NEW SILK ROAD New Silk Road – The Belt and Road Initiative Global cities form networks. In the age of interconnectivity and complexity, we need a mission, a vision, which creates this new connectivity, and this is the New Silk Road, the Belt and Road Initiative, China’s long-term strategy, which was announced in September 2013.

The age of New Eurasia built on long-term sustainable growth

...connecting Eurasia

Source: scmp

What is the New Silk Road? We need to place the axis of world economy from the oceans back to land, and restore and rebuild the former economic, political, and cultural role of Eurasia. The New Silk Road can be interpreted as a complex network, which can be extended in space and time in a flexible way. It is the alliance of public and economic institutions and cities, a collaborative and peaceful rise and a network of win-win relations. The New Silk Road connects the players which constitute the new age of globalisation: this makes up around 40% of global GDP and 70% of the Earth’s population. The Belt and Road Initiative and the New Silk Road were announced by President Xi Jinping in September 2013, and entail infrastructure interconnection, political coordination, making trade barrier-free, financial integration, and the strengthening of the human sector. The Belt and Road Initiative was joined by 64 countries upon its announcement and by now, by the spring of 2019, 125 countries and 29 international institutions have signed and started to implement 170 agreements worth 1000 billion USD. In other words, the Belt and Road Initiative is the single most important geostrategic programme of the 21st century and the largest investment in history. It

is a contiguous network of sea routes and economic corridors on land. Among the economic corridors on land, the most important is the Eurasian Land Bridge connecting nearly 108 cities. 13,000 trains a year run between China’s and Europe’s largest cities, transporting more than 1.1 million tons of goods. So far, more than 600 projects have been launched since the announcement of the plan, including 41 pipelines, 203 bridge and motorway developments, 199 power plants. New railways are being built and 12 new port developments were started in Europe in early 2019.

The rise of Central Europe Geopolitical power relations have changed in the 21st century. We can and we must redraw our maps or look at them from a different perspective to understand current trends. Central Europe has an increasingly important role and significance on the 21st.century geopolitical world map. And the region, formerly called ”buffer zone”, functions as a gate region of a new Eurasian supercontinent and as an intersection of the East and the West. David A. Jones, a Professor of the Faculty of United States and European studies at the University of Warsaw suggested during his lecture in Budapest that we should “shift” Central Europe eastward, as the region offers

The new eurasian land bridge corridor is the most significant

Source: V-RIPORT (PAIGEO 2018)

Hungary is the key Country in the BRI

Source: saját szerkesztés

The age of New Eurasia built on long-term sustainable growth

more potential and it is Europe’s most important region with respect to realising the Chinese Belt and Road Initiative. Central Europe is no longer what it used to be: it produces the highest economic growth in the continent with stringent financial stability, has the lowest rate of public debt, and unemployment is steadily decreasing, while its competitiveness is continuously improving. Central Europe has always been part of Europe and it always will be. And a strong Europe is in the interest of the Visegrad countries, too. In China, people look at maps from a different perspective. On their world map, America is north of Asia and Europe and Asia appear as a single continent, whose key region is the western gate: the region of Central and Eastern European countries. Hungary is a key region on the Silk Road Hungary was one of the first countries to engage in diplomatic relations with China 70 years ago. It was the first in Europe to announce the Eastern Opening policy in 2011 and to join the CEEC-China 16+1 Initiative during the Chinese Prime Minister’s visit to Budapest in 2011. In 2013, Hungary was one of the first ones to adopt the bilateral agreements on currency swap. The Bank of China has chosen

Budapest as its regional headquarter, and Hungary was the first one to sign an agreement on the implementation of the Belgrade-Budapest highspeed railway within the framework of the Belt and Road initiative. In 2017, Budapest hosted the 16+1 summit and the Meeting of the 16+1 Central Bank Governors was also held in the House of Wisdom in Budapest. It was also in the House of Wisdom that the joint MBA programme of Fudan University of Shanghai, the Hungarian Central Bank and Corvinus University of Budapest was announced. Thanks to trading relations, the trade flow has amounted to 4.5 billion USD to date, and 235,000 tourists visited Hungary last year, and this figure has increased by 32% by the beginning of the year. And on 7th of June, a direct flight will be launched between Shanghai and Budapest. The importance of the Central European economic centre of gravity Due to the main hubs of the new infrastructure networks created within the framework of the New Silk Road, the significance of certain regions changes and new centres emerge. The dry port of Khorgos, which is located in Kazakhstan and considered the world’s largest dry port, is the main Eurasian gate and logistics hub of China’s primary land route and

The role of Central Europe is becoming more significant

also impacts the development of Central East Europe. Similarly, the China-Pakistan Economic Corridor connects China and the Arabian Sea through the Karakoram Highway, which is the worldâ&#x20AC;&#x2122;s highest paved international road, and the port of Gwadar. The importance of Gwadar lies among others in the fact that through it, Chinese goods can reach the European continent faster than on the traditional transport routes passing through the Strait of Malacca. One of the main distribution centres of the goods is the Port of Piraeus, from which shipments are expected to reach Hungary through the Belgrade-Budapest railway and continue from there to the ports of Rotterdam and Hamburg. The Port of Piraeus can shorten the duration of the sea transport by 20 days, while the transportation on the Xian-Duisburg rail route takes 24 days instead of the previous 42 days. The Western European centres of railway transport could be the German Duisburg, Brest on the Belarusian-Polish

border, Lodz in Poland, the Greek port of Piraeus as well as Budapest. In the light of this, a new axis of development will be created, which has an east-west direction in the North and northwest-southeast direction in the South, which connects Piraeus to Rotterdam or the port of Hamburg. Thus, a north-south belt is formed from the Baltic Sea to the Adriatic or Black Sea. The 16+1 countries and initiative represent the most important European relation with China. It is no coincidence that according to Chinese plans, two centres will develop in this region: one of them is the northern centre with Warsaw as its main hub, which will mainly manage transportation and logistics and energy investments; while the other one will be Budapest in the South, home to financial services, cultural and intellectual partnerships. The geopolitical balance of power has changed in the 21st century, and Central Europe has an in-

The age of New Eurasia built on long-term sustainable growth

The BRI, the Amber Road and Via Carpathia

Source: PAIGEO, László Gere

Central European economic zone

unit. The Central European identity has resurrected from its “seemingly dead” status, and the region’s states now identify themselves with it. The new world order has redrawn our maps. The areas previously considered peripheral occupy a central place again. The 21st century has brought about the development of a multipolar world order on the one hand, and the economic centre of gravity has clearly and significantly shifted to the east on the other hand. Central Europe offers many opportunities; the region is no longer the same as it used to be a decade ago. Central Europe has always been an important part of Europe and it always will be. And a strong Europe is in the interest of the Visegrad countries, too. Due to the main hubs of the evolving networks, the significance of regions changes. The New Silk Road reaches Europe through the Central Eastern European countries, further increasing the importance of the region’s future role. While Europe is considering an east-west division, the central part of Europe has united as a north-south region. In order for Central and Eastern European countries to become gate regions of the Eurasian continent currently being shaped, they must form an independent powerful economic region. Instead of the west-east division, the region’s solution is a New Central European “geoeconomic centre of gravity” built on new north-south infrastructure corridors. This could the key region of New Eurasia.

Source: OFTK és saját szerkesztés

creasingly important role and significance on the world map. Central Europe, that is the intersection of the East and the West can become the strategic “bridgehead” of a new Eurasian supercontinent and a powerful economic and geopolitical region. Central Europe is not only a historical, geographical but also an economic, intellectual, and cultural

Within the EU, the four key elements of the Central European economic and geopolitical centre of gravity are 1) the Visegrad cooperation; 2) the Three Seas Initiative connecting the Baltic, Adriatic, and Black Seas, and the Via Carpathia motorway passing through it, linking Greece to Lithuania through Debrecen and Miskolc; 3) the New Amber Road railway corridor on the western edge of the region, ranging from the Port of Koper to the Baltic Sea, touching Hungary’s western border; and 4) the 16+1 Initiative of China and Central Eastern European countries. Thus, a contiguous territorial unit is formed between the Port of Piraeus and Rotterdam/Hamburg, connected by the Via Carpathia motorway to the east, the New Amber Road to the west, and the New Silk Road to the north and southeast. Europe has shifted eastward and risen in geopolitical terms at the same time.

Europe Kirov

Perm

Moscow Hamburg Rotterdam / Antwerpen

Minsk

Berlin

Warsaw Kiev

London Lille / Brussels Paris

Cologne Salzburg MĂźnich Salzburg

Nuremb.

Pardubice

Vienna

Chop Budapest

Alterau (New Sarai)

Belgrade Skopje Sofia

Istanbul

Ankara Yerevan Tabriz

Venice

Antiochia

Rome

Damaskus Cairo

Teheran Bagdhad Basra

Mediterranean sea

Arab Peninsu

Siberia

Yekaterinburg Omsk

Novosibirsk

Yakulsk

Northern Corridor

Krasnoyarsk Tayshet

Skovorodino Chita Heihe

Irkutsk

Astana

Ulaanbaater Aktogay / Alataw Pass

Khabarovsk

Manzhouli Suifenhe

Saksaulkaya

Harbin

Central Corridor

Ă&#x153;rĂźmqi

ula

Lop Nor

Wuwei

Niya

Taxila

Xian

China

Mashhad

Shenyang / Fushun

Lanzhou

Holan (Kholan) Balkh (Bactra)

Changchun

Bejing / Tianjin

Tashkent Khujand (Kokand)

Vladivostok

Erenhot

Turpan

Jlayuguan Samarkand

Sevelskaya Gawan

Tianshu / Guyvan

Lianyungang

Zhengzhou

Xuzhou Nanjing

Shanghai

Wuhan

East China Sea

Changsha / Zhuzhou

South Corridor Karachi Tamluk

Hanoi

Barygaza

Shenzhen / Hong Kong

Masulipatam

South China Sea

Bengal Bay

Singarpore

The 70 anniversary of ChineseHungarian diplomacy th

Author: Duan Jielong

The opening speech of the Ambassador of the People’s Republic of China to Hungary at the CEEC-PAIGEO conference This year marks the 70th anniversary of the founding of the People’s Republic of China, and is also the 70th anniversary of the establishment of diplomatic relations between China and some CEE countries such as Hungary, Poland, Czech Republic, Slovakia, Romania, Bulgaria, Albania etc., all of which are worthy of our celebrating and review.

Distinguished experts and scholars, Ladies and Gentlemen, Dear friends, Good morning! It is my great pleasure to be invited to this conference. First of all, on behalf of Chinese Embassy in Hungary, I would like to extend my warm congratulations on the opening of this conference and wish it a great success. This year marks the 70th anniversary of the founding of the People’s Republic of China, and is also the 70th anniversary of the establishment of diplomatic relations between China and some CEE countries such as Hungary, Poland, Czech Republic, Slovakia, Romania, Bulgaria, Albania etc., all of which are worthy of our celebrating and review. As we all know, China has undergone enormous changes over the past 70 years. 70 years ago, China used to be a country with the largest population in the world but also a poor and weak country in all

aspects. The impoverished population reached up to 770 million at that time. After 70 years’ hardworking, under the leadership of Chinese Communist Party, China achieved great success which is well recognized by the international community. By the end of last year, China’s per capital GDP has reached over 9,000,USD and the number of poor population has decreased to less than 16 million. China is expected to eradicate absolute poverty and realize the goal of building a moderately prosperous society next year (a moderately prosperous society means that per capital GDP up to 10,000, USD and the absolute poverty is eliminated). At the international level, China has established diplomatic relations with 178 countries. Currently, China is not only the second largest world economy but also the second largest contributor of UN membership fees and UN international peacekeeping actions, and also an official member in almost all major intergovernmental organizations and institutions. Until now, China has signed more than 500 multilateral internation-

al treaties, and actively supported and participated in international cooperation on climate change. Besides, China proposed the “Belt and Road” initiative and the harmonious development concept of “building of a community of shared future for mankind”. In short, today, China has been deeply integrated into the international community based on common interests and deep connections. China’s path and direction for future development is now attracting more and more world’s attention while its remarkable achievements keep accumulating. Indeed, Chinese economy has enjoyed a continuous development and its people are living a better life. However, Chinese Government has made it very clear time and again that China has no intention to seek for hegemony nor “China first” at all, but is willing to make more contributions and undertakes more responsibilities for the international community. Chinese government holds that the imbalance of development is the foremost factor affecting the peace and development of today’s world. Therefore, China is willing to build hand in hand with all countries around the world, a Community with a Shared Future for Mankind, which sticks together in times of difficulty, share rights and shoulder obligations together for common development and welfare. To commit our words, in 2013, the Chinese President Xi Jinping proposed “the Belt and Road Initiative”. So far, more than 150 countries and international organizations have given warm responses to the initiative, and many of them have signed cooperation agree-

ments with China. It is well known that “the Belt and Road” Initiative focuses on five major areas of cooperation, which respectively are policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bond. Based on the principles of extensive consultation, joint contribution and shared benefits with all participating countries, “the Belt and Road Initiative” is designed to uphold the global free trade system and an open world economy, and aimed at sharing with the world the enormous opportunities brought by China’s development. We are pleased to see that it has delivered fruitful outcomes in about six years since the inception of the Initiative. Meanwhile, the BRI vision has been included in the official documents of major international institutions such as the United Nations, the Asia-Pacific Economic Cooperation Organization and the Shanghai Cooperation Organization. About 96 % of the 279 items on the outcome list of the first Belt and Road Forum for International Cooperation in 2017 had been accomplished. In this regard, China speaks highly of Hungary as the earliest European country to support and actively participate in “the Belt and Road Initiative” which has provided strong impetus for deepening the comprehensive bilateral relations and pragmatic cooperation of two countries. Ladies and gentlemen, Over last 70 years, the assistance from the CEE countries made great contributions to China’s de-

velopment and achievements. China highly value these contributions and is willing to further develop friendly relations with the CEE countries based on mutual respect, equality and mutual benefits. Historically, Europe was the major destination of the ancient Silk Road. Today, as important supporters and participants in “ the Belt and Road Initiative”, the CEE countries play an essential role in connecting China and Europe. By April this year, over 14,000 China-Europe freight train shifts had been operating well, connecting 62 Chinese cities and 51 cities in 15 European countries, and achieving twoway balance of transportation in general. With the steady development of China-Europe Land Sea Ex-

% against the backdrop of slowing global trade growth, hitting a record high of 82.2 billion USD. We prefer an improving trade structure along with growing trade volume instead of trade surpluses. Chinese Government therefore keeps exploring every possible means to increase imports to promote balanced trade. The first China International Import Expo in Shanghai last year was a complete success with a total turnover of more than 57.8 billion USD. At present, the Second Import Expo is under preparation to be held in Shanghai again in November this year. As FDI across the world plunged last year, China’s investment in the CEE countries has bucked the trend and soared by 67 %, notably

press Line, CEE countries are poised to play a bigger role as gateways between Asia and Europe.

in major projects of energy, mining and home appliance sectors. Cooperation between China and CEE countries in third-party markets also makes new steps. Smooth progress can be seen in projects such as Budapest-Belgrade railway, the Peljesac Bridge in Croatia, the E763 highway in Serbia, the MS and KO highways in North Macedonia and the South-North expressway in Montenegro. The Mozura wind farm, a Montenegro-China-Malta trilateral project, has been put into testing operation and become a demonstration project. Sub-national cooperation continues to deepen, marked by the

In 2011, the first China-CEEC Business Forum was held in Budapest, opening a new chapter for China-CEEC cooperation mechanism. Over the past 8 years, thanks to the joint efforts of all parties, China-CEEC cooperation has remained robust, and yielded fruitful results in the fields of trade and investment, infrastructure connectivity and people to people exchange and so on. In 2018, China’s trade with the CEE countries increased by 21

The 70th anniversary of Chinese-Hungarian diplomacy

launching of the China-CEEC Demonstration Zone for Economic and Trade Cooperation in Ningbo, Zhejiang Province, the SMEs Cooperation Zone in Cangzhou, Hebei Province, the People-to-People Exchange and Experience Headquarters in the Yangtze River Delta Industrial Zone, and the China-CEEC Pavilion. There have been more frequent people-to-people and cultural exchanges, as evidenced by over 1.4 million tourist arrivals from China to CEE countries, and 350,000 visits from CEE countries to China in 2018. Our two sides also run collaboration programs in performing arts, animation, film, sports and other cultural and creative industries. It is also worth mentioning that this year, China-CEEC cooperation further expanded the“circle of friends” by including Greece as a full-fledged participant. It has evolved into an open and inclusive platform for cross-regional cooperation of mutual benefit. The “17+1” platform plays a positive role in boosting the economic growth of participating countries, improving people’s well-being and advancing China-Europe relations as a whole. The proposal of “17+1” cooperation derives from complementarity of economy between China and CEE countries and is in line with the trend of eco-

nomic globalization and free trade. All participants have followed the principle of “equal consultation, mutual benefit, openness, inclusiveness, pragmatism and innovation” in our cooperation, and been sensitive to each others’ major concerns, and taken into full account the realities of the countries concerned in making cooperation plans and identifying projects. As a result, the China-CEEC framework has attracted wide participation and strong support. Embracing the spirit of openness, fairness and transparency, China firmly adheres to internationally recognized rules, including those of the WTO and EU in China-CEEC cooperation, understand and respect the responsibilities and obligations of some CEE countries as EU members. In pursuing China-CEEC cooperation, we give equal importance to trade and investment, promote economic cooperation and people-to-people exchanges in parallel and enhance China-CEEC cooperation to achieve a common development of all participating countries. In recent years, many CEE countries are undergoing a strong economic recovery, continuous upgrading of industries and steady improvement in people's living standards and social welfare. As the Chinese Ambassador to Hungary, I am deeply im-

pressed by those achievements. Take Hungary as an example. The vitality of economic development is present everywhere. The tourist attractions are full of visitors; constructions are in full swing; Liszt International Airport is well-lit for 24 hours and the advanced and comfortable M4 metro line full of passengers every day. The Chinese enterprises including Bank of China, Huawei, Wanhua Petrochemical (Yantai), and BYD etc. have operated well in Hungary. An increasing number of Chinese enterprises are investing or planning to invest in Hungary. This June, the opening of direct flights from Shanghai to Budapest brings Hungary and the economically developed southeastern region of China closer in terms of time and space and will inject new impetus into the economic, trade, tourism and cultural exchanges between two countries. I would also like to mentioning that Chinese government has always stressed that China-CEEC’s cooperation has been an important component of China’s cooperation with Europe and the EU. In December 2018, the Chinese government issued the “China's Policy Paper on the European Union”, in which it clearly clarifies that “China welcomes a united, stable, open and prosperous Europe, supports the European integration process, and remains committed to developing balanced and mutually reinforcing ties with EU institutions, member states and other European countries. China and the Central and Eastern European countries have conducted win-win, open and transparent cross-regional cooperation based on common interests and needs. The support and constructive participation by the EU and other parties are welcomed. In the first half of next year, China will host the 9th Meeting of the national leaders of China and central and eastern European countries (“17+1” cooperation). China is actively making preparations and consultation with relevant countries. We be-

lieve that this meeting will open a new chapter of China-CEE Cooperation with new highlights and fruitful results. Under the framework of the “Belt and Road Initiative” and “17+1” cooperation, China is willing to better realize the strategic docking between China and CEE countries, optimize the trade structure, explore new potential for cooperation and achieve win-win outcomes and common prosperity. We are strongly convinced that cooperation between China and CEE countries based on extensive consultation, joint contribution and mutual benefit, will not only benefit the progress and growth of all participants, but also contribute to the development and integration of the EU as a whole. Ladies and gentlemen, The world is experiencing unprecedented changes. A new round of revolution and transformation in science, technology and industries are gaining momentum, bringing new opportunities for development of human society. Meanwhile, world economic growth has been slowed down due to sluggish international trade and investment under the background of rising protectionism. In particular, the US government wrongly sticks to unilateralism and adopted trade protection measures towards other countries, especially towards my country, which did a great damage to the WTO rules, multilateral trading system, seriously disrupted global industrial chains and supply chains, undermined market confidence, and posed a serious challenge to global economic recovery. China-US trade friction is not launched by China. Since the economic and trade consultations started between the two countries in February last year, China has always adopted a rational and cooperative attitude and endeavored to resolve problems and disputes through dialogue and consultation. However, US disregards the agreements reached by the heads of two countries and went back on its words repeatedly, and escalated the tariff time and again to put extreme pressure on China so as to claim unreasonable demands, which deeply hindered the further trade negotiation. The recent report released by IMF warned that the upgrading of US trade war against China could cut global economic output by 0.5% in 2020, making a loss of 455 billion US $. In addition, US Government abuses its state power in sanctioning and cracking down the

The 70th anniversary of Chinese-Hungarian diplomacy

legitimate operations of Huawei and other Chinese high technology enterprises in the name of so-called national security. It also labeled China as “currency manipulator” and announced the arm sales to China’s Taiwan region, attempting to let China swallow the bitter fruit harmful to our sovereignty, security and development interests. That’s why the negotiation goes to a deadlock and China has to fight back.

WTO mechanism. China is forced to take reciprocal countermeasures against the trade bully. What we are doing is in line with the common and long-term interests of the countries across the world. We will resolutely oppose unilateralism and work together with all countries to promote more open and inclusive world economy by safeguarding the multilateral trade system with the WTO as its core.

Hereby, I would like to emphasize that from 1949 to 1979 , accordingly matching the period between the founding of the People’s Republic of China and the establishment of China-US diplomatic relations, the US government had constantly imposed various blockades and sanctions on China, but China firmly sticks to its own path of development and enjoyed a steady development. Today, China is already the second largest economy in the world. Our economic growth remains robust. The capacity of our domestic consumer market continues to expand with huge potential of Chinese’s consuming power. Therefore, the ability of the China’s economy to withstand various risks is a lot better than that in the past. As a responsible country, China will not compromise on the issues of principle and will firmly uphold multilateralism and the

Ladies and Gentlemen, To conclude, I would like to quote the remarks by the Chinese President Xi Jinping at the Opening Ceremony of First China International Import Expo last year. He said, “the Chinese economy is not a pond, but ocean. Big winds and storms may upset a pond, but never ocean.” “As long as we have strategic confidence, deepen reform and opening-up policy on a large scale, intensify supply-side structural reforms and make greater efforts to solve prominent problems, China’s economy will surely make a quicker transition to high-quality development, the Chinese people will surely overcome all challenges in front of us and embrace a brighter future of development.” Thank you for your attention.

HUNGARIAN MODEL 2.0

Author: György Matolcsy – Governor of the Central Bank of Hungary

The Hungarian economic model is successful, but the time has come for us to step on a long-term sustainable catching-up path. We must react to the global “economic climate change” and strengthen and improve the competitiveness of the Hungarian economy. Among others, we must develop high-tech industries, the green economy, and boost employment.

Presentation by Central Bank Governor György Matolcsy on the opening day of the 57th Itinerant Conference of Economists We need to ensure long-term sustainability in many aspects, for example in the environment, and we are beginning to understand this. Whoever does not see climate change, should wear larger glasses. We can argue about the reasons, but it is not worth it, we must act. However, similarly to environmental climate, the economic climate can also change. We are now experiencing the precursors, the foreshadow of the fact that the economic climate is changing in the global space, the global economy, just as in our environment: in Europe and in our region. We have been on a catching-up trajectory for seven years now. We are maintaining the balance and realising growth at the same time. Indeed, together we are not only successfully fostering a growth turn but also a catching-up turn. We have been doing so based on a Hungarian model, however, as a result of climate change, we must consider whether what was relatively peaceful and good in peace time and sufficient in a general business cycle, will work and be enough in the economic climate change expected in the next years. And the economic climate change involves the global environmental climate change as well. Staying on top in dangerous waters as well – Hungarian Model 2.0 In my opinion, our next task is to make a proposal on the development and creation of the Hungari-

an Model 2.0. The Hungarian Model 1.0 has yielded excellent results, but we, in the Central Bank, think that the world is now changing and we need something more. This is also what our think tanks suggest and what echoes from the financial systems of Europe, the euro area, and the global space. We need to think slightly differently. It is rare in the world that a country successfully catches up for seven years with richer countries, be it the United States or Germany in Europe. This is rare. We can see that

“If the storm comes, there are those who build walls and those who build windmills” the countries in the red belt have been experiencing and implementing lasting catching-up periods of more than 7 years. However, not all of them. Some have realised catching-up periods of 3-5 years, they are more. It does not mean that they have not caught up, only that there have been breaks and halts in their convergence. Thus, the result we wish to achieve is very rare; that is, to successfully catch up in seven years, between 2013 and 2019 with the developed work, with our immediate neighbourhood, Western Europe, Austria, and Germany. We have a catching-up period longer than seven years, which is rare in the world.

â&#x20AC;&#x153;If the storm comes, there are those who build walls and those who build windmillsâ&#x20AC;?, the Chinese say. The windmill is a comparison: some exploit the wind, the storms, and the dramatic changes, and their energy in order to be successful in the next period as well. This is what we propose. The experts of the Hungarian Central Bank propose that if the storm comes, we should use its energy and new challenges to realise a successful, lasting, and sustainable convergence. Indeed, if a crisis strikes, such as the last one, the 2008-2009 global financial crisis, later to become the euro area crisis, nine out of ten catching-up attempts have come to a halt. And out of the ten attempts, we have experienced halts, standstills, and barriers, even for longer periods of time in several cases. The example of Poland shows us accurately how to operate successfully in the midst of a crisis. Poland remarkably got through the 2008 and 2009 financial and later real economic crisis. Following the crisis management, which was highly successful in terms of economic history and in an international comparison, since 2013, or indeed the autumn of 2012, we have been on the path of catching-up, and now we are very close to the Poles. The difference is due to the fact that we made many mistakes before

2010. We erred. And naturally, the shadow of our mistakes was not only over us in 2008 and 2009, but it continued to follow us. 12 Economic historical turns Hungary became a different country after 2010. It did so because we have made turns in economic history. We have implemented a successful fiscal turn. Economic history offers only a few examples when a country is able to realise a successful fiscal budgetary turn very fast – in our case, it was one and a half or two years. Some countries struggle and it takes them 5-10 years, or 3-4-5 years to restore their budget. We have seen an a country in the euro area which could not stabilise its budget. We did it in a very short period of time. Indeed, the public debt is steadily decreasing, the excessive deficit procedure have been lifted, the budget deficit is permanently low, we have implemented a tax reform and a motivational turn through the labour market and the tax system. And we have also implemented a monetary political turn. We have reduced the prime rate – everybody knows the story –, and the two factors combined achieved the growth turn. Economic history will surely appreciate it as a great success what has been realised in the seven years between 2013 and 2019 (although we have a couple of months left), but the numbers are already there. Hungary has reached a GDP growth of 3.5% or more in average. A remarkable result. The employment has been steadily growing since August 2010. Sándor Kopátsy personally taught me for decades that you can learn a lot of things, but the most important is work and the workplace. We understood this from 2010 on. Labour market turn We have begun with a turn of the labour market. So over the past seven years, we have managed to realise our goal to achieve each year an average growth 2% higher than in the European Union, the euro area, Germany, and Austria. Average growth. This is the catching-up itself. This involves many things, it shows results; all of our turns are included in it. The Central Bank programmes have resulted in a longterm change in the credit market and in the financial market in general, and we think and see such trends that the Central Bank has been able to contribute to both the growth and the catching-up trajectory.

If a central bank takes its mandate seriously and, after taking care of price stability, is able to ensure the stability of the financial system as well, then it arrives to the task of supporting the economic policy – which means growth and employment. We are after a successful stabilisation period; after the budgetary consolidation, we have realised a successful economic stabilisation. An essential area of this is the current account. The countries which operate with high current account deficit in turbulent times find themselves in a very difficult position. Budgetary turn The budgetary turn of 2010 was not an easy task. It is still ongoing. Why? Because of the tax system. And because of the motivational turn. As well as all the other government and central bank measures. The budget deficit has been reduced to a permanently low level in Hungary. This is a huge asset. It has become sustainably and permanently low. We expect to completely get rid of it by 2021, just as of foreign currency loans and the net external debt. Net external debt level of a country indicates its level of vulnerability. If we are able to significantly reduce it – this red line represents Hungary –, it means that the country is alive. The dynamic, vivid red line is converging to zero, and according to our estimates, we will manage to make the Hungarian net external debt disappear by 2021. Hungary is currently among the less vulnerable countries. A competitive turn is necessary in Hungary In 2010, Hungary was among the top 10 vulnerable countries. Greece was second. From this group, we have made it to the promising green group, the category of less vulnerable countries. Thus, the Hungarian Model have done well so far. I think that the high fiscal political turn was followed by a growth turn, which led to a catching-up turn; we have maintained the new formula of balance and growth and embarked on the path to competitiveness, but we are only at the beginning. Therefore, a competitive turn is necessary in Hungary. This is where we must stop for a moment and realise that we have been sailing forward in a relatively peaceful period of business cycles until now. Seven years of catching-up is behind us. However, we plan to continue to catch up for many more seven-year periods.

HUNGARIAN MODEL 2.0

We think that we need to identify 12+1 new factors, and look for and find solutions for them. Trade war Such a factor is the trade war between the United States and China. In our opinion, in contrast to the American and then global financial crisis beginning in September 2007 and breaking out in October 2008, today’s new challenges and trends signalling a new threatening crisis come from the real economy, rather than the financial sphere. In 20082009, the known factors of the US real estate market rocked the foundations of the financial system, which, of course, further manifested itself in the real economic crisis and many other ways. Today, for multiple reasons, the real economy seems to face many such challenges as the financial system did around 2008. And from there, it can spread to the financial sphere because the real economy is not independent from money, and asset prices may be affected, which are included in banks’ books. In other words, the financial system

could be affected by a slow-down, halt, or possibly crisis stemming from the real economy. Let us examine these threats. The developments that now seem to be a trade war between the United States and China obviously extend beyond the scope of commercial wars, such as the Japanese–American or American-Japanese trade war in the ‘80s. This is more than that. It is the clash of an existing global power and a rising global power in many fields of life. Let us look at a couple of areas. It is more than a trade war because it manifests itself not only in trade but other areas as well. It has started from trade as there were tariffs in trade between China and the US before the war. Tariffs stood at 2% and 4% in January 2018. By contrast, according to a quick calculation, they will increase to 21% and 22% in October 2019. This is a large increase and it definitely signals a trade war. But it also implies more because the centre of gravity of the world economy is also measured by wise scientists, who claim – and we know these analyses – that the centre of gravity of the global economy has migrated to Asia. So what we can see today is the clash between the Western world and the Eastern world. A

HUNGARIAN MODEL 2.0

clash of the developed West and the emerging East, while the centre of gravity of the world economy is already in the East, in Asia. However, if we go beyond this aspect, we can see that behind the context of trade war, a very serious technological war is being fought. As the new technological revolution, perhaps the fifth such wave since the industrial revolution brings with it new technologies in the field of digitalisation, biotechnology, the use of raw material, and energy, which fundamentally change the functioning of the economy. Whoever seizes the new technology, will win in the end. Perhaps the 5G battle is fought over this. This can also seem to be a trade war, but it is much more than that. This struggle is the fight, the war for new technologies. The functioning of the economy, of the world economy is profoundly changing in these years and decades. J. P. Morgan said during the hearing of the Congress in 1912 that “Gold is money. Everything else is credit”. How right he was. But this implies many things, for example the fact that the Central Bank

of Hungary has increased Hungary’s gold reserves tenfold. But it also follows from this that the nature of the financial system is changing. For example, information will become very important because “the new gold is data”: everyone’s data. We believe that we are progressing towards a new financial system and a new monetary system. The Petrodollar era, which began perhaps after the decision by Nixon in 1971 and developed in the wake of the two oil price explosions of the ‘70s, is being replaced by something else: naturally by digital money as 90% of the world’s money is digital today, but it is also information; that is, it is energy-based and perhaps a little bit gold-based. New money, new forms of money are evolving. A different financial system and a different global money or forms of money are being born. This is a great change compared to the past decades. Brexit The second factor is the challenge posed by the United Kingdom. We must admit that the United Kingdom is a very strong actor in the European

Union, beyond the fact that it is a political ally of Hungary. Brexit is a threat to Europe as a whole, the euro area, but also to Hungary. A study by the Bank of England, the British central bank shows the threatening effects. Although these forecasts were partly revised and slightly lessened by a new study published today in the morning, they are still not very promising. Thus, an English, British, or UK exit – which might continue and not be the last – can severely affect our sustainable catching-up trajectory. Not directly through the British-Hungarian foreign trade but through the change of the financial and economic relations between our key partners and the United Kingdom. Italy and Germany Italy We, at the Central Bank, think that perhaps the euro’s fate will be determined in Rome, and the European Union’s fate in Paris, but it is certain that Italy is a key actor of the European Union and the euro area. The banking system in Italy is also facing troubles. It is not uncommon that there is a constant change of governments, but Northern Italy has still

managed to catch up. There are two countries within one, and public debt is high. Italy has had 43 governments in 73 years. Not a few. The country consists of two parts. One of them, the northern part delivers an economic performance which is over 120% of the EU average, while the southern part’s output is only 70% of the Union average, which is a large difference. Indeed, the composition of the country, i.e. it is made up of two parts is, in itself, a threat to the euro area, and public debt is 132% of the GDP. However, it is an unusual new challenge that the German economy is having problems. German politics and business leadership has made many serious mistakes over the past 5-8 years, including the decision on the fast phasing-out of nuclear energy and the fact that some large German financial corporations believed that they could conquer America and that Deutsche Bank, for example, could beat Goldman Sachs on Wall Street. This is an interesting romantic dream. As we can see the fate of Deutsche Bank, looking at the evolution of stock prices, we notice that this romantic dream is very expensive not only for Deutsche Bank and the German finan-

HUNGARIAN MODEL 2.0

cial system but also for everyone else in Germany. There are many more such mistakes; during the automotive industryâ&#x20AC;&#x2122;s conservative and, so to speak, cunning operation, mistakes were made which now blow back on the German economy. These are cyclical and structural factors at the same time. The Germans have not yet found a good solution to the transforming automotive industry. Internal demand is moderate due to historical reasons, the German character, and the German economic policy, the Landesbank system is vulnerable just as Deutsche Bank is, and Germany lags behind in terms of digital infrastructure development. Hungary has a better and faster internet service than Germany. It is a rather interesting difference. Central and Eastern Europe And our fifth challenge, the shadow over us that our region, the converging V4 and Central and Eastern European region is very closely linked to Germany used to be a success factor. It was a huge benefit. We has become partners of the advanced German industry, which was a huge advantage. Nobody believed that this could be realised because earlier,

others were the allies of the German industry. However, these trends also mean that in 6-9 months, a German slow-down, and particularly that of the German automotive industry or other types of difficulties will spiral into Hungary. We have never believed, and even less so today that whatever happens in the world will stay out of Hungary. For example, that the problems of the German economy will not appear here. But it is clear that the entire region is highly dependent on the German economy. There is a sixth factor, namely that Hungary, along other regional countries such as Czechia, is open in economic terms. Hungary's domestic market is still weak, therefore it has focused on foreign markets. This has been a driver of convergence so far. However, problems may arise in case of a slow-down or even reversal in global trade and capital. There might be problems. Let us note that the concentration of Hungarian export is quite high. What has been our advantage should be preserved. There are many positive signs: South Korea, for instance, has chosen us in the field of new high-tech technology. There are a lot of good signs, yet the export rate in

Hungary’s catching-up model, the Hungarian Model 1.0 is higher than in other countries of a new level. The achievements of the Eastern Opening could be threatened if the American-Chinese dispute persists. So the rivalry affects the Eurasian integration and particularly the relations between China and Central Europe. We have managed to increase Hungarian exports to China one-and-a-half times since 2010, while our balance has improved since our Chinese import has not grown so dynamically. Can the Asian opening be maintained in the age of Asia? We must do everything to keep it up. But to do so, we need new tools, a new way of thinking. The eighth challenge is that the room for manoeuvre of the European Central Bank has become rather restricted. President Draghi has achieved a historical result by protecting the euro, practically on his on. He pushed the sentence “Whatever It Takes” through the media and the financial markets, and previously through the Governing Council, insisting that the euro’s survival is worth everything. Because not everybody is happy to see that Europe has a common currency which might rival the dollar. The European Central Bank went as far as it could. We will soon see how our friends in Frankfurt decide, but the European Central Bank’s margin for manoeuvre is surely less than that of the partly private Federal Reserve, acting as the central bank of the US. Not to mention the fact that the cooperation between governments and central banks is essential in managing crises or difficulties. We witnessed as the United States of America managed and put an end to the American financial crisis in 10-11 months, from October 2008 to mid-2009. They managed to do this because the government and the FED cooperated in the closest possible way. Have we seen such a close cooperation between Brussels and Frankfurt? Unfortunately not. Do we see the necessary room for manoeuvre in the European Union or the whole of the euro area? Christine Lagarde, for example, has done an excellent job at the IMF, and earlier as the Minister of the Economy and Finance has implemented a very brilliant transformation at the Monetary Fund – in addition to helping and advising us, Hungarians very wisely. Christine Lagarde’s more recent declaration has made it clear that she will pursue President Draghi’s policy in the European Central Bank, and– although we should wait some time –, she has called for the beginning of fiscal stimulation. However, there is a

country which consists of two countries, and France is, in fact, a group of countries in this sense. Some countries have a margin for fiscal manoeuvre, but there is no intention for it. This is, for example, Germany. And then there are those which would very much like to stimulate, and would do anything for it, but has no financial margin. They are not allowed or simply they do not have it. Such are the yellow states of the southern euro area. Today, much of the European Union, and the euro area within it, is in a potential crisis; they cannot coordinate the monetary and fiscal, the budgetary and the financial policy, and cannot act jointly as much as they should. The tenth challenge is that there are vulnerable countries in our environment as well. Turkey is not that far and Ukraine is very near. Argentina and Brazil are far, but whatever happens there affects the forint’s currency, and of course, there are others. Emerging economies and markets have emerged and become significant to the extent that they can now influence the trends and cycles in global economy. Of course, there are business in-

“Distant water will not quench a fire nearby.” terests in the background, but it is just so. In Turkey, dependence on external sources is strong, growth perspectives are getting worse, there are domestic political tensions and, of course, geopolitical risks as well. Turkey has excellent potential, but it is vulnerable in a more difficult global economic situation. The eleventh area is naturally the Arab region and oil. One fifth of global oil production and one third of gas production passes through the Hormuzi Strait, which is a lot. The rate is high. It is a dangerous region. We try to stay on top in dangerous waters, too. These are dangerous waters, and even if we are not directly there, everything that happens affects us. And of course, climate change, which exists, progresses, accelerates even if the world has been in a 250-year-long warming-up period since 1850, which, however, is deepened, complicated, and accelerated by human activities. The effects of cli-

HUNGARIAN MODEL 2.0

mate change are here with us. I think that we should accept the fact that today we exploit the Earth to a seven-tenths ratio. So the regeneration of resources is not as fast as it should be. This year, it was on June 29 that the exploitation of Earth exceeded a certain extent. And this day arrives earlier every year. And the economic scene, the worldâ&#x20AC;&#x2122;s economic sphere, along with the business world, does not see the contexts that these factors create. The technological revolution is very fast. The revolution of money is very fast. In China. A high-level financial meeting was held in Beijing this spring, and the owner and president of one of the largest Chinese financial organisations was sitting next to me, telling me that we would decide on all the credit applications within five minutes. On phone. And then he whispered to me as we were leaving the stage that it would be five seconds actually, he just did not want to say it. It will be five seconds. Well, I was already a bit shocked by five minutes, too. I am respectfully calling on the representatives of the Hungarian banking system to consider to decide on all credit applications in five days as a start. The Central Bank of Hungary would be a partner in this.

Global changing economics The point of global changing economics is that we do not understand inflation. Raymond Kurzveil, Googleâ&#x20AC;&#x2122;s creative director claims that today there is minus inflation in the world as a result of the Moore law in effect since 1965. He claims it to be -1.5%, but it maybe higher today. So when the deposit interest rate of the European Central Bank is -0.4%, it can also be the real interest rate. We have entered the age of negative interest rates. Is this really a problem in the developed world? Fortunately, the situation is different in Hungary. In the advanced world, however, negative interest rates are becoming very common. What if there is some percent negative inflation? And negative interest rates are not absurd, unnatural, they are extraordinary, and unpleasant. But what if they convey a message from another world? Several traditional contexts of economics have lost their significance: the Quantity theory of money. The Phillips curve just changed at first, and then it is no longer valid. Demography has strengthened. The new globalisation theories have strengthened, but they do not

57th Itinerant Conference of Economists in Nyíregyháza

include the new economic relations arising from digitalisation. Digitalisation exists, it has just not appeared in our thinking yet. “Distant water will not quench a fire nearby.” Say the Chinese and they know why. It would be bet-

ter if the water was closer or the fire was farther away. So we think – and I would like to just mention this now regarding the Hungarian Model 2.0 – that we will need to make continuous progress in four areas, should a difficult time come in terms of the sustainable Hungarian catching-up. The first

HUNGARIAN MODEL 2.0

area, which the Hungarian Central Bank has summarised in a competitiveness programme with 330 items, is the competitive turn. We have to discuss, fight for, and realise each and every items. We need a competitive turn. And we think that we should make progress in six areas: knowledge, health, innovation, government, financing, and work. Should a storm hit, these are remote waters. They are not sufficient; we would also need a general business cycle stimulating programme. The stimulation of the general business cycle has already been started with the growth bond programme. We have highlighted this as a strong reaction to the fact. In my opinion, we would also need to transform the use of EU funds and revise the budgetary reserves. But we think this is still not enough. Industries can still face problems. In Germany, industries have got into trouble. For example, the automotive industry. And if industries face troubles, the general business cycle boosting is not enough. Not even the competitive turn is enough. Targeted industry boosting steps become essential. Not only because of the threats but also because of opportunities. High-tech industries create huge opportunities in the service

sector in Hungary. Green technologies should be mandatorily introduced. And knowledge-intensive industries and value-creating abilities should be strengthened. In addition to these, we must take a fourth series of steps. We must reinforce every favourable labour market position. If there are jobs, there is everything; the greatest change in Hungary has taken place in employment since 2010. And there is more as there are steps to made; for example, families and workers living abroad should be attracted back to Hungary. However, we think that increasing activity, expanding employment, and raising the purchase power of wages can be part of such a labour force market programme. To sum up; the Hungarian Model 1.0 has been very successful since 2010 and, in terms of the growth turn, since 2013. It has been successful and sustainable because it ensures balance and growth at the same time. But this model needs to be further improved, and we are proposing the Hungarian Model 2.0 between 2019 and 2030, starting the sooner the better. And I have indicated the directions, although this is not final, of course, we have just begun. Thank you very much for your attention.

The Belt and Road Initiative

Author: Viktor Eszterhai

The One Belt, One Road (OBOR) or Belt and Road Initiative (BRI) – which are short for the Silk Road Economic Belt and Maritime Silk Road – was announced by Xi Jinping, President of the People’s Republic of China, at Nazarbayev University, Kazakhstan in September, 2013. By now, the concept has covered a the vast majority of the country’s projects abroad as a kind of umbrella, and has become the flagship initiative of Chinese foreign policy. Not surprisingly, One Belt, One Road is in the focus of increased domestic and international attention. Its historical significance lies in the fact that China has openly started to transform international economic and political relations, certainly exerting a major influence on the existing international order and the environment of the countries concerned.

ANTECEDENTS The announcement of One Belt, One Road can be regarded as a sign of a drastic turnaround in China’s foreign relations. The foreign policy period characterised by keeping ‘a low profile’, which was announced by Deng Xiaoping and primarily aimed at strengthening the country’s major power status seemingly complying completely with international rules and regulations, seems to be over. The Belt and Road Initiative reflects that China regards itself as a major power making the rules, instead of a player complying with the rules. From a certain perspective, the shift can be regarded as an inevitable process as by the 2000s, there was an increasing contradiction between China’s economic might and the role it undertook in international politics. This tendency prompted China’s leadership to reconsider the country’s place in the world. The Belt and Road Initiative fulfils a kind of umbrella role in China’s increasingly active foreign policy, also serving as a means of conscious brand-building and raising the awareness of Xi Jinping. DEFINITION OF ONE BELT, ONE ROAD Although several studies and newspaper articles have been published about the Belt and Road Initiative in recent years, there is still a lot of uncertain-

ty about its actual content. It can be best defined as a draft initiative aiming at redefining the system of relationships between Europe, Asia and Africa. As it is stressed by Chinese official documents, it is not a plan, merely just an initiative, as there are no clearly identified stages or a well-defined scenario of its implementation. The projects and ideas related to the initiative can be flexibly adapted, and the Chinese party also hopes that other states, organisations and foreign companies will also take an active role. One Belt, One Road appears as a conscious analogy of the ancient Silk Road, which used to link the major civilisational hubs of Eurasia and Africa on land and sea as an extensive trade network. The explicit goal of One Belt, One Road is, in addition to promoting deeper economic ties, to create new channels for the flow and exchange of information, knowledge, thoughts, ideas, arts and technologies, just like the ancient Silk Road did. The initiative intends to connect the regions which are located close to each other geographically, but have only limited contact due to the dominance of maritime transport-based world trade. Although the emphasis may seem to be on overland connectivity, sea links also form an important part of the initiative, which is well reflected by the 21st Century Maritime Silk Road, a branch of One Belt, One Road.

The entire concept is focussed on connections or connectivity; official state documents highlight five ways of them. The first one is policy coordination, which means the harmonisation of the policies of certain national, regional and international institutions.

Finally, strengthening people-to-people relationships also has a prominent role, laying great emphasis on collaboration in culture, research and development, providing grant opportunities and exchange programmes for students, experts, researchers, promoting tourism, etc.

The second one means building physical infrastructure, which includes connecting new and existing networks of roads, railways, oil and gas pipelines and optic cables, completed by cooperating industrial parks, logistics hubs and sea ports, redefining the traditional economic relations between the manufacturing hubs, markets and raw material sources of this vast region. The third one is ensuring unimpeded trade, which, at the beginning, means the elimination of bureaucratic barriers to trade, but also includes the extension of free-trade zones in the long term.

Based on the five types of connectivity, One Belt, One Road can be best grasped as a complex network, which can be expanded extremely flexibly in space. The physically identifiable or future infrastructure network, however, has specific, distinguished channels and nodes, which concentrate in the so-called major economic corridors. The six designated continental corridors include the following:

The fourth element of connectivity is financial integration, the aim of which is the harmonisation and common regulation of financial services, and the exchange of the currencies of concerned regions.

â&#x20AC;˘ The New Eurasian Land Bridge Economic Corridor is an economic corridor already in use, which is based on existing railway and road links. Economic relations are concentrated at crossings established on the Kazakh-Chinese border (Khorgas, Alashankou), and goods reach the European Union via Russia, Belarus and Ukraine, using the former Soviet infrastructure network.

• Many projects of the China–Pakistan Economic Corridor are under construction. The developments announced in a value of more than US$60 billion by 2017 include the development of a road link between China and Pakistan (Karakoram Highway), laying optic cables between the two countries, upgrading major railway lines, constructing motorways, developing industrial and logistics hubs as well as ports, and significant energy investments. Pakistan’s Gwadar Port is planned to have an important role in economic relations directed towards Africa and the Middle East. • The China-Indochina Peninsula Economic Corridor: in December, 2014, the countries concerned agreed on building an up-to-date transportation network, industrial co-operation, coordination of a sustainable socio-economic development, and the establishment of a fund required to finance these. The programme is related to the trans-national traffic corridor , which is planned and partly being built on the Indochina Peninsula with assistance from the Asian Development Bank, including, for example, the Nanning–Hanoi railway line. In 2017, work began in the Laos section of the Kunming-Singapore railway track, providing the main transportation axis of the region, but the fate of the entire section is still uncertain. • Concerning the Central Asia–West Asia Economic Corridor, at the China-Central Asia Cooperation Forum held in June, 2015 the parties adopted a plan to implement the corridor, which, in the first step, means upgrading the existing transport network and linking missing sections. In addition to Central Asian states, China is also in negotiation with Iran and Turkey. China hopes for establishing an uninterrupted, high-standard railway link between China and Europe by 2030. • The China–Mongolia–Russia Economic Corridor provides the three countries involved with an existing link through the connectivity ensured by the Trans-Siberian railway, and also has a significant role in Europe-bound freight rail transport. In the future, road developments (e.g. in relation to the Mongolia Steppe Road programme) are expected to take more priority. • In May, 2013, India and China signed an agreement to implement the Bangladesh–China–India–Myanmar Economic Corridor, and then in December,

2013 the first working group held a meeting and agreed upon required infrastructure developments (with the Kunming–Mandalay–Dhaka–Kolkata line being the main direction). However, the implementation of the elements of the economic corridor is in significant delay, one of the main reasons of which is India’s ambivalent attitude. The economic corridors of One Belt, One Road well reflect China’s potential to radically transform relationships in Asia with the implementation of the initiative, have closer ties with particular regions, increasing its own role of a continental leader. Furthermore, One Belt, One Road may also be capable of bringing Europe and Africa closer to China. CHINA’S INTERESTS An initiative of such a magnitude and with a timescale of decades can be only regarded as relevant if there are well identifiable goals set by China behind it. Numerous economic, domestic and geopolitical interests can be identified behind One Belt, One Road. Economic goals It is an important effort of China to diversify its energy and raw material transport routes. As a result of a dynamic economic growth in recent decades, the country is in need of increasing raw material imports, most of which arrive on sea routes. One of the most significant import products is oil, 70-80 per cent of which currently arrives in the country through the Strait of Malacca and the territorially disputed South China Sea, making China extremely vulnerable strategically. Therefore, the government is seeking to establish alternative lines of infrastructure covering several regions and transport routes within the framework of One Belt, One Road. Second, through the implementation of the initiative, by expanding its network of relationships, China can have access to new markets, primarily relying on a rapidly growing Asian and African middle-class, which is also an important viewpoint. Third, the projects implemented within the framework of the initiative represent excellent investment opportunities for the country. In recent decades, the export-led economic model has resulted in an enormous trade surplus (US$3,000 billion), which has been mostly spent on purchasing low-interest US

The Belt and Road Initiative

Map. Economic corridors of One Belt, one Road. (edited by author)

Treasury securities. One Belt, One Road offers China’s government an opportunity to diversify investments and seek potentially more profitable projects. Fourth, due to foreign imports failing because of the financial crisis in 2008, China’s economic growth could be sustained by the government by introducing a large-scale economic stimulus package, which has been successful, but produced overcapacities in companies related to infrastructure development and the construction sector. Although the government cannot completely avoid a socially painful cut in these capacities, One Belt, One Road enables China to export a part of them. This also promotes Chinese companies’ presence abroad and their strengthening, which is in line with certain earlier goals (Go Out strategy). Fifth, One Belt, One Road promotes the structural transformation of the Chinese economy, a key element of which is that the industrial sector should produce as high added value products as possible. Increasing wages and more rigorous regulations make China shift towards innovation-led, high-standard industrial production, which is supported by the government’s modernisation programme focussing on smart industrial production, that is the intertwining of information technology and manufacturing

(Made in China 2025). In order to ensure a demand for these products, Europe has an important role as a market. Here, however, China must compete with the companies of developed industrial countries, which means that manufacturing high-standard goods is not enough anymore; they should be delivered to customers cost-effectively and rapidly, which makes infrastructure (primarily railway) investments of One Belt, One Road essential. Sixth, the initiative promotes the internationalisation of the Chinese Renminbi (RMB). The Chinese central bank seeks to sign currency swap deals with participating countries, which, hopefully, will increase the weight of the Chinese currency in cross-border trade. In a longer term, the Chinese concept is that RMB is used as a reserve currency in an increasing share by the countries. Furthermore, China is expected to provide credit (at least in part) in RMB for its foreign infrastructure projects, increasing the international role of the currency. Domestic policy goals One Belt, One Road is also related to certain domestic policy goals of the Chinese Communist Party, above all, Xi Jinping’s ‘Chinese Dream’ programme, and China’s ‘Two Centenaries’ goal (achieving a moderately well-off society by 2021, the centenary of

the founding of the Communist Party of China; and a well-off and strong China by 2049, the centenary of the proclamation of the People's Republic of China). Both focusses on restoring the former strength and international role of the country, and the grand vision of One Belt, One Road is an integral part of it. In addition, the Chinese government claims that the initiative promotes a socio-economic development programme aiming at developing the underdeveloped western and central provinces of the country, primarily their centrally located cities. The government considers improving economic opportunities to be capable of decreasing social tensions in areas inhabited by minorities, reducing the threat posed by religious extremism, terrorism and separatism (the ‘Three Evils’ in Chinese terminology). Foreign policy and geopolitical goals The Chinese government firmly rebuts any assumptions suggesting that One Belt, One Road has geopolitical goals. First of all, the government regards any comparison with the Marshall Plan as wrong, referring that China does not intend to export its own economic, political or ideological model (‘the principle of non-intervention’), as opposed to the effort of the United States after World War II, also emphasising that the initiative is open to all interested countries. Nonetheless, by implementing One Belt, One Road’s network based on ‘five connectivities’ and covering three continents, China – together with the countries involved – basically creates “hardware” for a new international order. Asia, Europe and Africa’s deepening integration may change the geopolitical foundation of the current architecture of international order, which is based on maritime trade and the major powers’ – currently the USA’s – control over maritime trade routes. Eurasia’s convergence definitely challenges the international order based on the dominance of the United States. Creating a new network, however, is not the only

way of how China affects the established international order, as China started to fill up the framework represented by One Belt, One Road with new institutions. These include transregional institutions setting a new tone for relationships between specific regions and China, and the ‘16+1 Cooperation’ promoting the cooperation between Central-Eastern Europe and China, but the financial institutions of the Asian country, such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund, also have received special attention. The Belt and Road Initiative has another important foreign policy goal. According to Chinese ideas, it is capable of improving China’s international reputation and increasing its “soft” power. The target areas of this pursuit are developing countries for which One Belt, One Road creates modern infrastructure, investment and trade opportunities. SUMMARY Since the announcement of One Belt, One Road more than seventy countries have expressed in some form their intention to participate in its implementation. The interest in the initiative is well symbolised by the success of the Belt and Road Forum held in Beijing in May, 2017, which was attended by a total of 130 states (including 29 heads of state) and 70 international institutions. Thus, One Belt, One Road is a great vision which will affect almost all countries to some extent, inevitably exerting a significant effect on international relations. The initiative is obviously driven by China’s definitively changing foreign policy practice, which is expected to determine the relationship between the giant of the Far East and its environment for decades. China, however, must consider criticisms in order to successfully implement it, so that it should not remain only China’s vision.

Geography of Rail Transport: the Eurasian Economic Corridor

Geography of Rail Transport: the Eurasian Economic Corridor Author: László Gere

The distance between China and Europe on land is some 11 thousand kilometres (by contrast, the length of the maritime transport route through the Suez Canal is more than double, roughly 24,000 km). The volume of rail transport has sharply increased in recent years. In the first half of 2017 for example, it rose by 144% compared to the same period in 2016. According to the data of the China Railway Corporation (CRC), more than 3,000 container trains had run between China and the EU between January and November, 2017.

A study from 2017 suggests that the volume of rail transport between China and the EU may double in the next ten years (by 2027). The latest data reveal that the volume of rail freight transport between China and the EU was 370 thousand TEUs in 2018, an increase of 35 per cent compared to 2017. A Kazakh estimate published in January, 2018 forecasted a traffic of only 340 thousand TEUs, thus we can say that the increase exceeds expectations. The east-west imbalance has also decreased to some extent: the number of westbound trains grew by 37 per cent, that of eastbound trains (to China), however, grew to a much larger extent, by 90 per cent. About 75 per cent of the total traffic volume was routed via Kazakhstan, that is, this is the extent that the route we are examining was used in the China– Europe communication. Although the volume of rail transport is minuscule compared to maritime transport, the change in the tendency of cargo delivery is most remarkable. Ten years ago, direct freight services from China to Europe did not exist, while today they regularly connect more than 30 Chinese and European cities.

CHINA Rail transport plays an important role in China. In addition to roads, considerable resources have been dedicated to the development of the rail network and the reduction of delivery times in recent years. Capacities released on traditional lines by the construction of a high-speed railway system can be used in freight transport. Today, China has the second longest national railway network in the world, with some 124,000 km (preceded by only the USA, with a network of 300 thousand km). Some 80 thousand km of it are electrified lines. The length of traditional railway lines is 102 thousand km, and there are 29 thousand km of high-speed railways. Although maritime transport has a commanding lead in freight transport (seven of the world’s ten largest container ports can be found in China: Shanghai, Shenzhen, Ningbo, Hong Kong, Guangzhou, Qingdao, Tianjin ), it is much harder for Inner China to transport goods to the coast; instead, using rail transport seems to be a more rational solution in many cases (primarily for product categories where the time factor counts).

Development of rail freight transport between Asia and Europe from 2014 to 2016 # trains (left) and TEU (right) Source: https://uic.org/IMG/pdf/corridors_exe_sum2017_web.pdf

.4% 0 14

R+ G CA

1,777

815

~65,000

308 2014

~145,000

~25,000 2015

2016

One of the major centres of trade in Eurasia is Changsha, the capital of Hunan province, which has no river or sea ports. Therefore, rail transport is of major importance for the city, which is illustrated by, among others, the fact that it was the third time in 2018 that the China International Rail Transit Industry Expo had been organised here, with some 200 exhibitors and 20 thousand visitors . The development opportunity of the Eurasian Land Bridge Economic Corridor appeared in 1996 in China’s long-term strategy of the Chinese government as one of the possible routes of strengthening European relationships. It had been working as an important economic corridor well before the announcement of the Belt and Road Initiative in 2013, just like many other transport development projects associated with the BRI. KAZAKHSTAN Kazakhstan is a land-locked country in Central Asia, with a vast surface area and a low population. Transport links have a prominent role in the development of both domestic and international trade, which primarily means rail connections. The country has a strategic position between China and Europe, which greatly influences its economic and transport development plans and prospects . In 2016, some 500 thousand tonnes of freight went by train across the country on the route between China and the EU, up from next to nothing before 2013. Kazakhstan’s railway network is determined by Russia’s proximity, and the Soviet Union’s inheritance. Most of the network was constructed under the Soviet Union,

2014

2015

2016

broad-gauge (1,520 mm) tracks – which is also the Russian standard – were built; today, the entire railway network has a broad gauge. It means that although the volume of rail freight transport from Europe to China has grown significantly in recent years, breaks of gauge are still significant cost and time factors (cargos must be transferred to other trains, or specific wagons designed with modular chassis systems must be used), which hinders the competitiveness of Eurasian rail transport. Thus, despite more free capacities available in Kazakhstan’s rail transport, there are fears that they will be never fully used. The construction of the country’s first, 190-km-long railway line began in 1896, as part of the Trans-Siberian Railway, and was eventually opened in 1904. Its main aim was to connect major cities of Kazakhstan. Today, the entire railway network of the country is more than 16 thousand km long, a quarter of which is electrified. Two-thirds of both passenger and freight transport takes place by rail in Kazakhstan. Since an agreement was signed between Kazakhstan, Russia and Belarus in 2011 to eliminate customs tariffs, gauge breaks create the most formidable barrier to free passage on the route of the Eurasian Land Bridge Economic Corridor, on the China-Kazakhstan border and the Belarus-Poland border. Therefore, China spent great resources early, before the announcement of the Belt and Road Initiative, on accelerating transit over the Kazakh border, which has manifested in developing the Khorgos dry port and free trade zone (truly enough, there had been plans to standardise the Kazakh section of the railway, that is, to build tracks with the standard gauge, but this has not happened yet and is not expected to happen

Map of railroads in Kazakhstan. Source: wikimedia commons.

in the near future ). Thanks to developments, transferring the cargo of an entire train from standard gauge to broad gauge takes only 47 minutes on average. Trains arriving from China can enter Kazakhstan at two points: one of them is the border station at above-mentioned Khorgos, and the other is Dostyk, which has also undergone developments to increase its capacity in recent years, as a result of which it has been capable of handling transit volumes up to 25 million tonnes since 2015. Freight volumes (meaning trade between the two countries and not transit freight volumes) between Kazakhstan and China amounted to about 14,000 tonnes last year (2018), which indicated an increase of 38 per cent compared to the previous year. Some 8,500 tonnes of cargo were transported to China by Kazakhstan, which is an increase of 54 per cent compared to 2017. Kazakh and Chinese railway administrations have projected traffic volumes of more than 15,700 tonnes in 2019. From Kazakhstan’s perspective, container traffic between China and the EU doubled in 2017 compared to the previous year: while in 2016, the China-EU-China transit freight container traffic amounted to 105,000 TEU, it was 201,000 TEU in 2017, and a similar growth, 340,000 TEU, is expected in 2018.

In addition to the line passing through Russia, Kazakhstan’s plans include the construction of a southern corridor, which would leave the country via Uzbekistan and Turkmenistan, and would reach the European Union through Iran and Turkey (this one coincides with the route of one of the economic corridors of One Belt, One Road, the China-Central Asia-West Asia Economic Corridor ). In recent years, Kazakhstan has completed several railway development projects, which are considered to be specific parts of the BRI. These include the development of Khorgos terminal, the Zhezkazgan-Beineu railway, the Arkalyk-Shubarkol railway and the Almaty1-Shu railway, building a new railway hub and a train station in Astana, a logistic terminal in Shymkent and Astana, and the modernization of Aktau and Kuryk ports. There completion have cost more than US$2.7 billion in total. RUSSIA At the end of the 19th century, the plan to establish a rail link between Europe and the Far East had already been an important strategic goal for the Russian Empire of the time; the building of the Trans-Siberian Railway, finished eventually in 1916, was commissioned in 1891, by Russian Tsar Alexander III. The railway line constructed served Russia’s vital geopolitical goals, as

Geography of Rail Transport: the Eurasian Economic Corridor

Indicative map of railways in Russia. Source: wikimedia commons.

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Voronež

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Nižnij Bestjach

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Samara

Ufa

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Lesosibirsk

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Novosibirsk

Astrachan'

Krasnojarsk

Barnaul Almaty

Baku

Almaty Taškent

the journey to East Asia, seeming inaccessible before, took only a few weeks (it is still the longest direct rail route in the world) . Although the line has been continuously developed in recent years (the double-tracks system has been built and the entire line has been electrified ), and it is officially a part of China’s Belt and Road Initiative (that is, its China-Mongolia-Russia Economic Corridor ), reduction in journey times and a sound management of freight transport would require further developments. Russia has the world’s third longest railway network (the entire network is almost 90,000 km long), and its rail freight transport volumes are also the third largest in the world, following the United States and China (it is one of the countries in the world where rail freight transport has a more important role than rail passenger transport). For Russia, due to its vast expanse, the ability to transport freight and passengers across immense distances has always been an essential economic (and strategic) viewpoint. Railways accounts for nearly 90 per cent of the country’s freight movements, excluding pipelines (calculated in Freight Tonne Kilometres). The fully state-owned Russian railway company (Российские железные дороги – RZhD) is one of the largest single contributors to Russia’s GDP: in 2017, its GDP contribution was 1.4 per cent, its revenues amounted to

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Nižnevartovsk

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Volgograd

Novorossijsk

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Harbin Beijing Vladivostok

Pyongyang

over RUB2,000 billion. In addition, it is also the largest employer of the country, with about roughly 735 thousand employees in total in 2018. Rail transport between Asia and Europe mainly concerns the line of the Trans-Siberian express within Russia. More than 50 per cent of Russia's foreign trade and transit freight is carried on this line. Its importance is also reflected by the fact that its role in connecting Europe and Asia is considered to be a priority by several international organisations, including the UN. Its extension towards Europe has become known as International Transport Corridor No.2 in the Russian rail network system (from Moscow to Berlin via Minsk and Warsaw). The continuous development and maintenance of the line is a priority of Russian transport development, the country launched a development plan with a financial envelope of RUB50 billion (~USD750 million), which is in accordance with the goals set in the Russian rail development plan until 2030 (major goals include increasing capacities, harmonising multimodal transport, cost cuts, managing international transport in a standardised system, and reducing journey times through the development of logistics systems). 15 per cent of total freight train traffic between China and Europe is carried along Russian routes. Therefore, the country has developed its infrastructure in a val-

ue of about US$43 billion in Russia’s Far Eastern regions near China in recent years to support new connections to be established between Asia and Europe. Developments are definitely needed, as freight transport from China has been in an uptrend since 2013, and, according to Chinese rail officials, the capacities of the existing Russian infrastructure will not be able to meet growing needs. The freight transported from China through the two economic corridors also passing through Russia amounted to 350 thousand TEU in 2016, and 415 thousand TEU in 2017, which well illustrates the pace of growth (500,000 TEU has been projected for 2018). Industry experts think that – in addition to lacks of capacity – high transport

Indicative map of railways in Belarus. Source: Belarus - Railway and Logistics Strategy : Activity 1 - Broad Assessment of Belarusian Railways. World Bank, September 2017. Appendix 2. http://documents.worldbank. org/curated/en/320641546839741457/pdf/ Belarus-Railways-Broad-Assessment-2017.pdf

costs may create barriers to further growth: the cost of freight transport between China and Germany is roughly US$2,200/TEU, while by rail, it is US$4,500/ TEU (truly enough, delivery time is a quarter/onethird of that of maritime transport). The leadership of the Russian railway, however, is optimistic about the future of freight transport, as figures obviously show permanent growth. BELARUS The Belarusian railway network was launched in 1862, when the Hrodna-Parečča section was opened. Currently, it has a railway network of over 5,500 km, but only 900 km of it is electrified. State-owned Belarusian Railways (Беларуская чыгунка – Bch) provides all rail transport services in the country, annually transporting more than 140 million tonnes of cargo and 90 million passengers. Belarus has an extremely advantageous geopolitical position as it plays a central role in the rail connection between Asia and Europe, and additionally, it is also an important transit hub, as it is at the junction of broad and standard gauges on the Belarus-Poland border. Transit transport between Europe and Asia (primarily China) accounts for one-third (30 per cent) of total freight transport. There are three border checkpoints: Brest-Terespol (the most important on the China-EU route); Bruzgi-Kuźnica Białostocka; and Svislač-Siemianówka. Regular freight trains run via Belarus between the following terminals: Chengdu– Łódź, Changzhou–Hamburg, Chongqing–Duisburg, Leipzig–Shenyang (“BMW”), Duisburg–Chongqing (“Ford”), Wuhan–Hamburg, Yiwu– Madrid.

Freight transport via Belarus in the China– Europe–China communication, 2011-2018 (thousand TEU). Source: https://rail-congress. com/wp-content/uploads/Presentations/ Session-1/5_Morozov.pdf Áruszállítás Belaruszon keresztül Kína–EU–Kína viszonylatban, (ezer TEU) 350

324,7

300

257,5

250 200 145,8

150 100 50 0

2,5

13,4

11,7

2011

2012

2013

34,2

2014

59,9

2015

2016

2017

2018

The number of trains passing through the country in the China–EU–China communication has been continuously increasing in recent years, and the country has been a supporter of the New Silk Road project since the beginning, and their railway development strategy is largely determined by serving this route, as the country has significant revenues from transit transport.

Geography of Rail Transport: the Eurasian Economic Corridor

Indicative map of Rail Freight Corridor No.8: North Sea–Baltic. Source: http://rfc8.eu/corridor/geographical-outline/ (Map of all European lines: http://www.rne.eu/rneinhalt/uploads/Rail-Freight-Corridors-RFCs-Map-Printable-version.jpg)

Belarus can play an important role in freight transport between China and the EU as a logistics hub or transit point, its development concepts are mostly focussed accordingly (and this is also what the Chinese party also considers the country to be). The expansion of capacities in two cities located on the border with Poland has taken priority: the rail transhipment points of Brest and Hrodna (Grodno), where cargo would be loaded from trains to trucks. EUROPE

The European section of the east-west railway line, connecting with Belarus (and, if extended, Ukraine) belongs to the so-called North Sea-Baltic Corridor (Rail Freight Corridor No.8: North Sea–Baltic), which was officially launched in 2015 . Rail freight corridors were established by the European Union to enhance the efficiency of rail transport, cooperation between Member States, harmonisation of regulations, and the competitiveness of the sector through coordinated developments and investments, which still come within the Member States’ competence.

Regarding Europe-bound routes, most Asian cargo arriving via Russia used to enter the European Union primarily through Northern Europe. Eastearn and Southern Europe had an insignificant role, largely due to their countries’ economic performance, which was also affected by the 2008 financial crisis. However, the last five years saw a significant growth in Eastern and Southern European countries, which also manifested in an increase in consumer demand, which also plays a role in the increasing trade of recent years between China and the countries of the EU.

This corridor leaves the European Union via Kaunas, Lithuania, and Terespol, Poland (this border town is located near Małaszewicze on the Belarus-Poland border); these are its two eastern “terminals”. (There are plans for another branch connecting also Estonia to the route (with Tallinn as a terminal) in the near future, and there will be an exit on the Poland-Ukraine border (towards Medyka) and a branch towards the Czech Republic. The corridor runs through Warsaw and Berlin, too, and ends in German, Dutch and Belgian ports in Western Europe (Rostock, Hamburg,

Core network: Railways (freight), ports and rail road terminals (RRT). EU Member States. Source: REGULATION (EU) NO 1315/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU http://publications.europa.eu/resource/cellar/ f277232a-699e-11e3-8e4e-01aa75ed71a1.0013.01/DOC_1 p.29.

Bremerhaven, Wilhelmshaven, Amsterdam, Rotterdam, Antwerp). According to the EU’s relevant policy documents, most part of the corridor has well-built lines, some sections are suitable for high-speed transport as well. On the eastern border section, however, there are sections requiring development (under development) both towards the Belarusian and the Ukrainian border. In addition, although main freight transport lines are well-established in the east-west direction, this is not the case in the north-south direction; here lines are also under development (both in the Baltic states and Poland, as well as more southwards – including Hungary, where freight transport lines are rated as under development in the entire country; truly enough, it is not a part of Corridor No.8.) The greatest challenge to the European section is posed by gauge breaks and an efficient flow of queues of trains. Poland’s Małaszewicze station is unable to

handle increased capacities of recent years generated by an increase in the volumes of Chinese rail transport. The station is expected to be developed with the EU’s financial assistance, but, as development practice (and bureaucracy) in the EU is considerably slower than Chinese developments, progress in this process is expected to take long years. All these, in general, call attention to an important limiting factor in rail freight transport between China and the EU. As rail is a closed system it does not work in a way that roads do (which is a much more flexible system, where alternative routes can be opted for much more easily in case of disruptions), it is important to be aware of the physical limits of rail transport capacities. Although there is considerable potential in the sector, fundamental transport patterns are not expected to change, that is, the dominance of shipping by sea will obviously prevail.

Rail Freight Transport

in Numbers

Rail Freight Transport in Numbers Author: PĂŠter Bucsky, LĂĄszlĂł Gere

Rail freight transport between China and Europe has undergone significant growth in recent years, which is an economic interest of both the Chinese and the European party. The following article offers an insight into its background and considers the factors that may create barriers to further growth, making a contribution to outlining a comprehensive vision about the development of rail freight transport between the two actors.

INTRODUCTION The first industrial revolution, which started in the 18th century, entailed massive urbanisation and regional development. From the beginning, railway and rail freight transport played a key role in this process, as ores, coal and other products required for the development of cities, factories and related infrastructure had to be transported over great distances. Railway construction, however, required a lot of steel, thus the railway itself became a source and an engine of development. Thus, the relevance of railways was first created by freight transport, the growing demand that raw materials, processed goods and consumer products should be available to anyone from increasingly longer distances. Then, in the 20th century, goods could be transported by sea at a much lower price due to globalization, and road transport also increasingly gained ground as the road network was expanding. Thus, in spite of market growth in industrialised countries, the volume of freight transported by trains declined. Currently, for example, the market share of rail freight transport in Europe is only 18 per cent in all modes of transport (which means some 2,400 billion tonne-kilometres annually). In the

21st century, however, the share of rail freight transport may start to grow again, which is mostly contributable to the fact that the need for optimising transport encourages the use of combined, multimodal modes of transport, in which rail transport, a complementary mode, is given a significant role. In transport, environmental considerations have come increasingly into focus, and rail has a significant competitive advantage in this respect over, for example, road transport, as its energy consumption accounts for only one-sixth of that of road transport (which also translates into much lower levels of carbon-dioxide emission). Owing to technological innovations, rail freight transport has significant potential, some experts regard this mode of transport as the backbone of future mobility. RAIL FREIGHT TRANSPORT BETWEEN CHINA AND THE EU At the end of the 20th century, freight transport between the EU and China took place exclusively by ship or air. Rail was a long-exiting alternative: the Trans-Siberian Railway reached Vladivostok in 1917. Nevertheless, experimental shipments to Europe were conducted only by Japan (on the Trans-Siberian Railway) since the 1960s, with varying degrees of success.

For decades, rail freight transport has been lacking significant innovation globally: the speed of cars and locomotives have not increased, the speed of 100-120 km/h can be regarded as average. In Europe, the quality of tracks is adequate, but busy traffic on the network and especially congestions in the areas of urban centres are causing an increasing challenge. Rail infrastructure was underdeveloped in China for a long time, but a significant railway development programme was launched in the 1990s. The main aim was to increase the quality and speed of passenger transport, and create new rail connections. This was also beneficial for rail transport, too, as passenger trains started to use new, high-speed tracks, releasing significant capacities for rail freight. China and the EU, these two important economic centres have adequate infrastructure in rail freight transport, but a distance of 10,000 km between them has to be covered in the member states of the former Soviet Union, where the conditions for rail transport are not necessarily ideal. In this region, al-

though rail has a prominent role â&#x20AC;&#x201C; it has a share of over 80 per cent in freight transport, as opposed to the 20-30 per cent of developed countries â&#x20AC;&#x201C; but it is not contributable to well-developed rail freight transport but to a gravely underdeveloped road infrastructure, a very low population density and vast distances. Rail freight transport is really competitive over longer distances, according to a rule of thumb used by European rail professionals it means roughly a distance of over 700km. It is harder to estimate what distance is worth transporting by rail, and not by ship, which is slower but considerably cheaper. Determining further boundary conditions which should be in place for the competitiveness of rail freight transport is another substantial question, since the existence of railway lines is not a sufficient condition. Auxiliary services, such as terminals required for combined freight forwarding, door-to-door delivery solutions, punctuality and defining expected timeframes, groupage and distribution, flexible quantitative and pricing solutions even take an increasing role in modern logistics systems. And these are exactly

the areas where rail delivers a poorer performance than other competitors in Europe, and these services are even less developed in the former territory of the Soviet Union and China. In order to improve infrastructure connectivity, the EU launched a project to develop pan-European rail corridors (the so-called TEN-T lines) in the 1990s, and, related to this, encouraged Central Asia to develop its international rail freight transport corridors. This became the TRACECA (Transport Corridor Europe Caucasus Asia) network initiative. Independently from that, China also started to modernise its railway network. As a result of these developments, today rail freight transport can be conducted in several corridors and it is getting more significant. While earlier the Trans-Siberian Railway represented the only link, a new link was created through Kazakhstan in 1991, and Central Asian corridors were also gradually expanding. The railway link between Ürümqi and Alashankou was enabled by an improvement in the late 1980s in China and the Soviet Union’s strained political relations, thus the Soviet-Chinese railway connection planned in the 1950s was implemented by 1991, as Kazakh-Chinese one. However, there appears to be no real prospect of creating a shorter and faster rail link in the medium term.

RAILWAY DEVELOPMENTS WITHIN CHINA AND THEIR BACKGROUND Rail logistics solutions to and from China have become a true alternative in addition to traditional transport modes in recent years, also benefiting from significant investment in rail infrastructure. But not only China’s international interests and role play an important role in the situation of Eurasian land bridges, but also transformations within China. The objective of China’s policy is to develop inner regions, which is also dictated by an economic necessity, as workforce is getting more expensive in coastal cities, and problems with labour supply have also started to occur. Cities in Inner China can be even 2,000 km away from seaports, thus there is a good chance that freight forwarding to Europe or to the regions of Inner China from there is more cost effective across the continent. Since at least 60 per cent of Chinese exports are based on imports, connectivity in both directions has an important role. It is particularly true for assembly plants working for export, where the share of Chinese domestic content is merely 5 per cent. Due to increasing Chinese wages and a decreasing Chinese labour supply, some of the factories have to look for new investment locations. Vietnam or Bangladesh

Rail Freight Transport in Numbers

may represent ideal ones, as they can be reached by ship. Central Asia will be another ideal location, but it will require the infrastructure development of the region. A total population of only 70 million people, however, seriously limits the development opportunities of the region. As environmental requirements are also getting stricter in China, the relocation of polluting and energy-intensive industries can be also observed in the region, for example, cement plants have been relocated to Tajikistan – and they are typically industrial plants with a high transportation demand. Relocating agricultural production to neighbouring countries may also have an important role. As both industries typically produce goods that can be transported in large quantities and cheaply by rail, this also supports the relevance of Chinese infrastructure investments ; furthermore, several expert materials can see significant opportunities in the rail transport of perishable goods, with the spread of air-conditioned containers (with an adjustable temperature). The ‘Go West’ strategy, announced by China’s government in 2000, has encouraged an increasing number of industrial production units to move from the eastern, coastal regions to the central and western regions of the country (for example, most of the computer assem-

bly plants have already moved to Chongqing or Chengdu). Furthermore, major industrial centres moved also to the northwest, where, for example, the production of the automotive, steel, shipbuilding and aviation industries take place (e.g. Changchun, Shenyang). From these areas, rail logistics solutions have considerable advantage over ocean transport in terms of travel time savings. RAIL FREIGHT TRANSPORT IN CENTRAL ASIA These links are important not only from a European perspective, but there is also increasing demand in Russia and the CIS countries (Central Asia, even the Middle East). It is based on the growth pace of Central Asian countries and time savings, which is becoming an ever greater factor of competitiveness (ocean freight transport takes much longer). The Central Asian route is coming increasingly to the forefront because the Tran-Siberian express line, used traditionally formerly, is reaching the limit of its capacities, and on this line Russian domestic freight transport enjoys an advantage over international trains, thus international traffic is getting more difficult (and last but not least, the line is rather slow, the average speed of freight transport is 12 km/h, whereas it is at least 40 km/h in China) .

Germany’s Deutsche Bahn and Russia’s Russian Railways completed a project about Trans Eurasia Logistics GmbH in 2008. Deutsche Bahn prepared the launch of the first train on the Beijing-Hamburg line, then started to pilot the so-called northern line (running on the line of the Trans-Siberian express) and the southern one (running across Kazakhstan) in 2010. Then, China announced the New Silk Road initiative in 2013, with the objective to extend China’s international trade over Europe, by, on the one hand, expanding existing opportunities, and, on the other hand, building new capacities (e.g. constructing a railway line connecting Indonesia, China, India, Pakistan, Iran and turkey, and then joining TEN-T lines). The first direct service, commissioned by Foxconn, left from Shenzhen for Europe in 2008. The first regular service was launched between Shanghai and Duisburg in 2009 by DB Schenker. In that year, a regular service was launched between Chongqing and Germany on a route between Kazakhstan-Russia-Belarus-Poland by Hewlett Packard, after its production centre had been relocated to the city of Chongqing in Inner China. It was followed by the Wuhan–Pardubice (Foxconn), the Chengdu–Łódź and the Zhengzhou–Hamburg services in 2012. These all used the so-called southern route

via Kazakhstan. The first service running on the northern route was launched in 2014, between Suzhou and Warsaw, then between Changsha and Duisburg (however, it is important to note, that most of rail freight transport between China and the EU is conducted on this route .) The Yiwu–Madrid service was also launched in 2014 (making Yiwu become the first Chinese city which is on the third level in the hierarchy of cities, and has launched a regular direct service to Europe). Overall, we can talk about two main routes of rail freight transport: • the Northern route uses the infrastructure of the well-developed Trans-Siberian express. This route is basically used by trains departing from China’s northeast (major centres include Beijing, Dalian, Suzhou and Shenyang) • the Southern route goes through Kazakhstan as well as Russia, Belarus and Poland (major centres include Chengdu, Chongqing and Zhengzhou) Other locations can be easily connected with these main routes, for example, Central Asian cities may be connected with the Southern route, and Russian cities, or – with short sea transport – even South Korea or Japan may be connected with the Northern route.

Rail Freight Transport in Numbers

BENEFITS OF RAIL FREIGHT TRANSPORT Choosing an optimum mode of transport depends on several factors, therefore it is worth considering carefully the question as to what benefits rail transport has over other modes of transport. Fundamentally, rail is ideal for goods that have a lifespan that is too short to allow shipment by sea, and for low-margin products where air freight is too costly. Briefly, three major factors can be highlighted from benefits: • it is faster than maritime transport (as a result, the customers’ capital cost is significantly reduced), takes only 15-18 days depending on the route, which is half of the transit time of maritime transport. It is worth mentioning in this regard that rail freight transport has undergone considerable development in the past decade; an analysis from 2006 suggests that rail freight transport was not only more expensive but also slower than maritime transport. A complete Shanghai–Hamburg journey took 36 days then; now it has been reduced to 16 days. Thanks to faster transport, some industries can adapt faster to changing market needs, which might be an important viewpoint. Furthermore, faster transport allows for faster rotation, it is unnecessary to maintain large storage capacities (accumulate stocks), which reduces capital costs. Transport costs depend on a lot of things, but as a general rule, rail transport is twice as expensive as maritime transport, and it costs only a quarter of the price of air transport. (This is partly contributable to the fact that the Chinese government keeps rail transport costs artificially low.) • it is cheaper than air transport • currently (if certain boundary conditions exist), it is the most environmentally-friendly mode of transport. An example for the cost and time factors of rail freight transport: transit time and cost of transporting notebooks from Central China to the Netherlands (in the case of transporting approx.. 3,000 pieces):

USD/ notebook transit time (days)

maritime transport

rail

air

3,8

martime+ air 9

1,9 38

Maritime vs rail transport: rail transport is at least 16 days shorter (other data are even more favourable, time savings can amount to even 20-24 days!). The spe-

cific cost of rail transport, however, is the double of the cost of maritime transport. Air vs rail transport: costs savings of rail transport amount to 75 per cent compared to air transport. In terms of time, however, it is roughly 18 days longer (other calculations suggest only 10-14 days!) Maritime+air vs rail transport: transport costs roughly a half by rail (a cost saving of more than 55 per cent), and takes approximately the same length of time. Calculations by DB Schenker suggest that rail transport is the most environmentally-friendly mode of transport between Europe and China. An example: carbon-dioxide emission of transport between Beijing and Duisburg (kg CO2/tonne): CO2-emission 7000 5727

6000 5000 4052

4000 3000 2000 1000

270

391

rail

mari me

mari me+air

air

Rail transport has several safety benefits as well: • modern terminal facilities have qualified staff and are fenced in (the railway police are mostly located directly at terminals); furthermore, they are under video surveillance • entry to the terminal is allowed with an access card only, under strict control • the cargo on the terminal territory is guarded by the security personnel; • armed guards are present at terminals and stations and also on some of the trains. The mode of transport is fundamentally determined by the value of goods: the more expensive a product is, the more it is worth transporting it by air. No other mode of transport can be competitive with the maritime transport of low-value mass products, such as clothes. Rail transport can be competitive in the transport of medium value but heavy products such as motor vehicles and automotive parts. More sensitive electronic components, which would be expensive to be transported by air due to their size – such as servers, special equipment – may be better transported by rail

In the future, changes in traffic volumes will be greatly influenced by the change in the structure of trade between China and Europe; if the share of products with higher added values, such as mechanical engineering products, increases in both Chinese and European exports, it will create an opportunity for rail freight transport in larger volumes.

mean 170 minutes per train, by using a common electronic consignment note. In the case of the rail connection between China and Europe, it would be appropriate to develop a common IT system, where consignment notes and any other necessary documents would be available digitally, in several languages, which would reduce the time spent on administration and accelerate trains. This would also reduce direct administration costs, and the reduction of lead times would make the rail connection more competitive.

CHALLENGES OF RAIL FREIGHT TRANSPORT

TRANSPORT VOLUMES

In the case of Central Asia, bureaucracy, the quality of maintenance or the lack of it, the difficulty of international communication are particularly important issues. According to a survey carried out with 24 actors in the industry about intermodal freight transport between Europe and Asia, there is still significant potential to accelerate trains: during a 15-20-day journey, they are standing on borders for 4-5 days, waiting for customs and other control procedures, track and locomotive changes. This is an enormous development opportunity practically without investment, but the region traditionally achieves very poor results when it comes to bureaucracy: they are tail-enders â&#x20AC;&#x201C; with the exception of Kazakhstan â&#x20AC;&#x201C; in the World Bankâ&#x20AC;&#x2122;s â&#x20AC;&#x2DC;Ease of doing businessâ&#x20AC;&#x2122; survey. The OECD last conducted a survey about the average time taken by border controls in 2010, but then the regionâ&#x20AC;&#x2122;s performance was very poor, the average time of crossing the Uzbekistan-Kazakhstan border was 100 hours, i.e. 4 days on average.

Currently, the volume of BRI-related rail freight transport â&#x20AC;&#x201C; despite the significant developments and investments described above â&#x20AC;&#x201C; is still rather low: in 2014, the volume of bilateral trade between the EU and China amounted to US$600 billion, and goods of a value of about US$5 billion were transported by rail. In 2016, rail transport accounted for only one per cent of trade between China and Europe.

because salty air may damage them during maritime shipping, and these avoidable losses may make rail transport cost-effective.

There are risks also from a legal perspective, as Asian and European railways use different legal and insurance systems and consignment notes. In Europe, COTIF consignment notes (Convention Concerning International Carriage by Rail - COTIF), while in the former Soviet region and China SMPS/SMGS ones are used. This causes problems, not only because their formats are different, but also the legal regulatory frameworks behind them are different and can be reconciled with difficulty. Since 2006, a common CIM/SMGS consignment note has been available, which counts as a great achievement . The fact that it is still not a completely smoothly working process is well illustrated by the development of managing freight transport between Slovakian and Ukrainian railways: the railways, which are in an intensive relationship with each other, reduced the time spent on borders by 66.7 per cent, which used to

Distribu on of trade betwee the European Union and China by modes of transport (tonne, %) air 2%

rail 1% road 3%

other 1%

mari me 93%

Source: Eurostat

Nevertheless, the industry has started to grow rapidly in recent years: between 2010 and 2017, container traffic from China to the EU increased from 5,600 TEU (1 TEU: 6.1-m-long, standard container size) to almost 164,000 TEU. During the same period of time, container traffic from the EU to China increased from 1,300 TEU to over 98,000 TEU. Between 2013 and 2016, the number of container trains and the volume of container cargos doubled annually, which was largely attributable to subsidisation of export railway freight traffic by the Chinese state. In November, 2017, China Railway Corporation reported that more than 3,000 container trains had run between China and Europe between January and Novem-

Rail Freight Transport in Numbers

ber, 2017, exceeding the total for the previous six years combined. Services connect 35 cities in China with 34 destinations in Europe. According to the information of China Railway Container Transport Corp., Ltd. (CRCT), in 2018, freight trains travelling between China and Europe connect 43 Chinese cities with 42 cities of 14 European countries. Since 2nd April, 2018, freight trains have been running on 65 designated routes, with 46 lines going from China to Europe and 19 ones going in the opposite direction. Goals set for 2018 suggest that the number of freight trains travelling between China and Europe is intended to be increased to 4,000. Currently, considerably more trains run from China to Europe than on the way back; the Coordination Committee of China-Europe Freight Trains, a committee established in Beijing specifically for this purpose, wants to achieve that the number of freight trains travelling from Europe to China should achieve 60 per cent of the number of trains travelling in the opposite direction. In 2016, 1,700 container trains – 1,130 from China to Europe, and 572 from Europe to China – travelled across Eurasia within the framework of the BRI. The number of trains increased to 3,700 in 2017 – 2,400 from China to Europe, and 1,300 from Europe to China –, and the number of trains crossing the eastern and western borders of the Eurasian Economic Union exceeded 10 per day. The most intensive traffic is at the Brest–Małaszewicze (Belarus–Poland) border crossing, as this crossing point is included in almost all routes linking China and the EU. The border crossing between Záhony and Chop would be important to Hungary, this line is used also by, for example, Chinese trains headed for Budapest. However, it is not easy as the conflict between Ukraine and Russia has made rail traffic between the two countries cumbersome, therefore significant traffic is not expected to shift to this line until the situation eases. In the medium-term however, the role of the transshipment district, which has considerable free capacities, may become more important, since significant capacity problems have already arisen on the Poland-Belarus border. China-Europe trains account for a minor part of border traffic – although their ratio is growing –, but most of the trade between Belarus, Russia, Central Asian countries and the EU has to be conducted here. It is much more cost-effective to transport by rail to these countries which lack or have only limited sea links – and, in addition, are closer to Europe – than to remote China.

But similarly significant volumes of goods are directed from China towards the countries of the Soviet region, and not Europe. The Infrastructure Economics Centre reported that China’s three most important trade partners within the European Union in 2016 included (in order) Germany, the Benelux states and the Great Britain. China's main trade partners within the EU (%, 2016) Others 10% East Europa 9%

Germany 29%

Spain 5% France 8% Italy 8% Great Britain 12%

Benelux 19%

According to the EDB Centre for Integration Studies’ estimates, the subsidies provided by Chinese provinces amounted to about US$88 million in 2016. This estimate assumes an average container transport subsidy of $2,500 per FEU (1 FEU: 12.2m-long standard container size; 1FEU=2TEU), while the Journal of Commerce calculates this figure to be almost US$6,000. According to some estimates, the cost of transporting a FEU is US$4,800-6,000, while according to others, it is about US$9,500. . The total number of subsidised containers originating from central PRC provinces is estimated to be 35,000 FEU. Incidentally, subsidies per FEU average a mere 0.3-0.4 per cent of the value of cargo per FEU (however, it is important to note that there are no official data available about the extent of Chinese state subsidies). Benefits of rail transport include the fact that 99.7 per cent of China-Europe freight trains are punctual, and delivery times are only one-third of that of maritime transport. However, the disparity between eastbound and westbound volumes poses a problem: according to Far East Land Bridge, a logistics company, two-thirds of traffic is westbound and one-third is eastbound. CHANGE OF GAUGE Transport encounters the same problem on all the existing rail routes. Railway lines in China and Europe use the standard West European railway gauge of 1,435

mm, former Soviet member states use a broader railway gauge of 1,52 0mm, therefore the gauge has to be changed on certain borders. It is done in the following sites: Break-of-gauge sites in Europe: Belarusian-Polish border: • Brest (Belarus) — Małaszewicze (Poland); • Bruzgi (Belarus) — Kuźnica Białostocka (Poland) Polish-Russian border: • For the present, BRI-related rail freight transport is only in the pilot phase in Kaliningrad. At the end of October 2017, a freight train service was launched from Poland to China, with a change of gauge at Chernyakhovsk Station. Break-of-gauge sites in Asia: Kazakhstani-Chinese border: • Dostyk (Kazakhstan) — Alashankou (China); • Altynkol (Kazakhstan) — Khorgos (China) (the world’s biggest dry port can be found in Khorgos, but gauge is changed also on the Chinese side of the border. ) Russian-Chinese border: • Zabaykalsk (Russia) — Manchuria (China) Chinese-Mongolian border: • Erenhot (Erlian) (China) — Zamyn-Uud (Mongolia) Gauges can be changed in the following ways: changing bogies (this is the most expedient method if the cargo is hazardous, bulk or has to be handled with care, but this process is expensive and requires a significant amount time ), using wagons equipped with expandable wheels (which is technically possible but not used world-wide in rail freight transport due to its high costs), or transhipping loads onto another train. Expandable wheels mean the fastest solution but their use is not economic as they are only used once every few thousand kilometres, and it is not worth using the cars in other traffic. Transshipment is the most frequent method of changing gauges. From this perspective, container traffic is particularly beneficial, as the load of a train can be transhipped within a couple of hours at relatively low costs. On the Kazakhstan-Belarus border this task takes typically twelve hours, according to some industry sources. A concept to get closer to Western Europe by rail without a change of gauge was already born in 2008. In that year, the Russian, Austrian, Slovakian and Ukrainian railways created a joint venture, Breitspur Planungsgesellschaft, to extend the 1,520 mm gauge line from

Kosice in Slovakia for about 400 kilometres to Bratislava and Vienna. The company produced a feasibility study report in 2017, which estimated the total cost of the project at EUR6.5 billion, and forecast transport volumes in 2050 between 16 and 25 million tonnes. The construction of the railway line is planned to start in 2024, and the opening of the line is envisaged in 2033. The plan has arisen on many occasions, but several barriers to its implementation can be highlighted. The construction of railway lines is considerably more expensive across Slovakia due to its terrain than across Hungary. In addition, the costs of towing from the Ukrainian border across Slovakia to Vienna can be twice as high, due to topographical constraints. The implementation of the project raises doubts from several perspectives: the construction of the section is profitable for Slovakia if adequate revenues are realised from track access charges, which does not seem realistic considering current traffic volumes. A private company may also build the line, but in this case, the necessary land has to be purchased without any help from the government, which means enormous difficulty and cost in the case of a cross-country line, thus it is not realistic to count on the implementation of the line. It should be noted that in the west, the broad-gauge line reaches Katowice within the territory of the European Union: the Hrubieszów–Sławków Południowy line, which starts from the border at Brest, was built between 1976 and 1979 to supply Polish iron industry plants. Trains arriving from the east, however, do not use this line the most, but the terminal in Brest, although containers could be transhipped also in Sławków. The annual capacity of the terminal is 285,000 containers, which is more than the total China-Europe rail traffic. In 2017, a traffic of only 15,000 containers was conducted, most of which was headed towards former Soviet republics. CONTAINER SIZE AND THE LENGTH OF CONTAINER TRAINS Trains from China to Europe use FEU containers in rail freight transport. The wagons of most container trains running on the China–Eurasian Economic Union–EU lines can carry two TEUs or one FEU. The length of container trains depends on several factors: the weight of the train, locomotive power, the length of the side tracks at holding stations, etc. Most container trains from China reaching China-Kazakhstan border crossing points consist of 54 conventional

Rail Freight Transport in Numbers

CONTAINER TERMINAL IN KHORGOS From the New Silk Road’s perspective, Khorgos is a very significant terminal with a change of gauge on the China-Kazakhstan border, and industrial activities pursued on an area of over 5,000 hectares. By merging the Chinese and the Kazakh sides, a special economic zone has evolved, which resulted in high economic growth. KTZE Khorgos Gateway, an inland port on an area of almost 130 hectares, has been built in recent years in Khorgos. Data from January, 2018 about the dry port: The dry port is using the NAVIS N4 terminal operating system, which is one of the most advanced ones in the world. With this technology, Khorgos Gateway can process an entire train in 47 minutes. In addition to this, the port has developed its own traffic management system, which is a fully automated, multi-lingual RFID-based solution to organize the flows of trucks. Capacity of the dry port: • Container yard for 18,000 containers/per day. • Container terminal for 6 loading and unloading areas. • Warehouses on different gauges (1,435 mm and 1,520 mm) with areasa of 5 000 sq.m each and with 4 climate control chambers on 700 sq.m. (almost 14-m-long) railway cars, that is, the full length of trains is 801 m. In Russia an average train is composed of 71 conventional railway cars and produces a total train length of 1,040 m. In Belarus (the Belarusian Railway), the length of the car portion of the train varies from section to section, ranging from 57 to 65 conventional railway cars, producing train lengths reaching up to 955 m. According to applicable norms and regulations, train lengths in Poland may not exceed 600 m, thus trains can have a maximum of 43 cars carrying 86 TEU. As a result, if a longer train arrives at the border with Poland, a 43-car train can travel onwards, while the remaining cars have to wait at the station for the next train to be made up. PROBLEMS AND CHALLENGES Long-term growth of container traffic is inhibited by several factors: • Chinese provinces may discontinue financial support for export container traffic. In 2017, the Chinese government indicated its intention to cut subsidies.

• Terminal for over-sized cargo. • 25-km-lomng railway tracks, both with narrow and broad gauges. Equipment capacity of the dry port: • 6 6 Reach stacker DRT450 Kalmar • 2 Empty Handler DCT80 Kalmar • 3 RMG HDHM • 4 RTG HDHM • 7 ITV and 10 Trailers Kalmar • 25 Forklifts Toyota Data from July, 2017 from KTZE-Khorgos Gateway’s General Director Zhaslan Khamzin: The dry port handled more than 80,000 TEU in 2016 and is aiming for 540,000 TEU by 2020. In the middle of 2017, 5-6 trains were processed per day. According to a figure from February, 2017, however, the capacity of the dry port is underperforming, partly because most cargo volume that passes from China to Kazakhstan goes through Dostyk /Druzhba. According to Khamzin, it takes 2-3 days to deliver goods from the dry port to Central Asia, 4-5 days to Moscow and St. Petersburg, and 12-13 days to Europe. Container trains on routes to Europe travel 1,200 kilometres per day. • R ail freight transport still cannot be applied everywhere in China, it is still relatively expensive from the southern regions, with much less time savings. • The transporting and processing capacity of Polish railways is low, including the Brest-Małaszewicze transshipment hub – Poland is refraining, for the time being, from investing in required developments, and is instead developing the North-South railway lines. Currently, insufficient capacity of the crossing points at the Belarus-Poland border remains the main barrier to the growth of China-EU rail freight traffic. However, developments are ongoing, as it is profitable business. Transshipment can be carried out on other crossing points, and insufficient capacities may encourage the evolvement of alternative routes – either towards Slovakia or Hungary. If the route has to go through Ukraine, however, customs-related and administrative burdens multiply as Ukraine is not a member of the Eurasian Economic Union, as opposed to Belarus, Kazakhstan and Russia.

• C ustoms clearing is an inhibiting factor, goods have to cross several borders, slowing down the whole process. • While on average a container train consists of 71 cars in Russia and 57-65 cars in Belarus, the maximum number of cars is 43 in Poland. Varying length of trains may slow down rail traffic when travelling across countries – due to adherence to rules, for example, when wagons are detached and waiting for a new train. • Geopolitical challenges: there are/may be some countries along the route boycotting the European Union (e.g. Russia), which means that some goods can be subject to prohibitions. The Russian infrastructure is also very old and the level of investment is much lower than in China, for example. • The speed of container trains drops to less than a half as they enter the EU, with Poland posting the lowest cargo train speeds in Europe. • Insufficient standardisation of shipping documents and technical regulations among China, the member states of the Eurasian Economic Union and the EU is the main administrative and legal obstacle to the increase of freight traffic.

China: The Departure Point of the Iron Silk Road

Author: Katalin Borosnyay-Miklós

Although maritime transport pre-dominates trade between China and Europe, rail traffic has been expanding in recent years. One of the strategic elements of the Belt and Road Initiative (hereinafter referred to as BRI), announced by China’s government in 2013, is the development of a railway line crossing the Eurasian continent and the expansion of its transport capacity. There are two major railway lines in operation from China to Europe, one of them leaves the country at the northern border crossing points towards Russia or Mongolia, and the other does so on the west, towards Kazakhstan, and then goes on via Russia and Belarus, to Poland, and from there, the other states of the European Union. A field research, carried out in 2018, explored the stations of the railway line running across Kazakhstan through interviews conducted with the leaders of Chinese railway and logistics companies and political decision-makers. On the basis of the materials collected during the trip in China, the background work done additionally and official Chinese railway development plans, this paper presents how rail transport between China and Europe has evolved, its current situation, and its development trends expected in the coming years.

THE BEGINNINGS OF RAIL TRANSPORT BETWEEN CHINA AND EUROPE The first railway line linking Europe to Asia was the Trans-Siberian railway line; in the beginning, freight between the two continents was transported exclusively on this route. In 2006, the U.S. Chamber of Commerce commissioned a study about land transport options between Europe and Asia, including rail transport. An increasing container traffic on the Trans-Siberian line was observed, with mainly Korean companies shipping household appliances, automobile parts and chemical products towards Europe. Commercial imbalance presented a problem even then; most of the Europe-bound containers loaded with goods returned empty, and congestions were frequent at border crossing. China also used the Trans-Siberian railway line for freight transport as there ran a railway line through Kazakhstan, but then only the Druzhba/Alashankou

border crossing existed, which was not suitable for handling container trains, but the Chinese and Kazakh governments were engaged in the issue of its development. Several international shipping companies were interested in the development of rail transport as theoretically, goods can be delivered by rail from the Far East to Europe within 15 to 20 days. However, the study found rather high rates and long transit times for rail transport between China and Western Europe: transportation from Shanghai to the European Union cost US$6,900–8,700 per 40' container, and transit time was around 32–45 days, which suggested the relative underdevelopment of the service. Foxconn was also seeking faster transport options, and sent out its first train from Shenzhen to Europe, via Mongolia, in 2008. This route worked well until Mongolia doubled transport rates, which took a big bite out of the attractiveness of the route. Then, bypassing Mongolia, they switched to the Trans-Si-

berian railway line – in the north, goods were transported from China directly to Russia. Trains leaving from the east and northeast of China still use this route, but to the west of the country that would mean a too long detour; from there, trains leave towards Kazakhstan. After long years of preparation, the Far East Land Bridge (FELB) commenced rail container transport between Europe and Asia on the Trans-Siberian line in 2007. Capacity has been increased from one train per week to six trains per week, and it owns 7,000 containers through its partner, Russian TransContainer. The initial transit time of over 28 days had been reduced to 14 days. According to the company’s business model, with rail transport, it offers an alternative to sea freight and air freight between China, South Korea and Europe in both directions. Door-to-door service is offered, regular customers include, for example, BMW, Audi, Volkswagen, Samsung and LG. The pioneers of rail transport via Kazakhstan were companies from Chongqing. Within the framework of the ‘Go West’ strategy, China’s government paid massive subsidies to mainly electronics manufacturing companies to take production to the west of the country. First, these products, such as mobile phones, were

to be transported by air, as models change rapidly. But that would have meant too many outbound flights, and there was no demand for inbound air transport, as parts were supplied domestically, from other Chinese factories and not from Europe or the USA, where finished products were delivered to. One-way air transport was not profitable, an alternative had to be found, and that is how rail transport, which was 50 per cent faster than maritime transport and cost less than half of air transport, came into focus. Trans Eurasia Logistics, a joint venture founded by the German and Russian rail companies in 2008, in cooperation with Chinese rail carriers, began to develop rail connections between cities in western China and Europe, with the chief intention of servicing global producers of electronic devices and machines. A Polish logistics company, Hatrans, in cooperation with Chengdu International Railways, launched a service between Łódź and Chengdu. The first cargo train of DB Schenker left from Chongqing to Duisburg in 2011, ordered by a large electronic manufacturer, and soon, cargo trains were running between Leipzig and Shenyang, northern China, to service the automotive industry. These trains can be regarded as pilot services, typically running ad hoc as commissioned by a single company between its European and Chinese premises.

The six economic corridors. Source: HKTDC

The evolvement of rail transport was also promoted by the fact that 2009 was the time when ocean freight forwarders started to travel slower in order to save on fuel costs, increasing the shipping time of 25 days to 35–37 days. After the Eurasian Customs Union was formed in 2011, customs borders between member states disappeared, significantly decreasing the costs, the logistics and administration burdens of trains travelling from China to Europe via Central Asia, and waiting times contributable to the inspection of the cargo disappeared, thus the attractiveness of rail transport further increased. THE ROLE OF BRI IN THE DEVELOPMENT OF RAIL FREIGHT TRANSPORT BETWEEN CHINA AND EUROPE Within the framework of the BRI, announced by China in 2013, the goals to build new networks of relationships both on land and sea have been set – this is the Silk Road Economic Belt and the 21th Century Maritime Silk Road. The initiative encourages the development of relationships in five areas, including infrastructure development and the facilitation of trade. These involve the construction of roads, railways, oil and gas pipelines, the upgrading and expansion of existing networks, and the establishment of logistics, industrial and free trade zones related to them. The priority zones of the development of trade and infrastructure are the so-called economic corridors; the BRI distinguishes between six of them. There are three

corridors stretching towards Europe, two of which are currently carrying considerable traffic. One of them is the China-Mongolia-Russia Economic Corridor, and the other is the New Eurasia Land Bridge Economic Corridor, which runs from the coast of East China to as far as the Netherlands. The third one is China-Central Asia-West Asia Economic Corridor, the transport infrastructure of which still requires considerable development. Although Xi Jinping’s speech delivered in Astana, where he first explained the main points of the BRI and which is regarded as the starting point of the initiative, did not specifically include a rail link, rail freight transport, which had already existed in an initial stage, was soon placed under the BRI’s aegis. The BRI action plan, drafted by China’s National Development and Reform Commission, highlights the importance of building a Eurasian land link, the coordination of rail transport and customs clearance on the China-Europe corridor, and the cultivation of the brand of "China-Europe freight trains”. The development of rail freight transport between China and Europe is expected to further increase trade between the two regions and correct the imbalance in economic development which has arisen between the eastern and the western regions within China since the ‘Reform and Opening’ began. Since the late 1980s, the provinces on the coast of southeast China have

China: The Departure Point of the Iron Silk Road

been developing radically, and the provinces of western and inner China have been lagging behind them. The ‘Go West’ strategy, announced in 1999, did not mean the increase in western exports, but targeted the development of the inner areas of the country. Within that framework, factories were set up also in western provinces of China, but products could not been transported from here so easily by sea as from coastal provinces. Rail transport has “opened” the inner regions of the country to the world, and foreign trade and the development of the rail link to Europe are facilitated by further subsidies under the BRI’s aegis.

Between 2011 és 2017, a total of 570,734 TEU (twenty-foot equivalent units) were transported by rail, which means 84 TEU per train on average. Industry actors said that typically 41 forty-foot equivalent units (FEU) were loaded on a train , that is, this average number of containers corresponded to practical experience, as two TEUs equals to one FEU. REGULATIONS AND ACTORS OF RAI FREIGHT TRANSPORT IN CHINA As we could see, the development of rail freight transport between China and Europe is a strategic component of China’s plan to expand its relationships globally; accordingly, its planning and operation is coordinated on state level.

The effect of BRI can be observed also in the increase in the number of trains. While initially direct trains travelled ad hoc, as commissioned by particular companies, since 2012 there have been scheduled trains, and a rapid increase in traffic has been observed since 2013. According to the statistics of the China Railway Container Transport Co., Ltd., the number of cargo trains travelling from China to Europe, and from Europe to China changed between 2011 and 2017 as follows:

In October, 2016, China’s National Development and Reform Commission issued the document ‘Development Plan of China-Europe Freight Train Construction (2016-20)’ , which gives a definition of ‘China-Europe freight trains’, identifies the main routes and nodes, as well as the domestic and international tasks required for creating an efficient logistics network.

Between 2011 and 2013, there were only a few trains running and there were not any services back from Europe. After the announcement of the BRI, the number of trains increased drastically, and they started to transport goods also in the eastward direction in 2014. In 2018, almost as many trains ran within a year as in the previous seven years combined.

‘China-Europe freight trains’ (中欧班列) – or CR Express (CR is the abbreviation of China Railway), according to the official English translation included in Chinese documents – are international intermodal container and other freight trains route organised by China Rail-

Number of cargo trains travelling between China and Europe 3666

7,916

7066 7666

4,986 4,788

4066 4666 1066

1,176

1666 066 6

456

4,611

4,614

4,617

006 45

4,613

China-Europe

1,423

024 490

4,610

4,619

4,612

4,615

Europe-China

way and running according to a pre-determined number of services, route and schedule between China and Europe as well as other countries situated along the route. The name is intended to be made an international logistics brand, the CR Express label and logo are featured also on containers. It is the task of China Railway to build and manage the brand, and to this end, a separate development plan has been prepared. Within China, it is the task of the leaders’ working group responsible for the development of the BRI to create a favourable operating and development environment of the railway line; to this end, it liaises with competent authorities, the local governments and companies concerned. Abroad, the National Development and Reform Commission, the Ministry of Foreign Affairs, the Ministry of Commerce and the Ministry of Transport hold bilateral investment, trade, foreign policy and logistics consultations. They also enhance cooperation with international organisations and expert groups; in addition, it is also the task of Chinese diplomatic bodies present in countries along the line to consult the government and authorities of the given country. Local governments provide plots required for the establishment of the line and the nodes and support railway development centrally in several different ways. Chinese companies are motivated to participate in the

BRI by trade promotion policies and simpler administrative processes of foreign investments. From large financial institutions – such as AIIB or the Silk Road Fund – to local governments and companies, investments in the development of the railway line are encouraged, and Chinese financial institutions are also advised to make foreign investments. Scientific and technological innovation also has a role in the construction of the BRI, the research and development background required for the development of the railway line is being created by involving researchers, foreign and local experts. Thus, the five-year plan involves actors of the political, economic, financial and scientific life in the complex tasks of developing rail connectivity. In addition, to coordinate and govern specific tasks related to the development of rail transport, and to centrally control operation and development, a Transport Coordinating Committee of China-Europe Freight Trains was established in Beijing in May, 2017. The establishment of the Committee was initiated by China Railway, responsible for the BRI’s rail strategy, and it was established with the participation of China Railway Container Transport Co., Ltd. and seven large platform companies: – Yuxinou (Chongqing) Logistics Co., Ltd. – Chengdu International Railway Service Co., Ltd. – Zhengzhou International Hub Development and Construction Co., Ltd.

China: The Departure Point of the Iron Silk Road

– Wuhan Hanou International Logistics Co., Ltd. – Suzhou Zongbao Tongyun International Freight Forwarding Co., Ltd. – Yiwu Tianmeng (Timex) Trade Co., Ltd. – Xi’an International Inland Port Multimodal Transportation Co., Ltd. The Committee seeks solutions for practical problems posed for rail transport. When it was established, the ratio of trains from China to Europe was considerably higher than that of trains in the other direction, therefore for 2018 the goal that at least 60 per cent of trains should return from Europe loaded with goods was set. To this end, the improvement of the coordination of services, the reduction of costs and accelerated transit at border crossing points were recommended. The goal set was even exceeded; according to data disclosed at the plenary meeting held at the end of 2019, the ratio of trains from Europe to China increased to 71 per cent compared to the other direction, accomplishing the target of “4 to, 3 from’’. The committee’s tasks include the assessment of foreign rail and transport companies, and providing information for Chinese companies that want to cooperate with a foreign partner. It is also engaged in the safety of transport, the opportunities of implementing electronic anti-theft systems along the full line and traceability. By setting up a standard container platform,

a refrigerated transport chain would be provided; the containers of both China Railway and the members are used. The development of digitalisation, setting up an information platform, and the development of information exchange between the railway companies, customs authorities and transport companies of participating countries are regarded as priority tasks. Since its establishment, the Coordination Committee has held two plenary meetings, one in Chongqing in December, 2017, and another in Chengdu at the end of 2018. In addition to the delegates of the Development and Reform Commission and China Railway, the meeting in 2017 was attended by the representatives of 38 companies engaged in organising and operating trains. The goals set for 2018 included the opening of new routes, the standardisation of foreign price negotiations, the organisation of groupage on the broad-gauge section, the expansion of foreign container drop-off points, the creation of a refrigerated container system, the development of insurance covering the entire line, and improving the organisation of transporting goods from Europe. At the plenary meeting in Chengdu, the representatives of 42 companies were participating and the Coordination Committee was expanded by seven new members.

Regional divisions of China Railway Container Transport Corp.

At the meeting, it was concluded that 2019 would be the year of quality development, the main tasks would be to determine the indicators of high-quality development, develop the groupage and freighting of goods on the wide track section, unify foreign quotations and enhance security measures. The latest statistics were also disclosed: the total number of CR Express trains exceeded 12,000, freight trains depart from 56 cities in China for 49 cities of 15 European countries. In 2018, a total of 6,300 trains travelled in the two directions (that is, almost as many as in the previous seven years combined), therefore the goal of 5,000 trains/year, set for 2020 in the development plan, was reached two years early. HOW CHINA-EUROPE FREIGHT TRAINS ARE OPERATED Several companies take part in operating freight trains between China and Europe. The highest-profile actor is China Railway, and its container transportation division,

train operators compose and operate trains, and platform companies keep direct contact with customers and organise overall transportation. China Railway Railways, locomotives and compartments count as strategic infrastructure in China, and are owned by the state. In China, the operator of trains is China Railway: they operate all trains. There are several operators on the wide-track section, such as DB Cargo Russia, a subsidiary of DB Schenker, but the largest actor is RZD, the Russian Railways, or KTZ, the Kazakh Railways. Chinese platform companies, that is, companies organising transport for customers, can choose freely which operator they want to work with on specific sections. There are many operators in Europe, there is a free market; DB Cargo, also a subsidiary of DB Schenker, or PKP, the Polish Railways, or even a private operator can be chosen. It is also the task of operators to coordinate transshipment between wide and normal-track compartments at border crossings.

China: The Departure Point of the Iron Silk Road

China Railway Container Transport Corp., Ltd. Railway stations, where trains are loaded, belong to China Railway Container Transport Corp., and their equipment is also owned by the company. The company has 18 regional divisions with several premises across the country. Trains and loading stations belong to China Railway, they provide the “hardware” part of services, while platform companies perform the “software” part, the organisation of transport. Platform companies Platform companies keep in touch with customers using rail freight transport, organise the delivery of goods from customer’s premises to the destination point. They usually offer door-to-door services and they issue price bids accordingly, including the charges for using containers, depending on where containers can be let. For example, if goods from Shanghai have to be transported by rail from Xi’an, the platform company will quote the price from Xi’an to the European destination, including the fee for using the container, or, if the container can be handed let in Shanghai, a door-todoor fee is quoted, that is, the empty container is let in Shanghai, including a track access charge to Xi’an and then transportation to the European destination in the

price. Thus, the price quoted to the customer contains the transport fee of the first section and export customs clearance, a door-to-door fee, European import or transit customs clearance and a final delivery. As a single company is unable to transport the goods along the entire line, different agents are involved on foreign sections. Usually, a foreign agent manages the administrative tasks of the entire section outside China. The Kazakh railways is typically a partner of many platform companies; in addition, Belarusian, Russian, Polish logistics companies also take part in the process. For example, the pricing of a platform company based in Changsha and transporting to Budapest is formed as follows: the Chinese domestic price is agreed with the Chinese railways, a Russian logistics company negotiates on Ukrainian and Hungarian prices, these are sent back to the Chinese company, and combining them, a quotation is sent to the customer. Customers can order the service from any company and book transport capacities on scheduled services electronically, through an online system. They can also track the way of their consignments, but there is not a central system for this purpose, each platform company offers its own solution to the customer. A Xi’anbased company monitors the way of trains through the

navigation system of Chinese Beidou, customers can monitor it on an online surface but also receive a notification via e-mail daily. Other companies also use e-mail communication; in addition, GPS devices which can be installed on containers are offered to their customers. Although the Coordination Committee has set the goal of developing an electronic anti-theft protection covering the full line, it still does not exist centrally, each platform company has its own solution. Due to land transport, the risk of breaking into the container is higher, there are GPS devices that indicate if someone tries to open the container, and, as mechanical protection, various locks are offered to customers. Several platform companies operate in China, the seven founding members of the Coordination Committee belong to the most significant ones, and all of them can be found at a major railway node: in Chongqing, Chengdu, Zhengzhou, Wuhan, Suzhou, Yiwu or Xian. Yuxinou (Chongqing) Logistics Co., Ltd. was established on 11th April, 2012 by five related companies. Its members include DB Schenker China Ltd., China Railway International Multimodal Transport Co., Ltd., the Transport Holding of Chongqing, Kaztransservice (the container fleet operator of the Kazakhstan Railways) and RZD Logistics (the logistics opera-

tor of Russian Railways). The name of the company has been coined by combining the former name of Chongqing (Yu), the first syllable of the name of the Uyghur Autonomous Region (Xin) and the first syllable of Europe’s Chinese name (Ou). We can encounter such Chinese names of various lines in other services, too; they are used as brand names and appear on containers and packaging. As a pioneer of rail freight transport, the first rail transport route to Europe was developed for laptops manufactured in Chongqing. Negotiations were held separately with each country concerned – Kazakhstan, Belarus, Russia, Poland and Germany, Other cities, such as Wuhan, Chengdu, Xi’an opened their own railway lines following the example of Chongqing. Later goods from Europe also arrived in China, mainly passenger cars (Mercedes, BMW, Volkswagen), consumer products, beer, powdered milk, and most recently mail are also transported by rail. Yuxinou launched a pilot service to Moscow in 2011, and transported components from Europe for the Changan Ford automobile factory in 2013. By the end of 2017, 1,500 runs had been made. In 2016, 420 runs were made, 278 of them travelled from China to the west, and 142 were inbound. In 2018 1,442 trains ran be-

China: The Departure Point of the Iron Silk Road

tween Chongqing and Europe, making Chongqing the second city operating the most services after Chengdu. The main route is the Chongqing–Duisburg line, which enters the territory of the European Union via the Brest-Małaszewicze border crossing point. The average running time is 13 to 15 days; this line provides connection with several further countries, such as the Czech Republic, Ukraine, Lithuania, Latvia, the Netherlands, Belgium, France, Italy, Switzerland, Hungary, etc. Another route links China with five Central Asian countries and Russia via Dostyk and Almaty. Due to its geographical position, Chongqing in Western China is an important node of the BRI, and has a prominent role in the ‘GO West’ strategy, encouraging manufacturers to move to areas in Western China. In fact, BRI corrects the imbalanced development after the reform and opening between the eastern and western regions of the country: as eastern regions are already overloaded, western regions are less developed, therefore production was moved into the hinterland, but the question arose how products could be exported from there. Shanghai and maritime container transport are accessible through the Yangtze River, but it is slow. That is why the rail freight transport route to the west has been opened.

The BRI enjoys political support in Chongqing on several levels. On the one hand, the creation of a shared customs clearance information system with countries along the BRI is encouraged, on the other hand, mutual investment cooperations are initiated. Within this framework, several German and Korean companies carry out industrial production in the free trade zone of Chongqing, and Chinese companies start business activities in BRI countries. The third area is the strengthening of people-to-people relationships, cooperation in innovation and science-technology. According to China’s opinion, BRI is not one-way, production centres within the EU could be connected with railways, so that they could export together to the Far East. In addition to exports, China purchases more and more products from abroad. A good example is the Shanghai import expo, held first in November, 2018, where foreign companies importing to China could introduce themselves and find business partners. Rail, with rapid transport times and a schedule which can be kept much more punctually than a maritime one, can be also a good tool to increase Europe’s exports. Chengdu International Railway Service Co., Ltd. was founded in March, 2018. Chengdu was among the first cities where pilot freight trains had been sent to Eu-

rope well before the BRI was launched, and after the specialized company was founded the number of services launched and received increased dramatically. Services are organised not only for Chengdu-based customers, they have an extensive logistics network domestically, and launch services jointly with eleven cities, e.g. Shenzhen or Ningbo. For three years since 2016, Chengdu has been the largest launching and receiving station of China-Europe freight trains: in 2016 460, in 2017 1,020, in 2018 1,587 trains departed from and arrived here. Trains leaving from Chengdu are called Rongou trains – a combination of Chengdu’s former name and the first syllable of Europe’s Chinese name. Services are launched on four routes towards Russia, Europe, Central-Asia and the ASEAN countries. Several cities (Łódz, Tilburg, Nuremberg, Milan, Budapest, Vienna, etc.) can be reached on the European line, but according to timetable information, only the services to Łódz and Tilburg carry real traffic, these trains are typically full or only limited capacity is available on them on a given week. The running time to Europe is typically 12 to 14 days. The company has a customs terminal suitable for receiving meat imported from Europe, with a reefer terminal and a cold storage depot of a capacity of 3,000 tons. In addition to scheduled services, customized block trains are also launched on the customers’ request on existing lines; their fares are higher, but the trains leave and arrive punctually, at the time specified by the customer. Customised trains can be ordered for transporting specific products, such as construction materials or meat; this service is available on the Vienna, Milan, Małaszewizce, Minsk and Moscow routes. The first Milan–Chengdu service was launched on 28th November, 2017, carrying machinery, quality furniture and tiles to China. TCL is a good example of services offered to companies: colour television parts are transported for it from Chengdu to the assembly plant in Poland. Zhengzhou International Hub Development and Construction Co., Ltd. was established on 26th June, 2013. The collective name of services from Zhengzhou, like in other cities, is Zhengou freight trains. The main railway link to Europe is the Zhengzhou– Hamburg service, which reaches its destination via

Alashankou or Erenhot, taking 10,214 and 10,484 kilometres respectively. Another important line links Zhengzhou with Munich, again, via Alashankou or Erenhot; the distance here is 10,650 and 10,920 kilometres. The average running time is 15 days, which is 22-27 days shorter than ocean shipping time, and the cost is 20-80 per cent cheaper than air freight, depending on weight. Zhengzhou is one of the centres of the New Silk Road, situated at the intersection point of the north-south and east-west railway lines, therefore it is an ideal logistics and warehousing hub. It is the fourth city launching and receiving the most services, after Chongqing, Chengdu and Xi’an. The warehousing hub in Zhengzhou receive shipments from the Yellow River and the Pearl River Delta, the Bohai Bay and the north-eastern industrial region – that is, three quarters of Chinese provinces. Korea, Japan and Taiwan are easily accessible by sea. It is connected to 121 cities of 24 foreign countries and cooperates with 780 foreign companies. Zhengzhou International Hub Development and Construction Co., Ltd. maintains relationships with some 150 European, Russian, Central and East Asian logistics companies, and Polish, Kazakh, and Belarus railway companies. Negotiations have begun with railways in Turkey, Luxemburg, Bulgaria and Lithuania on establishing a shared centre of groupage, the development of the Southern European line, the construction of logistics hubs, etc. The company has developed a customs clearance platform for online trading companies, and operates its own online trading site named Banliego. In addition to online trading, they are present also “offline” in many supermarkets with their own display stores, and imported goods can be looked at in a central display room in the Zhengzhou development area. Wuhan Hanou Logistics Co., Ltd. was founded in March, 2014. The city of Wuhan, situated on the banks of the Yangtze River, used to be a centre of trade, and its significance has been increasing recently. Freight trains leave China either at Alashankou (Hanxinou trains) or Manzhouli (Hanmanou trains), reaching Europe within 14-17 days on average; trains leaving from here reach 60 cities in a total of 28 countries. Typical transported goods include aircraft, automobile and bicycle parts, machinery components, electronics, textiles and chemicals, food, etc.

China: The Departure Point of the Iron Silk Road

A rail freight service between Wuhan and Europe was launched in 2014; only 23 trains left in that year. This figure increased to 92 in 2015 and 122 in 2016; in addition to this westward direction, trains are operated returning from Europe, importing timber from Russia, dairy products from Belarus, red wine from France, automobile parts, and meat products from Germany to China. Railway lines running across Wuhan link the Southeast Asian region with Russia and Central Asian countries. A manager of Hanou said that the company is owned by the state, and similarly, Chinese rail freight forwarders are fully or partly state-owned companies – as initial deployment requires a state background and support. Trains are scheduled; three train per week leave for Europe and two returns. Transport costs are calculated to decrease by some 15 per cent annually, as the logistics system and the infrastructure are developing. Trains can be tracked along the whole line, and refrigerated wagons are provided for perishable goods, such as foodstuffs and medicines. Trains from Wuhan also reach Hungary via Poland, and Hungarian wine, such as Tokaji or the Bull’s Blood of Eger can be found in the shops of the Chinese city. The manager thinks there is a growing demand in China for

high-quality and safe foodstuffs, and Wuhan, with a population of 13 million, represents a large market for European meat and dairy products, or specialties, such as goose liver. Suzhou Zongbao Tongyun International Freight Forwarding Co., Ltd. was established on 2nd April, 2011 as a subsidiary of Suzhou Gaoxin Duty-Free Zone and Logistics Co., Ltd. Trains running from Suzhou to Europe cross the Chinese border at Manzhouli (Sumanou trains), and several train services are operated in cooperation with Russian Railways. The main route that leaves from here is the Suzhou–Warsaw line; the journey of 11,800 kilometres takes 14 days on average. In five years, 346 trains ran between Suzhou and Europe, carrying goods of a total value of US$2.98 billion. In the first ten months of 2017, 104 trains travelled along the line, carrying goods worth US$925 million. 45 of the trains ran from Europe to China, the value of such imported goods amounted to US$162 million. Through Suzhou’s Taicang port, Japan and Southeast Asia can be linked to the Eurasian railway network, and shipments arriving by sea can be forwarded through the multimodal logistics hub.

Yiwu Tianmeng (Timex) Trading Co., Ltd., founded on 28th February, 2012, is the operator of Yixinou trains leaving from Yiwu. The company has several agencies abroad, in Madrid, Duisburg, London and Paris. The main route is the Yiwu–Madrid line, which was launched in 2014, and reaches the Spanish capital via Małaszewicze and Duisburg. Apart from Madrid, freight trains leave from Yiwu for London, Tehran, Chelyabinsk, Minsk, Riga, Prague and Mazar-i-Sharif. In addition to eastward traffic, trains run on the way back, too: the western and eastern ends of the Eurasian continent have been linked by the Madrid–Yiwu service since 2015 and the Prague–Yiwu and the London–Yiwu services since 2017. Established on 11th October, 2016, Xi’an International Inland Port Multimodal Transportation Co., Ltd. is the operator of international freight trains leaving from Xi’an (Changanhao trains). Xi’an is the most important transshipment centre of Europe-bound goods from the East Chinese region, and a meeting point of trains from different cities heading towards Kazakhstan. Only 30 per cent of goods transported by rail originate from the region, most of them arrive from China’s coastal areas, Japan and South-Korea. On average, 7,000 or more containers are handled daily and transported goods can be put into six categories: industrial raw materials,

e.g. reinforced concrete, industrial parts, mechanical equipment, e.g. cars or mobile phones, light industry products, construction materials, e.g. timber and steel, and foodstuffs. Freight trains depart from Xi’an for two main regions, Europe and Central Asia. The main European destinations are Hamburg/Duisburg, Budapest and Kouvola, Finland, the journey to specific cities takes 16, 13 or 12 days. At the end of 2017, a return train service left from the Finnish city, carrying timber, machinery, work clothing and ship components to China. The service was organised by Kazakhstan’s KTZ Express along with Xi’an International Trade & Logistics Park and Kouvola Innovation Ltd. The company has a modern IT system for organising consignments, customers register and order services online. Containers can be tracked with a self-developed device based on Chinese navigation device Beidu, customers can raise queries about real-time data online on the basis of container numbers, once the service is purchased. ROUTES Routes and the geographical distribution of organising transport within China have been determined in the five-year development plan of China-Europe freight trains.

Railway lines linking China to Europe

100

China: The Departure Point of the Iron Silk Road

Hubs of China-Europe freight trains

Routes match the three above-mentioned economic corridors – the China-Mongolia-Russia Economic Corridor, the New Eurasia Land Bridge Economic Corridor and the China-Central Asia-West Asia Economic Corridor –, their geographical location is shown by the map below. Although the map is in Chinese, countries can be clearly identified, and it can be regarded as the original official Chinese route plans. Three colours can be observed on the map: blue marks routes starting from eastern regions, green marks the ones starting from central regions, and red marks the ones leaving from western areas, with dashed lines marking sections under planning or construction. These directions are not “cast in stone”, as we can see, western lines stretch farther, as far as the shores of the East and South China Sea. Currently, the busiest routes are the northernmost branch of the red, western route, the green, central line

and the blue, eastern line. The first crosses the Chinese border and enters Kazakhstan at Alashan, situated in the Uyghur Autonomous Region (or at Khorgos), joining the Russian Siberian railway line, and arrives in Germany or other countries of the European Union via Belarus and Poland. Trains travelling on the green, central route leave China at Erenhot border crossing (Inner Mongolia), then proceed across Mongolia on the Russian Siberian railway line to European countries. The blue, eastern line leaves China at Manzhouli, Inner Mongolia, and joins the Trans-Siberian railway line. The red, western route has two other branches as well. One of them leaves China also at Khorgos (or Alashan) and then, via Kazakhstan, Turkmenistan and Iran, arrives in Turkey, where transport branches off into various countries of Europe. As an alternative route, it runs from Kazakhstan and arrives in Bulgaria via the Caspian

101

Sea, Azerbaijan and Georgia. The other route joins the planned China–Kyrgyzstan–Uzbekistan railway line at Torugart (Irkeshtam, Kyrgyzstan), and then reaches Turkey via Kyrgyzstan, Uzbekistan, Turkmenistan and Iran. The map shows that this network has not been completed yet, there is scant traffic from China to Europe only on the multimodal route running across the Caspian and the Black Seas. The plan also outlines the principle of collecting goods exported by rail to Europe within China and organising services. Distribution centres, major railway nodes, sea ports and land border crossings constitute the centres of the system. Distribution centres ensure the collection of goods and a permanent supply of them. Not surprisingly, most of them can be found in the most densely populated central and south-eastern areas, which are also the major areas of industrial production. Xi’an is also a distribution centre, although according to information obtained there, only one-third of goods exported from Xi’an by rail originate from surrounding areas, the rest comes from China’s more remote areas and from Japan and South Korea. The criterion of the plan that these centres should be able to organise freight transport on returning services is interesting; they are encouraged for European imports, in addition to exports, for an improved balance between westbound and eastbound traffic. The task of railway nodes is to compose, shunt and transload trains travelling from China to Europe. Two stations, Xian and Ürümqi have a particularly great role in that, as westbound trains all meet at these stations. A marshalling yard is planned to be built in Ürümqi, where goods headed towards the same destination are collected, and trains are shunted. Sea ports are intermodal terminals connecting water and rail transport. The plan highlights several times that the railway line from China to Europe is suitable for transporting not only Chinese, but also Japanese, Korean and Taiwanese goods, and these can be easily forwarded into East Chinese ports by sea. Land border crossings are border stations of China-Europe freight trains. The four major border crossings are Erenhot towards Mongolia, Manzhouli to Russia, and Alashankou and Khorgos towards Kazakhstan. Customs clearance is the task of bor-

102

der crossings, but it is managed electronically now, thus it does not really influence running times. Border transit times may be increased by the container transloading, as whatever direction a train exits China, in the surrounding countries to the west and the north there is broad-gauge (1,520 mm) network, in contrast with the Chinese normal gauge (1,435 mm). Transloading as such is not a hindering factor, but the availability of adequate cars is. Ideally, a westbound train and an eastbound one meet at the border, they are transloaded, and both can move on. This is organised by train operators, delays occur, but the situation is improving year after year. It is hard to tell exactly from which Chinese cities and to which European cities trains travel. News containing increasing numbers are regularly published in China – in 2017, 36 Chinese cities were linked to 34 cities of twelve European countries by 57 routes , in 2018, freight trains departed from 56 Chinese cities to 49 cities of 15 European countries , and in April, 2019 there were reports about rail freight transport links between 62 Chinese cities and 51 cities of 15 European countries. According to a table included in the official development plan, in 2016 services were operated from 23 Chinese cities, and further services were planned to be launched from 20 other cities, under the China-Europe freight trains brand. The table, however, includes trains that do not arrive exactly in Europe – for example, the destination of several services is Almaty, trains leave for Cherkessk, Ulaanbaatar, and the Russian Far East (Tomsk, Zabaykalsk), and even the service to Tehran is included here. In the development plan of 2016 there are eleven European destinations: Brest, Duisburg, Hamburg, Łódź, Madrid, Minsk, Moscow, Pardubice, Rotterdam, Schwarzheide és Warsaw. Eight of them can be found within the territory of the European Union, with Duisburg being the most significant. The rail Silk Road reinvigorated the former steel hub of the Ruhr region, which was plagued by severe unemployment after heavy industries were shut down. Today it has the largest inland port in Europe, its capacity is on a par with that of the port of Hamburg. Trains have been arriving here form Chengdu, Chongqing and Ürümqi since 2011; today, Duisburg is the first European destination of four trains out of five. These typically arrive in Europe on the route running across Kazakhstan.

China: The Departure Point of the Iron Silk Road

In addition to cities included in the development plan, several other routes have been reported in the news; let us just think of the Yiwu–London train, which has become famous as the longest service. The first train arrived in the British capital in January, 2017 after having taken an 18-day-long journey. Three months later, the first eastbound service was launched, carrying pharmaceuticals, baby formula and whisky to China. In the initiative, Britain sees an opportunity to boost its trade, which may be particularly important to the country in the post-Brexit period. The routes in operation allow for the launch of several services, news about newer and newer trains can be regularly read on the official site of the BRI or rail freight transport portals. The infrastructure required for the operation of the trains is in place, the system serving transport is increasingly developed both in China and the countries along the route, the number of services can be further increased on customer and market demands. TRANSPORT COSTS AND RATES Transport cost compared to other modes, mainly maritime transport is a basic factor in the competitiveness of rail freight transport between China and Europe.

When exploring the issue, the greatest problem is that different sources give very different prices. A study in 2017 examined the transport costs of laptops between Chongqing és Rotterdam, comparing various modes and routes, such as maritime, combined road-maritime, rail-maritime, rail and air transport. The following prices were charged for a 40’ container (Table 1.). An analysis published on a Chinese news portal calculates much higher prices, the transport cost of a 40’ container is estimated to be between US$6,0009,000, breaking down transport costs between Ningbo and Hamburg as follows (Table 2.). The cost of maritime transport on this route is calculated to be US$2,000, and that of air transport is US$2,364 per tonne, which makes comparison rather difficult. Nevertheless, the cost of rail transport is on the same level with the costs of air transportation, the previous study suggests. According to an information material of a logistics company, a 40’ container can hold 22 tonnes of cargo (naturally, it also depends on the types of goods), the transport cost of which between China and Europe will be US$8,000 by rail, US$2,000 by sea, and US$32,000 by air. These prices are similar to the ones

Table 1. Transport costs of a 40’ container between Chongqing and Rotterdam Route

Mode of transport

Transport cost (US$)

Chongqing–Shanghai– Rotterdam

Inland water–Maritime transportation

2,354.1

Chongqing–Shanghai– Rotterdam

Road–Maritime transportation

3,637.5

Chongqing–Shanghai– Rotterdam

Rail–Maritime transportation

3,162.1

Chongqing–Shenzhen–Rotterdam

Road–Maritime transportation

Chongqing–Shenzhen–Rotterdam

Railway–Maritime transportation

3,066.2

Railway transportation

4,436.6

Air transportation

8,930.5

Chongqing–Xinjiang–Europe railway Air

3,387

Table 2. Transport costs of a 40’ container between Ningbo and Hamburg Section within China Ningbo – Alashankou RMB20,206 Alashankou - Hamburg (41 wagons, 1-2 trains per week) US$5,100 Section outside China Alashankou - Hamburg (41 wagons, unscheduled) US$5,300 Cost of border station Border crossing RMB500 Fees for using trains of China Railway RMB800 Fees for using containers US$700 1-2 trains per week on the foreign section US$9,134 Total (1 USD = 6.45 RMB) Unscheduled on the foreign section US$9,384

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Name of route

From-To

Yuxinou

Chongqing– Duisburg, Germany Wuhan– Czechia, Poland Chengdu–Łódz, Poland Zhengzhou– Hamburg, Germany Suzhou– Warsaw, Poland Yiwu–Madrid, Spain

Hanxinou Rongxinou Zhengxinou Sumanou Yixinou

Table 3. Distance (Km) Rate/FEU (USD) 11,000 8,900

Subsidies/FEU (USD) 3,500~4,000

10,700

12,000

15~17

4,000~5,000

9,965

10,290

12~14

3,000~3,500

10,245

10,500

16~18

3,000~7,000

11,200

7,500

12~15

13,052

10,000

1,000 (cancelled by 2014)1 Without subsidies

given by the second source, although the cost of air transportation will be much higher if 22 tonnes are calculated. When examining other, here unquoted sources, we can generally say that the cost of rail transportation is twice to four times as much as that of maritime transportation, and it is one-fourth/one-fifth of that of air transportation. There is one more factor influencing transport costs of freight trains between China and Europe, and that is the subsidies from local governments in China. LOCAL GOVERNMENTS’ SUBSIDIES Chinese provinces and local governments have an important role in developing rail connections. Everyone wants to have the highest share possible of the initiative announced by China’s president, hoping for political support for their commitment, and they regard it as an important element of the local economic development strategy. Local governments provide plots required for rail development and the construction of lines and nodes, and various subsidies for local companies. It is difficult to provide an accurate picture of its extent, as only careful answers, lacking specific figures were given during the interviews. According to some respondents, subsidies cannot exceed 50 per cent of the entire budget, thus its extent varies year by year. Some others said that subsidies varied by areas and could be used for various purposes – cutting logistics costs or developing a station. There are cities where no subsidies exist anymore, Zhengzhou, for example, operates independently, and Changsha also receives very little subsidy. In a metaphor, the pro-

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Running time (days) 15~17

cess was compared to the development of small children – first, children need a lot of care, before they start walking independently. According to a logistics company in Tianjin, local governments compete with each other in terms of how much they can support the launch of trains, which is a pre-requisite of opening a line. Fully or partly stateowned companies enjoy the subsidies provided by local governments, which can be of two types: the difference between maritime and rail transport, and supporting road warehousing over 1,000 km. By contrast, companies without a state background do not receive subsidies, and are losing ground in this competition. They are concerned that there are some who want even more subsidies, which may lead to an even more unfair competition and a deteriorating economic environment. Zhengxinou, for example, offers free road transport within a 1,500-km radius, significantly distorting the market structure of eastern regions. They think that current subsidy is US$3,000-4,000/FEU, the market transport price from Chongqing or Chengdu to Europe is US$7,500/FEU, and in the case of a privately-owned company in Canton it is US$7,300/FEU. According to another source, the Trade Office in Canton, in 2017 subsidies amounted to a total of RMB 87.22 million (US$12.89 million) in Canton province, RMB 32.52 (US $4.81 million) in the city of Canton, and RMB54.7 million (US$8.08 million) in Dongguan. Three services per week were launched from Canton province, which means 144 trains a year, thus each train had a subsidy of roughly RMB600,000 (US$88,680). A train usually consists of 41 FEUs, thus on average, a subsidy of US$2,163/FEU was given, which is less than the figure above.

China: The Departure Point of the Iron Silk Road

In a research conducted in 2017, various amounts of subsidies for various communications were found, as shown in the table below (data are from 2014) (Table 3.). On the basis of the data above, the amount of subsidies may be around US$3,000-4,000 per container (FEU). A train typically carries 40-42 containers, thus subsidies per train may reach US$120-160,000. Consequently, a local government may pay several millions of dollars a year for subsidies for trains, but in China trains are considered to have also a social benefit, the local economy picks up in areas connected with new logistic lines, the increase in the performance of local companies far exceeds the amount spent on trains. According to the plans of the Chinese government, subsidies will be phased out by 2020-2022 and unprofitable lines will be terminated. The number of lines, however, increases each year, and although the price is a determining factor of competitiveness, the picture is more nuanced if other considerations are also taken into account. COMPETITIVENES AND FUTURE OF RAIL TRANSPORT Rail transport has its own advantages and disadvantages over maritime and air transport. It is definitely cheaper than air transportation, a train can carry much more, nine planeloads of, cargo, but its transit time is longer. Usually, smaller quantities of goods of higher added values are transported by air, where urgent delivery is important and the margin can take high costs. In terms of quantity and rates, rail cannot compete with huge container ships. The transport of a container between China and Europe by sea costs, depending on the departure and arrival points, US$2,000-2,500, and the capacity of the largest ships reaches 20,000 TEU â&#x20AC;&#x201C; by contrast, a train can hold 80-84 TEU. Maritime transport is ideal for cheap goods transported in high quantities, where delivery is urgent and flexible enough. Transit time can be as long as 30-45 days, loading and unloading in ports may take several days, and the exact date of arrival cannot be usually guaranteed. The greatest advantage of rail transport over maritime transport is speed. The transit time of goods between China and Europe on the Eurasian continent is 14-18 days, depending on, again, the departure and arrival points. Railway timetables are much more accurate

than maritime ones, which can be important when supplying parts to a factory. Time has a value, which can also be translated into monetary terms: due to a shorter transit time less equity has to be committed, less stock has to be kept. Thus, rail is suitable for transporting goods with higher values and shorter turnover periods, where it is important to place them in the market as quickly as possible, to deliver them at their place of destination. The competitiveness of rail may be improved by a further reduction of transit times, and a better utilisation rate of east- and eastbound containers. Since the beginnings, the running time of trains decreased from 25-28 days in 2009 to 17 days in 2016, but then it has slightly increased again. The reason for that is congestion at border crossings due to increased traffic, as containers have to be transloaded twice between China and Europe due to the change of gauge. For a smoother service, either existing border crossings should be developed, or new ones should be opened. China and Russia also expand rail border crossings: Khorgos, situated on the China-Kazakhstan border, plans to handle half a million containers by 2020, in Europe, the development of the currently busiest border crossing, MaĹ&#x201A;aszewicze, lying on the Belarus-Poland border, has begun, but alternative routes are also being considered. Traffic in the west-east direction is becoming increasingly balanced: in 2018, almost three-fourths of Europe-bound trains returned laden with goods to China. The Russian embargo, which banned the transit traffic of specific goods across the country, meant a barrier in eastbound traffic. This ban was lifted on 1st July, 2019, opening the way to agricultural products and foodstuffs, for which there is great demand in China. Norway is already planning the first consignment of salmon travelling through Sweden, Finland and then Russia, on its way to China, but there is high demand for beef and pork, dairy and baby food products on the Chinese market. Due to food-related scandals of recent years, import goods are trusted more in China, and with the growth of the middle class, there is increasing solvent demand for quality food. Regarding the other side of the rail traffic between China and Europe, the EU has criticized the BRI several times, but during the latest EU-China summit, the opportunities of creating a better connectivity between the two continents were discussed. Synergies between the EU's rail network, the Trans-European Transport

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Network and the rail corridors of the BRI and the development of a sustainable rail link between the two regions will be explored. The first trains were services launched by companies and operated on a market basis. China’s government aims at further extending railway connectivity, and now the EU may also be a partner. On this basis, rail transport is expected to grow further in the coming years, which will be only slightly affected by the phasing-out of subsidies. Logistics expert think there will be sufficient and balanced traffic between western and eastern destinations, the advantages of rail transport are being recognised by an increasing number of people, more operators will make service more efficient, and this product will succeed in the market after subsidies are phased out. A Chinese proverb, often quoted by China’s president, XI Jinping, says, ‘if you want to get rich, build roads’. China has been actively building roads leading to Europe, and these roads are two-way ones, offering an opportunity not only to Chinese companies but also European ones.

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Kazakhstan â&#x20AC;&#x201C; The Strongest Link in Central Asia

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Kazakhstan – The Strongest Link in Central Asia Author: Alexandra Zoltai

Kazakhstan is the biggest of the Central Asian countries by land mass and possesses abundant oil and natural gas reserves. With a GDP of roughly US$160 billion, its economy is larger than that of all other Central Asian states, while its location makes it an attractive trade and logistics hub between China, Europe and South Asia. China quickly realized the country’s potential, and as such it comes as no surprise that President Xi Jinping unveiled the plan of the New Silk Road project in Kazakhstan, as he contributes key importance to the country in the BRI project passing through Eurasia. Plans to establish Kazakhstan’s improved connectivity and central role, however, preceded the announcement of the BRI by more than three years. In 2010, China and Kazakhstan agreed to upgrade their common border area at Khorgos (Khorgos Eastern Gate).

Kazakhstan’s attractive location and China’s proximity make the Central Asian country an important BRI partner, this is one of the reasons why the Kazakh government aligned its national development strategy with that of China in order to boost Kazakh trade, industrial capacity, revenues in the energy sector and technological developments. Roughly these are the areas encompassed by ’Bright Road’, Kazakhstan’s flagship economic plan. ’Bright Road’ foresees US$40 billion in spending until 2020 on projects related to logistics, infrastructure, public services and SMEs. China and Kazakhstan have also signed over 50 deals amounting to US$26 billion in total within three years of the introduction of the BRI. Large investments into Kazakhstan are important to fuel its growth outlook, and to be able to diversify its economy in order to become less dependent on natural resources. From a Kazakh perspective, how-

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ever, it would be important not to build everything on BRI, seeming an easy source of revenues, but to simultaneously build up its manufacturing and technological capacities and create new opportunities for its emerging service sector. Naturally, BRI can provide the country with more opportunities also in this regard, for which a national programme, ’Digital Kazakhstan 2020’ has been devised, which has specifically set the goal of creating a ‘Digital Silk Road’ that focuses on the development of digital infrastructure in the Central Asian state. In practice, this means that Chinese telecommunication companies will contribute to the development of smart cities and smart infrastructure in Kazakhstan. Additionally, the increase in Chinese capital flowing through the region is expected to foster urbanization by bringing more migrant labour into the country, and an increase in tourism is also expected.

Container flow in the China-Europe-China communica on (TEU) 1,000,000 900,000

800,000

800,000 700,000

600,000

600,000 500,000 400,000

340,000

300,000 200,000 100,000

201,000 105,000

0 2016

2017

2018

2019

2020

Source: Belt & Road Updates 2018. Samruk Kazyna, January 2018.

No 1 2 3 4 5 6 7 8 9

Project Khorgos terminal Kuryk port Zhezkazgan-Beineu railway Arkalyk-Shubarkol railway Almaty1-Shu railway New railway hub in Astana Logistics terminal in Shymkent Logistic terminal in Astana Modernization of Aktau port

Cost (USD million) 222 261 1,131 242 102 561 43 82 112

Development period 2014–2020 2015–2018 2012–2017 2012–2017 2015–2017 2013–2017 2014–2017 2014–2016 2014–2017

Main projects, considered as a part of the BRI in Kazakhstan. Source: Belt & Road Updates 2018. Samruk Kazyna, January, 2018.

Kazakhstan, however, needs to make great efforts to become more than just a transit point on a BRI map. Therefore, it is also aiming to become a Central Asian finance hub. Still no trusted platform for international financial dealings exists in the region, therefore, for example, the Astana International Financial Center, founded in 2015, aims to become the go-to platform between London, Shanghai and Dubai. Buoyed by Eurasia’s growing importance, countries in Europe and the US have rediscovered their interest in Central Asia as an important destination for trade, finance and diplomacy. Particularly, financial services company JP Morgan and asset manager Blackrock have their eyes on Astana. Kazakhstan, due to its commitment to the BRI, can expect huge successes, and has a good chance to take the role of the main link in Central Asia. For a long-term success, however, it should make greater efforts to become more than just a transit station within the BRI, and take the opportunities to develop its own economy in the areas of infrastructure, technology and

finance. If the country manages to achieve these objectives, while simultaneously balancing its relationship with China, it has the potential to become one of the largest success stories in the region. Kazakhstan’s BRI-related economic data Over 2017, Kazakhstan’s total freight turnover amounted to 208.8 billion t-km, growing by ten per cent year-over-year, while the volume of freight loaded stood at 242 million tonnes, rising by twelve per cent compared to the previous year. The volume of transit freight transported reached 17 million tons, implying a 17 per cent year-over-year growth. In the China-EU-China communication, transit freight container traffic increased almost two times, amounting to 201,000 TEU (in 2016: 105,000 TEU). According to preliminary estimates by Kazakhstan Temir Zholy (the Kazakh railway company), in 2018, transit container traffic increased to 340,000 TEU and further growth

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is expected. This exponential growth is primarily attributable to the significantly improved efficiency of Khorgos dry port and Kuryk seaport and simultaneously reduced freight delivery times. The latest goal of the Kazakh government is to increase revenue from transit freight transportation to US$5 billion by 2020 and develop infrastructure by integrating the latest digital technologies, China’s authorities plan to relocate 51 production facilities to Kazakhstan, with a total of investments amounting to US$27 billion in sectors such as metallurgy, chemicals, construction materials and vehicle manufacturing. Three projects (polypropylene production in Pavlodar, automobile manufacturing in Kostanay and vegetable oil produc-

134 per cent compared to 2008 and amounted to 495.4 billion tonne-kilometres. Foreign trade turnover also grew by 22.4 per cent, but its share in the GDP has been steadily declining, indicating a deterioration in trade relations during the crisis. In 2013, exports and imports in the total trade turnover were respectively US$84.7 and 48.8 billion. In the total volume of freight traffic in 2013, 57.2 per cent was within the country, 21.1 per cent was for export, 3.5 per cent was for import and 17.1 per cent was for transit traffic. Income from freight forwarding in Kazakhstan has been constantly growing, amounting to US$8.78 billion in 2013. 62 per cent of carriage falls under the international destinations, which implies the development of

tion in the North Kazakhstan region), have already been completed, with another six projects being in the process of reallocation. Kazakhstan will have further benefits from the BRI: infrastructure investments estimated at US$7 billion over the next five years, 4.57.0 per cent GDP growth by 2021, and creating over 200,000 new jobs also by 2021.

the transport and logistics infrastructure and the improvement of its quality, especially because of transit traffic.

Players INFRASTRUCTURE DEVELOPMENT BY THE STATE Kazakhstan is located at the intersection of major transport routes used by countries and regions such as China, Russia, Eastern and Western Europe. Due to the new Silk Road, Kazakhstan is becoming a really important area for these countries through the development and deployment of modern logistics centres. Five international railway transit routes, six international transport corridors and several major pipelines cross the Kazakh territory. The development of transport and logistics systems, including the establishment and expansion of regional, inter-regional and local logistics centres in addition to international ones, would be key to the country. The transport sector accounts for about eight per cent of Kazakhstan’s GDP and 7.0 per cent of the total employed population. The transport system in Kazakhstan is very important due to factors such as a large area (2,724,900 sq. km) and the location of the country. In recent years, the volume of freight traffic, as well as related investment have increased significantly. In 2013, 3.5 billion tonnes of cargo were transported across the country, which was 60.3 per cent more than in 2008, which was also reflected by investments: in 2013, their value was US$9.5 billion, which is a 52.4 per cent increase compared to 2008. Freight turnover in 2013 increased by

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BRI’s northern transport corridor linking Western Europe and Western China is 8,445 km long, of which the Kazakhstan section is 2,787 km, with a project cost of US$5.65 billion. It is expected to promote the land transport of Chinese goods over sea transport (as opposed to 45 days by sea, land transport would take only 11 days). Among all types of transport, rail transport along the Euro-Asian routes has a great potential to become more competitive in terms of travel time and fares. In Kazakhstan, transport operators must speed up delivery time and improve the quality of service to meet the demand, while governments and investors need to modernize the infrastructure and harmonize national legislation. The two largest nodes of transport in the country are Dostyk, a railway junction on the Eastern border, and Aktau, a sea trading port in the west of the country. The state transport policy of the government of Kazakhstan for the period till 2015 sets the goal to increase the efficiency of transit transportation on the territory of Kazakhstan. As Kazakhstan’s rail system was mainly designed and constructed during the Soviet era, it does not suit modern-day commercial needs. Therefore, the Kazakh government had to set out a new policy guideline to modernise and improve rail transport. Recently, road transport in Kazakhstan has become the third most important mode of transport after rail and pipeline transport due to its economic importance. The main advantage of road transport is that the density of roads is almost six times higher (more than 30 km per 1,000 km2) than that of railways. The importance of road transport has doubled (20.8 per cent) by the 2010s compared to the 1990s (10 per

Kazakhstan – The Strongest Link in Central Asia

cent), and more than 90 per cent of passenger traffic takes place on roads. According to forecasts, by 2017 the share of this mode of transport in cargo turnover will increase to 32 per cent, mainly because roads are the only transport connections in many regions of Kazakhstan. INFRASTRUCTURE DEVELOPMENT POLICY ‘Nurly Zhol’ infrastructure development programme Within the framework of the ‘Nurly Zhol’ state programme of infrastructure development, Nursultan Nazarbayev, President of the Republic of Kazakhstan, has set the following direction for the Ministry for Investment and Development. 1. Creation of an effective transport-logistics infrastructure. 2. Development of motorways. 3. Development of the railway sector and logistics. 4. Development of industrial and tourism infrastructure. 1. Motorway projects From the National Fund, KZT296.7 billion will be devoted to carrying out these projects. International financial organizations also take part in funding motorway projects. Since 2016, after the reallocation of the loan resources formed from savings, US$763 million have been spent on implementing the West Europe–West China and the Beineu–Aktau projects, the Kurty–Burubaital, the Usynagash–Otar, the Aktobe–Makat and the Zhetybai–Zhanaozen routes have been co-financed from the National Fund in the amount of KZT4.6 billion. More than 7,400 km of roads are planned to be built during construction works. 2. Railway projects From the National Fund, KZT46.3 billion will be allocated to realise these projects. 3. Exporters’ support Exporters are supported through pre-export and export lending in accordance with the requirements of the ‘Development Bank of Kazakhstan JSC’ and/or the ‘Development Bank of Kazakhstan-Leasing’; lending is also provided for non-resident financial institutions/ organizations that import goods produced on the territory of Kazakhstan. Conditions of project financing of national producers and exporters within the framework of the given programme will be determined by the Gov-

ernment of Kazakhstan. At the expense of the National Fund, export support amounted to KZT35 billion in 2015, and KZT15 billion in 2016. The results of the ‘Kazakhstan 2030’ strategy from the perspective of infrastructure The main goal of the strategy is infrastructure development. Within this framework, several large-scale infrastructure projects have been launched in recent years, including motorways, railways, pipelines, logistics hubs, terminals, airports, railway stations and ports. These projects have created numerous jobs for Kazakh people, and integrated Kazakhstan in the regional and global economic system. In the past eleven years, the motorway development sector received more than KZT1,263 billion, which was used to build and reconstruct more than 48,000 km of roads and 1,100 km of railways. By reviving the ancient Silk Road, a ‘Western Europe–Western China’ transport corridor is also being established. The ‘Kazakhstan 2050” strategy from the perspective of infrastructure development In this respect, a completely new approach is being adopted in order to develop the infrastructure, for which two essential ways need to be implemented by expanding the opportunities of economic growth. Firstly, the national economy should be integrated into the global environment, and secondly, developments should take place towards regions within the country. It is important to focus attention on exit routes from the country and create transport and logistics facilities outside Kazakhstan. Joint ventures should be established in the region and throughout the world – Europe, Asia, America –, ports should be built in countries with direct access to seas, and transport and logistics hubs should be set up at nodal transit points. The transit potential should be developed Today, a number of infrastructure projects are being implemented, which are expected to double the transit capacity of the country by 2020, and this figure is intended to be ten-fold by 2050. The key goal is to promote exports to world markets and create a long-term demand for Kazakh goods and services. Infrastructure building must also meet the profitability criteria, that is, infrastructure should be built only in places where this leads to the development of new businesses and jobs. Within the country, the goal is to create “infrastructure centres", to ensure coverage of remote regions and

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places with low population density with vitally important and economically necessary infrastructure facilities. Ahead of that, transport infrastructure must be ensured. New opportunities under the Fourth Industrial Revolution Increasing the efficiency of transport and logistics infrastructure. In general, the transit of goods through Kazakhstan increased by 17 per cent and amounted to almost 17 million tonnes in 2017. The goal is to bring annual revenues from transit in 2020 to US$5 billion. This would make it possible to return the funds spent by the State on infrastructure within the shortest possible timeframe. It is necessary to ensure the large-scale introduction of digital technologies, such as blockchain, to track the movement of goods online and to ensure their unhindered transit, as well as to simplify customs operations. The use of “big data” will help provide high-quality analytics, identify areas of growth and reduce excess costs. To achieve this, it is necessary to introduce an Intelligent Transport System, which would allow for an effective management of transport flows and determination of the required directions of further infrastructure development. In order to improve intra-regional mobility, it is important to increase funding for the repair and reconstruction of local road networks. MAJOR STATE-OWNED OPERATORS KTZ Express The sole shareholder of KTZ Express JSC is Kazakhstan Temir Zholy National Company, which is also the operator of the Kazakh railway network. KTZ Express provides a full range of logistics services for domestic and international companies, through rail, sea, air and road transport, port and airport infrastructure, and a network of warehouses and terminals. KTZ Express actively contributes to regular container transport in 17 Chinese provinces, Vietnam, Korea, Europe and the Persian Gulf. Customers are offered competitive delivery times, cargo is delivered, for example, from China’s provinces to European countries within 9-15 days, and to Central Asian countries and Russia within 6-8 days on average. In 2016, the volume of container traffic on the China-Europe-China route amounted to approximately 105,000 TEU (1,122 container trains), exceeding the target of 94,600 TEU (1,100 container trains), which is the double of the results achieved in 2015 (49,900 TEU – 581 con-

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tainer trains). However, in 2016, the volume of goods directed from Europe to China was only 50 per cent of the capacity (70,174 TEU, consisting of 808 container trains from China to Europe, and 34,391 TEU, consisting of 404 container trains from Europe to China). Container transport was estimated to reach 195,000 TEU by the end of 2017. Kazakhstan Temir Zholy Kazahstan Temir Zholy is the owner and operator of the mainline railway network of the Republic of Kazakhstan. Its main profile includes rail freight and passenger transport, a significant share of gross export volumes in Kazakhstan derive from here. In order to ensure optimal and efficient transport, to increase freight and passenger traffic, and to meet industrial and consumer demands, the government of the Republic of Kazakhstan has launched a large-scale programme of constructing new railway lines. The creation of a functioning network of the Kazakh national railroads became extremely urgent after the declaration of independence, as certain regions and areas became isolated, and building relationships with neighbouring countries also became important. The development of the export and transit potential of the country also required new railway lines. Since it was put in operation in 2012, the Zhetygen-Altynkol (Khorgos) railway line has been providing a second railway transition on the border with China. The new, 550-km-long section shortened the distance from the People's Republic of China to Kazakhstan and the countries of Central Asia. Leaders of Kazakhstan, Turkmenistan and Iran opened the Uzen–Bereket –Gorgan international transport passage in 2014, its Kazakh section was put into operation in 2012. This passage has greatly reduced delivery time between China and the countries in the Asia-Pacific region, as well as Iran and the Gulf region countries. As the President of Kazakhstan, N. A. Nazarbayev said, ‘the new Silk Road was actually created’. The same year, two new railway sections (Zhezkazgan– Beyneu and Arkalyk–Shubarkol) were put into operation in the centre of the country. The introduction of new lines has increased the country’s internal communications between regions, and has also led to a growth of Kazakhstan’s transit and export capacity, and has also given a powerful impetus to the development of regions. New railway lines and stations were built, which prompted the emergence of the required social infrastructure. From 2000 to 2008, the company successfully managed to reach an annual growth of seven per cent.

In 2008, a new wave of development began. Over 1,000 locomotives, 37,500 trucks and almost 1,500 cars were put into circulation, and 4,700 km of rail tracks were upgraded. Today, state-of-the-art freight and passenger wagons, locomotives, electric locomotives, rails and materials of track structure are produced in the country. The production of Kazakh plants has a high export capacity and since 2012, they have been delivering to and producing for the markets of the countries of the Eurasian continent. In 2010, the Government of the Republic of Kazakhstan adopted a new programme for the development of transport infrastructure until 2014. NC KTZ JSC has changed from a railway company into a transport and logistics holding, with the task of developing Kazakhstan’s transit capacity and increasing the country’s significance in global transport and trade. Today, NC KTZ JSC provides and coordinates rail and maritime transportation services, services of transport and logistics centres, as well as the services of sea ports, airports and road infrastructure. The company implements infrastructure projects within the framework of the ‘Nurly Zhol’ state programme, participates in the implementation of the national plan, which has set out ‘100 concrete steps’, continues to modernize transport assets, increases the volume of land and sea transport, participates in institutional development in international transport and the elimination of non-physical barriers during delivery. Samruk Kazyna The Samruk Kazyna joint stock company is the Kazakhstani Wealth Fund, where the absolute owner is the government of the Republic of Kazakhstan. The Fund was established in 2008, its total assets amount to US$78 billion, and plays a great role in the economy and the business sector of the country. The public postal office, the national railroad, and the public oil and gas company are just some of the big companies found on the Fund’s list. The company is entrusted with managing the shares of the country’s institutions, public companies, and other organizations in order to optimize their competitiveness at a global level and in international markets. Their main goal is to maintain the economic growth and stability of the country and to counter any possible negative effects in the world markets. Invest in Kazakhstan/ Kazakh Invest It is the State Institute of the Investments Committee under the Ministry for Investments and Development of the Republic of Kazakhstan. The company

was established by the Government of Kazakhstan to create an adequate environment for foreign investments and attract them into the country. They provide a full range of services to support investment projects, from the initial idea to the project implementation phase, and provide support for the companies founded. Kazakh Invest is a “one-stop-shop” for existing and potential investors, and functions as a single point of contacts to support the investment paths of enterprises. It has an extensive international network of representatives in several large industrial centres of the world. Atameken It is a nonprofit organisation of the National Chamber of Entrepreneurs of the Republic of Kazakhstan, designed to enhance the negotiation power of business with the government and public authorities. The Chamber represents the interests of small, medium and large businesses, covering all business areas, including internal and external trade. The main task of Atameken is the protection of the rights and interests of the business, ensuring wide coverage and involvement of all entrepreneurs in the process of formation of legislative and other regulatory rules for business. Their aim is to preserve and improve the stability of the business and investment climate, and provide assistance for domestic and foreign investors. Khorgos International Centre of Boundary Cooperation Khorgos International Centre of Boundary Cooperation (ICBC Khorgos) is a public company established between the governments of Kazakhstan and China for the purpose of ensuring cross-border cooperation along the borders shared by the two countries. The idea of cooperation emerged after a state visit of the Kazakh President to China in December, 2002. However, a Framework Agreement between the Governments of Kazakhstan and China on the establishment of ICBC “Khorgos” was signed only two years later in the city of Yining (China). After that, a working group was founded by the Kazakh Government to develop a legislative and regulatory framework, then a joint stock company was established with one hundred percent state participation in the authorized capital. The core activity of the company is defined as the creation, development and maintenance of the infrastructure of the Kazakh part of ICBC "Khorgos", which creates an attractive environment for potential investors intending to launch investment projects

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‘The total area covered by ICBC "Khorgos" is 560 hectares, and there is a “special passage” across Kazakhstan’s state border, connecting China and Kazakhstan. The uniqueness of the project lies in the free movement of goods, cargo and vehicles within the territory of the centre, as no visa is required. ICBC "Khorgos" received the first tourists on 18th April, 2012. Since then, the city of Khorgos has been visited by six million Chinese tourists annually, as this is China’s westernmost part, and only 5-10 per cent of tourists have a passport allowing them to travel abroad, consequently most people have opportunities for internal travel only. The idea that an entertainment centre would be established on the Kazakh side fits well, as it would be very difficult to compete with China in terms of trade. By October, 2017, a decision by the government was made to grant Free-Trade Zone classification to the area, which gives privileges and preferences to investors. The best way to characterise the trade zone is that China provides the commercial area, and Kazakhstan provides buyers and entertainment. on Kazakh territory. The main mission of the centre is to create a new unique format of cross-border cooperation, integrated into the world economy, and its objective is the development of border areas between Kazakhstan and China, the creation of an attractive investment climate, the expansion of the influence of interstate and national programmes on environmental, cultural and social-ecological interaction of people. MAJOR RAILWAY COMPANIES InterRail Kazakhstan LLP "InterRail Kazakhstan" is a subsidiary of Swiss InterRail Holding AG, providing a full range of high-level logistics services, with effective, optimal solutions. The company pays particular attention to its Euro-Asian routes. Subsidiaries, branches and offices located in 29 cities in 13 countries offer a full range of services in the sphere of rail transport. Eastcomtrans Eastcomtrans LLP is the largest privately-owned rolling stock operator in Kazakhstan and Central Asia, with a rolling stock fleet comprising 12,545 wagons. Eastcomtrans LLP conducts activities in the transport market of the Republic of Kazakhstan for more

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than 15 years, and has branches and representative offices in 11 cities of the country. The company has one of the most modern automated management systems for wagons in Kazakhstan, which allows for tracking wagons throughout the 1,520 mm track space, and the current accounting of cargo and the technical conditions of wagons are also available. The company has roughly 100 partners, and transported 15,000,000 tonnes of cargo in 2018. Kaztemirtrans It is a subsidiary company of Kazahstan Temir Zholy, and was established as a result of reforming the railway transport of Kazakhstan. The mission of the company is to promote the development of the transport sector of the Republic of Kazakhstan and to meet market demands for rail freight transport to a high standard. Their core activity is to provide delivery and transport services both on a domestic and international level. They also offer rental services of freight wagons and a comprehensive freight forwarding service. Furthermore, the company also sell scrap metal, and manufacture freight cars. Freight cars transport package-piece, packaged and some free-flowing (grain) cargoes; machines, piece-goods, wood and other cargos; petroleum products; cement, other powdery and granular cargoes. MAIN LOGISTICS KTZE-Khorgos Gateway LLP Company Plans to create improved connectivity and a central role for Kazakhstan preceded the BRI by more than three years. In 2010, China and Kazakhstan agreed to upgrade their common border area at Khorgos. From the Kazakh side this involved developing the Khorgos dry port through improved access to railway transport and the construction of commercial centres. Simultaneously, China ratified a new special economic zone in Yili, on the other side of the border in north-western Xinjiang. The infrastructure to be put in place in the zone will facilitate container transport, a smooth freight flows at the border, and tourism. The outcomes of past efforts are visible today under the BRI framework. Khorgos dry port is now poised to rival Germany’s similar inland port in Duisburg by becoming the biggest dry port in the world and handling up to 30 million tonnes of rail freight per year.

Kazakhstan – The Strongest Link in Central Asia

Eurasian rail freight is getting increasingly popular in the ‘BRI era’ as it is cheaper than air and faster than sea freight. A train from Yiwu in China’s East into Europe through Khorgos only takes 15 days, in contrast with about 35 days by sea. As rail costs continue to fall, Khorgos is hoping to capture market share from maritime transport, which still dominates Eurasian trade. Developments in Khorgos show that Kazakhstan is seeking to position itself to benefit from growing Eurasian connectivity and aims to reshuffle global transport routes. However, the real question is whether or not the Central Asian country is also able to reshape its domestic industries according to the needs of BRI so that the local population could take advantage of the opportunities offered by BRI; however, here the outlook is mixed. The operator of the dry port is a subsidiary of KTZ Express, and in terms of size, it is the third largest dry port in the world. It was established with the aim to increase Kazakhstan’s export-transit potential within the Eurasian region, develop competencies in the field of global logistics, attract foreign investments and it also forms an essential part of the ‘Nurly Zhol’ – Road to the Future programme. Khorgos Gateway is part of a strategic goal to establish a huge logistics centre, covering world markets from China to Europe, including Central Asia, Turkey and the Persian Gulf countries. The dry port is located at the heart of Khorgos-Eastern Gateway special economic zone, directly on the Kazakhstan-China border. The total area of the Dry Port is 102.8 ha, integrated with the logistic (224.9 ha) and industrial (224.6 ha) zones. This project provides the optimal solution for container handling and opens up new opportunities for further industrial processing of imported goods. Companies of the SEZ receive a full range of tax and customs preferences. KTZE-Khorgos Gateway Dry Port is an evolving multimodal logistics hub, the services of which include various cargo operations such as train receiving / dispatch; transshipment of loads from trains of a 1,435 mm track gauge to trains of different, 1,520 mm track gauges and vice versa; transshipment of motor vehicles (China– KTZ, PRC–KTZ); making-up of container trains; operations carried out in warehouses and the container site: loading, sorting, storage, dispatch of cargoes, etc.; storage of dangerous goods and temperature-sensitive goods; scanning; weighing; packing / unpacking; customs clearance, insurance, provision of guarantees for all types of risks.

‘The dry port is located within the Khorgos Eastern Gate special economic zone. This zone can be divided into three sections: an industrial zone, a logistics area and the dry port itself, which is situated on an area of 130 hectares. There is a container terminal, where containers are loaded and unloaded; it has two temporary storing stations, one for standard-gauge and another for broad-gauge cars. There are ten side-tracks, three of them are narrow-gauge ones and six of them are broad-gauge ones, which means that three Chinese trains can be loaded simultaneously. The dry port has been in operation for three years, and is under customs control. In 2016, a container traffic of 43,000 TEU was managed here, in 2017 this figure rose to 92,000 and it has been estimated to exceed 100,000, 120130,000 in 2018. The transshipment of containers takes 55-60 minutes on average, than they have to pass through Atynkol customs point; all in all, it takes four hours for a train to complete all processes, including customs control, customs clearing and change of gauge. It is maintained from private investments and state assistance. There are no Chinese investors, but in March, 2017, two Chinese companies, COSCO and Jiangsu Lianyungang Port Company, acquired stakes in the company operating the port. Both have 24.5 per cent of shares. To sum it up, 49 per cent of the shares of the dry port is held by Chinese companies, and 51 per cent is held by KTZ Express. Currently, they work with a capacity of 30 per cent, roughly five trains are transhipped a day, although there is capacity to receive 15 trains.’ As of today, KTZE-Khorgos Gateway LLP has reloaded 14,855 containers, which means 24,882 TEU. Growth is primarily attributed to the re-arrangement of the parent company’s traffic and the accessibility of new geographical areas. Initially, mainly Kazakhstan and other Central Asian countries were targeted, now it has been extended as far as Europe, with stations such as Poland, Germany, Finland, and also countries outside Europe, including Azerbaijan, Russia and Iran must be mentioned, but traffic in Central Asia has remained significant. Countries such as Uzbekistan, which has a rapidly developing economy, conduct growing trade with China, therefore container traffic has increased also on this route. The transshipment of containers takes 55-60 minutes on average, then they have to pass through Altynkol station;

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all in all, it takes four hours for a train to complete all processes, including customs control, customs clearing and change of gauge. The main advantages of the dry port include: quick time of train handling, multimodal transport, safety of cargo in accordance with DP World standards, minimal probability of cargo loss, information on cargo in online mode, information in real time mode, including photos of cargo / containers, available on the corporate web site, fixed online schedule of reception and dispatch of container trains. The main advantages of the SEZ include: tax privileges (exemption from CIT, VAT, land tax and property tax), customs preferences (relief of customs procedure

in the market of transport and logistics services for more than 16 years. The company has unique assets and competencies in the area of terminal cargo handling, and also holds a leading position in transloading imported Chinese goods at Dostyk border station. Terminals are located in several regions and cities of Kazakhstan. The main mission of the company is high-quality and the most efficient provision of customers’ needs for integrated transport and logistics services. The main strategic goal of the Company is the increase in capitalization, the growth of its business scale and the increase in the efficiency of its activity. The company provides transport and logistics services in and outside Kazakhstan. Under Kazakh-

for goods, which are imported to the SEZ territory), simplified employment procedure for foreign nationals, strategically important location (at the crossroads of the old and new Silk Road and in the centre of the Eurasian continent), open access to wide markets (Eurasian Economic Union, Central Asia, China, Europe, Turkey and Persian Gulf countries).

stan’s state programme for accelerated industrial-innovative development of Kazakhstan for 2010-2014, the company implemented an IT program, IRS Transportation, which automated the payment process and the provision of services to customers, and an “integrated service” was also created.

Damu Logistics Damu Logistics is a logistics company that seeks to provide an adequate environment and services for companies to establish premises. Damu Logistics has industrial parks in five cities in Kazakhstan: Aktobe, Astana, Karaganda, Almaty and Khorgos. In addition to complex logistics services, sites and project management services are also provided for companies. Kedentransservice Kedentransservice is a leading provider of logistics terminals in Kazakhstan, which has been operating ‘You can find everything required for carriage at the logistics company: railways and roads to Europe and China, a warehouse, companies and factories. The main advantage of the logistics park is that companies can deliver their products directly from the company. In contrast to SEZs, one does not have to invest three million euros, only pay for the land. The positive effect of BRI has become obvious only recently, for example, with the construction of new roads leading to also Damu Logistics. Currently, there is a joint attempt with China to introduce common regulations for example in customs regulation, as the development of regulations pertaining to taxes and customs greatly contributed to the cooperation with Russia and Belarus.’

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Middle Corridor On 7th November , 2013 the II International Transport and Logistics Business Forum "New Silk Road" was held in Astana, where the leaders of Kazakhstan Temir Zholy, Azerbaijan Railways and Georgian Railway signed an agreement on the establishment of the Coordination Committee for the Development of the Trans-Caspian International Transport Route. In order to increase the flow of goods to the Trans-Caspian International Transport Route, the Coordination Committee was expanded with further members in February, 2014: Azerbaijan Caspian Shipping, Baku International See Trade Port, Aktau International Sea Commercial Port, Batumi Sea Port. The results of the coordinated work of the Coordination Committee members include the adoption of standard rates for container transportation; preferential tariffs for transportation of oil, gasoil, grain; creation of the technology for the interaction between transport companies on the China-Kazakhstan-Azerbaijan-Georgia-Turkey route; inclusion of new members; establishment of the International Trans-Caspian Transport Consortium. MAIN FREE-TRADE ZONE Khorgos – Eastern Gate On 29th November, 2011 the economic zone (effective until 2035) of a territory of 5,740 hectares was founded in the city of Khorgos, next to the Chinese

Kazakhstan – The Strongest Link in Central Asia

It was established within the framework of the government’s infrastructure development programme Nurly Zhol in Kazakhstan, and within the framework of the BRI on the Chinese side. The two countries signed an agreement to connect these two. The special economic zone, which includes the dry port, Altynkol station and MCPC Khorgos, has been established as part of a development initiative to create a new city, Nurkent. Local residents work in the territory of the SEZ, and the main aim of this whole thing is to develop the region, as development is very rapid on the Chinese side, but the Kazakh party also tries to keep pace. To this end, they try to create an adequate environment for business and logistics, primarily in freight transport between China and Europe. Companies operating in the territory of the SEZ enjoy tax and

customs privileges offered by the government. These companies are also exempt from income, corporate and land taxes until 2035. The SEZ is expected to operate until 2035, thus preferential taxes are laid down in legislation pertaining to the SEZ; investors can even import goods into the territory of the SEZ duty- and VAT-free. Thus, the main attraction of this SEZ is tax exemption (customs tariff is five per cent, VAT is twelve per cent) and its strategic location is also an important advantage. There is an area of 4,591.5 hectares available, a full system of utilities is built in 700 hectares; 130 hectares will be a dry port, 225 hectares will be a logistics centre and 225 hectares will be an industrial area. A new railway line has been recently opened, leading from Kuryk port beyond Italy via the Caspian Sea.

aim of the special economic zone is to function as an effective transport, logistics and industrial centre; safeguard the interests of trade and export activities; implement potential transfer within Kazakhstan; and promote the development of economic and cultural exchanges with neighbouring countries. Its goals also include the promotion of Kazakhstan’s integration by making domestic products meeting internationals standards competitive in the global system of distribution chains. Its priorities include: provision of storage facilities and secondary transportation activities; food production; production of leather and related products; production of textile goods; production of other non-metallic mineral products; production of chemical products; production of finished metal products (machinery and equipment); and construction of exhibition buildings, museums, warehouses and public administration offices in accordance with design specifications.

border. The Kazakh Railway Company (KTZH) – owned by Samruk-Kazyna, a state-owned company – has a 100 per cent stake in the zone. The primary

Thus, Kazakhstan has good chances to become more than a simple hub within the BRI, and as such, its role in Central Asia and even Eurasia is becoming more important. The government has already taken the initial steps through various developments and national programmes, but great efforts will be needed to achieve the goal and cope with occurring problems and barriers. However, we can conclude that the country is on track to become the strongest link in Central Asia.

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Kazakhstan â&#x20AC;&#x201C; The Strongest Link in Central Asia

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Russia: Beyond the Trans-Siberian Railway

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Russia: Beyond the Trans-Siberian Railway Author: Katalin Borosnyay-Miklós

In the railway transport between China and Europe Russia is almost inescapable. There are routes with intermodal transport via the Caspian Sea and Georgia, there are plans to develop a line passing through Turkmenistan, Iran and Turkey, but the largest volumes of transport travel through Russia, and the country has also seen the fastest increase in rail freight transport.

RUSSIA’S RAILWAY DEVELOPMENT PLANS

and new railway bridges will be built across rivers, including the Ob and the Volga.

The strategic goal of the Russian Railways is to completely integrate the Russian railway network into the Eurasian transport system, taking advantage of the country’s geopolitical position. The Russian government adopted the development strategy of rail transport up to 2030 in 2008, which set out improvement of the railway network in two phases. In the first phase, between 2008 and 2015, modernisation took place to upgrade the existing infrastructure, and in the second phase the task is to expand railway lines. According to plans, between 2016 and 2030 16-21,000 km of new tracks will be built. The costs are estimated at 4.2 trillion roubles, nearly 60 per cent of which comes from the Russian state, twelve per cent comes from the administrative areas of the Russian Federation, eleven percent comes from the Russian railways, and 19 per cent comes from private investors.

The Russian Railways’ strategic development plan up to 2030 was prepared in 2013, which includes tasks analysed by business segments. According to goals set, they want to achieve a leading role in cargo carriage in Europe, and increase freight traffic by 500-800 million tonnes by 2030. By developing the logistics sector, they want to become one of top 5 service providers of Europe, which requires competitive prices and a system ensuring an effective service to the global supply chain. They pay attention to the consistent renewal of assets, and the decrease in environmental load. They want to increase the share of the transport and logistics segment within the holding from ten per cent in 2012 to 23 per cent until 2020, and the following targets have been set for the growth pace of freight turnover: INTERNATIONAL COOPERATION

During the development period, 3.2 trillion roubles will be spent on upgrading the rail infrastructure. It is scheduled to lay 6,000 kilometres of secondary main track, 366 kilometres of third and fourth lines, carry out the complete electrification of sections totalling 7,400 kilometres. Railway tunnels in the Far East, Siberia and on Russia’s Black Sea coast will be renovated

Billion tonnes-kilometres

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In 2017, the rail organisations of China, Belarus, Germany, Kazakhstan, Mongolia, Poland and Russia signed a document on deepening the cooperation on the organisation of container trains between China in Europe. The aim of the cooperation is to develop international transport routes, expand storing, loading and other

2012 2,782.6

2015 2,932.0

2020 3,418.1

2030 3,905.4

logistics services, and provide rolling stock for an unimpeded container traffic between China and Europe. Russian Railways and the China Railway signed a comprehensive strategic cooperation agreement in 2016, pursuant to which the parties will develop border railway crossings between the two countries, international container traffic and freight transport serving e-commerce. Currently, border railway crossings between the two countries are Zabaykalsk–Manzhouli, Grodekovo– Suifenhe, Makhalino–Hunchun. In order to serve increasing traffic, rail infrastructure towards Zabalykalsk will be developed, and an international terminal with Chinese Yingkou Port and a logistics centre in the Bely Rast logistics centre (near Moscow) will be established. A committee (Coordinating Council for Trans-Siberian Transportation, CCTT), was established in 1993 to coordinate traffic on the Trans-Siberian railway. Founding members included Russian Railways, Deutsche Bahn AG and Korean Association of International Freight Forwarders. Currently, it has more than a hundred members from 23 countries, running several projects to increase international trade and the competitiveness of rail freight transport. These include a joint working group of the Russian and the Hungarian railways, which explores the prospects of increasing traffic between Europe and Asia on the Trans-Siberian Main Line and Trans-European Transport Corridor No. 6, stretching from Spain across France, Italy and Slovenia to Záhony, Hungary.

ROUTES PASSING THROUGH RUSSIA Most of the rail freight transport between China and Europe via Russia takes place on the Trans-Siberian railway. Three routes from China joins it: in the north, Manzhouli/Zabaykalsk border station is a direct crossing, the train leaves at Erenhot via Mongolia, and enters Russian territory at Naushki. Towards the west, the train reaches Kazakhstan via Khorgos or Alashankou border stations first, and then re-connects the Russian Trans-Siberian railway at Yekaterinburg. The Trans-Siberian railway, stretching from Moscow to Vladivostok, was completed in the early 20th century, rail freight transport between Europe and the Far East commenced on this line, and this is also the main route of the new Silk Road. The Trans-Siberian railway is fully electrified and double-track throughout. Between China and Europe, the Russian section is the fastest one, logistics companies are also satisfied with it. Trains cover more than a thousand kilometres a day, the journey time of the entire Russian section is 7-11 days, and further reductions are planned. On the easternmost route towards the north, congestions occur at the Manzhouli/Zabaykalsk border crossing, but they have been successfully reduced recently. Before the introduction of electronic customs

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Main railroads between China and Europe

documents, the trains could wait as long as three days at the border, but modernisation has reduced freight inspection times to one and a half hours. China Railway has been using the CIM/SMGS electronic consignment note on container trains running to Europe since the 1st May, 2017, while the Russian and the Chinese railways have developed new electronic data exchange, which allows the preliminary declaration of container shipments, accelerating the passage of trains across the border. There is a common customs tariff for rail freight in wide-track countries, thus there are only two customs borders between China and Europe. Freight trains running from China to Europe do not have to pay customs in the Eurasian Customs Union, but they pay a fee to the railway company of the given country for passage. Zabaykalsk station handles 50 per cent of the freight traffic between the two countries, and in order to accelerate traffic, at the beginning of 2019, tests of a new device began, which is capable of inspecting the cargo of trains without stopping, and detect illegal goods, including explosives, drugs, arms and ammunition. Russian Railways also wants to increase the volume of transit traffic passing from China through Mongolia, as this would take some pressure off Zabaykalsk border station. To this end, the Mongolian rail network (which is also a part of the wide-track network) will be modernised and developed by 2030, and new freight locomotives will also be delivered into the country. Mongolia joined One Belt, One Road in 2016, transit freight volumes running via Mongolia increased by nine per cent in 2018 compared to the previous year and reached 3.37 million tonnes. The line running across

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Mongolia is used by several logistics companies, for example, FELBâ&#x20AC;&#x2122;s service from Changsha to Dobra, Slovakia runs through Mongolia. The Trans-Siberian railway is also connected to the pan-European rail network, three of the nine pan-European corridors pass through Russia. Corridor I links Kaliningrad to Gdansk, Tallinn and Riga, connecting the railway networks of Northern-Baltic states. This route is important also from the perspective of One Belt, One Road, as Kaliningradâ&#x20AC;&#x2122;s role as an alternative border station towards the European Union is increasing as crossing points on the Belarus-Poland border are congested. Nearly 10,000 TEU were handled in the enclave situated between Poland and Lithuania and traffic exceeded 6,000 TEU in the first six months of this year. Kaliningrad offers a multimodal service to European ports, such as Hamburg, Rostock or the cities of Scandinavian countries, and a significant increase in traffic is expected. Pan-European Transport Corridor II stretches from Berlin to Nizhny Novgorod via Warsaw, Minsk and Moscow, and, extended to Yekaterinburg, together with the Trans-Siberian railway, forms a land bridge from Europe to Asiaâ&#x20AC;&#x2122;s Pacific coast. This line carries more than 50 per cent of Russia's foreign trade and transit freight, with branches towards North Korea, China and Mongolia in the east. Pan-European Corridor IX, linking Helsinki to Moscow, also plays an important role in freight transport between China and Europe. The city of Kouvola, situated near Helsinki has been designated by the EU Commission as the only TEN-T core network terminal in Finland,

Russia: Beyond the Trans-Siberian Railway

and EUR50 million will be invested in development to make it suitable for receiving trains with a length of even one kilometre arriving from China. Finlandâ&#x20AC;&#x2122;s advantage is that it has the same broad gauge as Russia and the CIS states, so trains arriving from China in Europe only need to switch to a different gauge only once, instead of twice. Journey time may take 12-14 days, also depending on the length of trains. Trains in Russia tend to be longer than what can be handled by European border terminals, therefore they have to be divided into shorter trains, which increases transit time. After the development, Kouvola will be capable of receiving 800-1,100-m-long trains as well, making entry into the territory of the EU simpler. Freight trains have been regularly running between Finland and China, but also Japan and South-Korea can be reached from here via Russia. The railway line coming from Kazakhstan plays an increasing role in freight rail transport between China and Europe. Trains are dispatched on this route from mainly western China, as it takes much shorter than taking goods towards the north. The largest development plan on this line is the 770-km-long, high-speed rail line between Moscow and Kazan. Construction costs are planned at US$15 billion, with US$6.5 billion of loans and US$1.6 billion of FDI offered by China. A German consortium led by Siemens, Deutsche Bank, and Deutsche Bahn promised to invest US$2.8 billion in the project, which is scheduled to be completed in 2023. There are further plans to extend the line through Kazakhstan all the way to China, reducing the commute time between Beijing and Moscow to 33 hours. Both Siemens and the Chinese have already offered to supply passenger trains on this line obtaining speeds up to 400 kilometres per hour. The Chinese would design trains that will have adjustable wheels, simplifying the change of gauge on borders. . There are bold concepts also about freight transport on the highspeed railway line: special cargo trains capable of carrying from 300 to 600 tonnes of cargo at a speed up to 300 km/h would run on this line. According to Russian development plans, rail freight transit traffic should be further increased in the coming years, and the expansion of services between China and Europe could have a prominent role. In 2018, 500,000 TEU travelled across the country, and this volume is intended to be increased up to one million TEU by 2024. It was a positive development for achieving this goal that the ban on transit traffic of European

products, lasting for years, was lifted on 1st July, 2019. The decision was unexpected for both European and Chinese market players, and for the present, it is surrounded by some uncertainty. Experts agree that this is a big advantage for both European export companies and stakeholders of Russian rail transport, as the former ones can expand their export portfolios, and the latter ones can profit from the increase in transit traffic across the country. The uncertainty is caused by the fact that the decree stipulates that an electronic seal shall be used on all transit containers, but it is unclear what device is supposed to be used, and where it can be obtained. Another question is the list of products allowed for transit transportation; the decree makes a reference to another document that imposed sanctions on EU food; now fresh and frozen pork and beef meat, poultry meat, milk and dairy products, vegetables, fruits and sausages are available for transit, but the list also has several amendments. SOME PLAYERS IN RAIL FREIGHT TRANSPORT TransContainer, an international logistics company, is one of the major players in Russiaâ&#x20AC;&#x2122;s rail transport, which offers not only rail transport but provides a comprehensive logistics service with door-to-door delivery and combined rail and maritime transport. Its shareholders include UTCL, a Russian-Kazakh-Belarusian joint stock company, a Russian bank, and Enisei Capital, co-owned by Roman Abramovich.

TransContainer is the largest rail container operator on the Russian market, with a market share of roughly 45 per cent and a fleet of 26,000 wagons and 70,000 containers. It operates 39 terminals in Russia and 19 terminals in Kazakhstan; Dobra in Slovakia also belongs to it, it has a joint venture in China, a joint stock company with the Kazakh railway company, and a subsidiary (TransContainer Europe) in Vienna. The task of the latter one is to organise export and import to and from

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Russia and China. The largest increase can be seen in transit transport, with China being one of the main growth engines. The company’s immediate circle of customers can be found in Central and Eastern China (e.g. in Shanghai) but the company’s aim is to have better access also to southern provinces. As the operator of the largest container fleet, the company has a good angle to see the imbalances in westbound and eastbound traffic. It is a global problem, and not only in rail freight transport, that cargo trains and other vehicles running from Europe to China are often empty. Currently, it is not a major problem in rail transport, as the number of wagons used in freight transport is relatively small. If traffic, however, increases significantly, for example to one million TEUs per year (which will happen within a couple of years, Russian plans suggest), it will present a serious problem. In this case, TransContainer could manage the situation perfectly, since competition is present on a limited number of routes, but they provide services covering not only entire Russia, but the entire broad-track region. The solution to the issue of how to manage empty containers might be provided by combining export and import with domestic transport. For example, if a train is headed towards Beijing from Brussels empty, it could be loaded with export goods from Europe to Russia (e.g. Moscow). Then, the train would carry goods from Moscow to Siberia, and as a result, containers would travel empty only on a small section of the entire journey.

rus, UTLC has created the Eurasian Rail Alliance Index (ERAI). Consignors have access to up-to-date indicators of the delivery cost for containers by sea, hence the idea to put together an index providing information on rail transit prices. The index value depends on an array of factors, it includes the rates charged by Russian Railways, Kazakhstan Railways and Belarusian Railway, the cost of terminal services, etc., weighed by the infrastructure load status in a given period compared to total container traffic. The index reflects the cost of container shipments from East to West (ERAI U West) and from West to East (ERAI U East) on the Dostyk/Altynkol–Brest/Bruzgi/ Svislach/Kaliningrad routes, that is, from the China-Kazakhstan border to the Belarus-Poland border, and on the section to Kaliningrad. The earliest data are from July, 2016, then the cost of forty-FEU transportation was over US$4,000 to the west and nearly US$3,000 to the east. Prices dropped rather rapidly until early 2017, afterwards they decreased at a slower pace, with some smaller peaks, and they have hardly changed in the past twelve months. Currently, ERAI is US$2,724, the index of eastbound traffic is US$2,803, and that of westbound traffic is US$2,590. Average transit time on these sections is 5.61 days, which is targeted to be reduced to 3.5 days by 2024. The average speed of trains is 1,008 km/day, which is planned to increase to 1,300 km/day by 2024. CONCLUSION

UTLC ERA (United Transport and Logistics Company – Eurasian Rail Alliance) is the joint stock company of the Russian, Kazakh and Belarusian railways, each railway company holding 33.33 per cent of shares. It is specialised in rail container transport between China and Europe, its traffic volume was 280,000 TEU in 2018, which means a dynamic growth compared to 175,000 containers in the previous year and 100,000 containers in 2016. For participants in rail transit container transportation, growing rapidly in Russia, Kazakhstan, and Bela-

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Russia also benefits from increasing rail freight transport between China and Europe, increased transit volumes mean growing income for Russian Railways and logistics companies. Development concepts are identical in both countries, rail transport is going to be made more competitive by increasing efficiency, reducing transit times and cutting service fees. Only two per cent of goods traded between China and Europe are carried by rail, and with improving conditions, there is still considerable potential to expand rail container traffic.

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Belarus: A Rail Transport Hub

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Belarus: A Rail Transport Hub Author: Alexandra Mogyorósi

Transport and related services, which accounted for 6.1 percent of the GDP and 6.2 per cent of total employment in 2015, constitute an important component of Belarus’ economy, which is reviving after the downturn of recent years. Enhancing rail competitiveness and railway logistics is an engine for growth, especially with regard to the fact that One Belt, One Road has added value to the role of railways. As 80 per cent of China-Europe-China rail transit volumes pass through Belarus, the country, due to its strategic location, has the opportunity to become one of the most important transport hubs.

THE SITUATION OF RAIL TRANSPORT IN BELARUS The Belarusian Railway (BCh) is the third largest railway system in Europe – excluding Russia – connecting Russia and the European Union, as well as China and Europe. BCh managed about 40,785 million tonne-kilometres on 5,491 kilometres of railways in 2015. 370 stations deal with cargo transportation, including nine distributing stations and twenty-seven freight stations to load trains daily with 200,000 tonnes of cargo on average. Currently, 20 per cent of railways are electrified and 79 of 790 of BCh’s locomotives are electromotive. The electrification of the network is continuous, thus freight trains travel across Belarus at a high speed of 120 km/h. As a result, freight travels from the Krasnoye station located on the Russia-Belarus border to Brest crossing point on the Belarus-Poland border in less than twelve hours. The China-Europe-China rail transit traffic takes place at three border crossing points between Belarus and Poland, Brest, Bruzgi and Svislač, but due a massive increase in freight transport, the reopening

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of a fourth border crossing point at Vysoko is making promising progress. Brest station is the largest of all, and its industrialised and upgraded northern terminal has significant potential for further increasing freight transport capacities. The station has two terminals, four broad-gauge (1,520mm) and four standard-gauge (1,435 mm) tracks, is capable of receiving 1,500 containers, which is expected to increase up to 2,000 containers as a result of developments completed until the end of this year. Demand for the transit services of the Belarusian Railway is reflected by the fact that freight traffic density of Belarus is over six times the EU average, although it is lower than that of Kazakhstan or Ukraine. Although there are no data available about the period when the role of Belarus increased in rail freight transport due to the Ukraine-Russia conflict, these figures must be seen in the light that the indicator has started a slow decline. It is important because high freight traffic density enables the railway to maintain its infrastructure and more closely cover its costs. Nevertheless, The Belarusian Railway is still viable, and generates sufficient revenues to cover its operating costs and to function efficiently.

Rail network in Belarus. Source: Виктор В, Nzeemin (wikimedia commons)

The continuous decline of the share of rail in freight transport in recent years, however, may raise concerns. Between 2000 and 2015, freight transport in Belarus increased by 57 percent, which is a three percent increase per year. Supported by robust investments in infrastructure, the value of road freight transport expressed in tonnes tripled over the same period – producing an increase of seven per cent annually –, and its share in freight transport grew from six per cent to 20 per cent. By contrast, the share of rail remained unchanged, 30-33 per cent, without any considerable growth. Considering road transport turnover measured in tonne-kilometres – due to the competitive advantage in moving heavier commodities over long distances – rail obviously has a predominant role. According to the World Bank, the Belarusian Railway

handled 62.4 per cent of all freight movements in the country in 2015, while the railway company’s estimate of this figure is 70 per cent. Comparatively, the share of rail in all freight movements is 60 per cent in Germany and 34 per cent in Ukraine, which are the most intensive railway systems in Europe. Between 2000 and 2015, the Belarusian Railway – realising a growth rate of 1.8 per cent per year – increased its freight transport from 31.4 billion tkm to 40.8 billion tkm, thus rail freight transport has no challenger regarding absolute numbers. A decline in its competitiveness, however, is indicated by a much higher growth rate of the trucking industry: it increased by one per cent per year, from 5 billion tkm to 25 billion tkm. The decline in competitiveness is also reflected by the change in the average length of rail haul, which decreased by more than 13 per cent.

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Traffic density (million (million ton-km/km) Source: World Bank

Freight transport by transport modes in Belarus (tonnes). Source: World Bank

It is contributable to a decline in the share of transit traffic, covering much longer distances, in rail freight transport. Due to the decline in the market share of rail freight traffic, it is essential for the Belarusian Railway to enhance its competitiveness, its weight in the economy

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of the country, and, as a transit country, make the most of its strategically advantageous geographic position. For Belarus, the development of rail transport and customs warehousing infrastructure is a priority, which offers the opportunity to become not only a key transit country in trade between China and Europe, but also a logistics hub of Europe-bound Chinese goods.

Belarus: A Rail Transport Hub

Mode share of freight transport in Belarus (tonne-kilometres). Source: World Bank

Keeping these priorities in view, the ’Republican Program of Logistics System and Transit Potential Development for 2016 to 2020’ focusses on four main areas: improving quality and comprehensiveness in logistics services, ensuring development of the logistics infrastructure, enhancing efficiency of infrastructure use, and improving the legal and economic environment for a more extensive use of the China-Europe transit potential. The first two points primarily include fast container trains, the development of terminals, warehouses, transshipment and distribution centres, and the expansion of warehousing and auxiliary services. Projects such as implementing harmonised multimodal transportation, or a simplified customs clearing process, which enables faster paperwork and as such, smoother movement of goods, help making rail transport services more attractive. Goals include the introduction of an electronic shipping document system based on the digital signature technology, which is already in the test phase in trade with Russia.

partners on the China-Europe trade route to establish a seamless transport corridor, offering services as one entity.

Taking modern freight transport trends and the expected growth of traffic volumes parallel with the increase in the region’s development level into consideration, Belarusian Railway seeks to sign – both bilateral and multilateral – agreements with all its

Transit traffic managed by Belarusian Railway accounts for one-third of all freight transport. Its share compared to both export and import traffic has decreased in recent years despite a significant increase in trade between China and Europe in recent

BELARUS’S ROLE IN RAIL FREIGHT TRANSPORT Belarus’s role in rail freight transport has added value due to its strategically important geographical position. The country lies on the Silk Road Economic Belt, an economic corridor encompassing Eurasia, but it is also located at the intersection of two pan-European transport corridors, Corridor II, connecting Berlin with Moscow, and Corridor IX, linking Helsinki to Greece. The former one is the shortest and most optimal land route of trade between Europe and China. Thus, Belarus plays a key role in connecting the Baltic states and the countries around the Black Sea, as well as Europe and Asia, especially since the switch between the standard gauge, characteristic of China and Europe, and the broad gauge used in former member states of the Soviet Union, takes place on the Belarus-Poland border.

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Pan-European Transport Corridors. Source: Wikimedia commons

years. It results from reductions in trade due to the Ukraine-Russia conflict; five years ago, when Russian sanctions were introduced, it left the terminal in Brest half-empty, and it was uncertain whether its employees would receive their salaries. According to

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a local manager of the terminal, the Ukraine crisis now rather generates an increase in traffic, as Kiev, responding to the Russian measures, has banned transit of Russian freight, most of which has shifted to Belarus.

Belarus: A Rail Transport Hub

Container transit traffic via Belarus in the China-Europe-China communication. Source: https://rail-congress.com/wp-content/uploads/Presentations/Session-1/5_Morozov.pdf

350

324,7

300

257,5

250 200 145,8

150 100 50 0

2,5 2011

13,4

11,7

2012

2013

34,2

2014

Another reason for the recovery of transit traffic – and its 20 per cent increase last year – is significantly increased trade from China. China was to build a deep-sea port and an industrial park in Crimea, but the projects were stranded by Russia’s annexation of Crimea. Beijing is sensitive to political, investor and military risks, therefore, instead of Ukraine, more reliable and stable Belarus has become a focus of attention, as a result of which the country is likely to become one of the main targets of Chinese investments and the largest logistics hub of Chinese goods in the region. The fact that the country spent US$2.5 billion on developments in the past seven years also plays a significant role in Belarus’s much greater prominence in rail transit; its rail freight transport infrastructure is considerably more developed than that of Ukraine. Furthermore, it is also an important aspect that Chinese goods travelling across Kazakhstan, Russia and Belarus have to go through customs only at two places, Dostyk on the Kazakhstan-China border, and Brest on the Belarus-Poland border. Thereby, trade is not hampered as Moscow controls freight traffic travelling between China and Europe via Ukraine. As a result, 80 per cent of rail transport between China and Europe takes place via Belarus. In 2017, more than 3,000 of the 3,673 container trains trav-

59,9

2015

2016

2017

2018

elling between China and Europe passed through the country, and Belarus seeks to increase this number to 5,000 trains by 2020. Along with the number of trains, traffic volumes are also increasing continuously; while in 2014, the country managed traffic of 34,200 TEU on the China-Europe-China route, in 2018 this figure exceeded 324,000 TEU containers. The Belarusian Railway has forecast an increase for the future, too: according to their calculations, the number of containers will reach 540,000 TEU by 2020, and one million TEU by 2025. At present, some twenty container trains pass through the country daily, twelve of which travel between China and Europe; 60 per cent of these are directed from China to Europe and 40 per cent of them are directed from Europe to China. Rail transit via Belarus is more expensive by 60-70 per cent than maritime transport, but it is three weeks shorter, which is an important viewpoint in many cases. The extra cost primarily pays off with perishable foodstuffs and electronics the models of which are manufactured in 30 days and lose from their value by the time they reach Europe as they are not the latest products. Consequently, containers are mostly filled with hightech and IT products, automobile parts, although their contents vary wildly, ranging from slippers and balloons to Boeing wings.

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PARTICIPANTS Belarusian National Railways Pursuant to the Law on Rail Transport, the Belarusian Railway is the only rail operator in the country and is under the supervision of the Ministry of Transport and Communications, responsible for governing operational and policy aspects of the railway system. As rail counts as a natural monopoly, prices, tariffs and some services are regulated by the Ministry of Antimonopoly Regulation and Trade. The Belarusian Railway is a vertically integrated association of trade consisting of 28 legal entities, covering a wide array of functions, from information management and infrastructure maintenance to the operation of the rolling stock, the provision of services and the operation of training centres. Six of the 28 unitary enterprises are subsidiaries located in different regions of the country, but the organisational structure also contains eight separate divisions (branches) and three foreign representative offices, in Russia, Kazakhstan and Poland. Belarusian Railway employs some 73,454 people. The railway, as well as each legal entity, is a state property. They have their own decision-making procedures, but in investment decisions, BCh’s approval is required. Revenues are managed through a central accounting system and allocated to each unit of the organization based on their contribution. BelInterTrans BelInterTrans is the logistics company of Belarusian Railway, which has been continuously the key player in the Belarusian rail freight forwarding market for six years. The state-owned company, which manages 50 million tons of freight traffic, provides services in all regions of the country, including door-to-door multimodal transport, customs clearing, insurance, loading/unloading and warehousing. The representative offices of its three foreign subsidiaries can be found in Lithuania, Russia, Poland, Turkey, China and Germany. Of these, BelTrans Germany is the most significant one, which, cooperating with ten Chinese provinces, has a key role in the China-Europe-China trade. OPPORTUNITIES AND CHALLENGES Apart from revenues from customs and services, currently untapped export opportunities are worth mentioning in rail freight transport. While trains travel

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from China to Europe fully loaded, several of them returns empty. This offers Belarus, which has a robust agricultural and livestock sector, an opportunity to fill containers headed towards China with its own products. As trade and economic relations between Belarus and China strengthen, dedicated services are provided to promote exports, said one of the local managers of BelTrans. Within that framework, six companies are currently accredited to provide China with domestic products. There are several examples of taking advantage of opportunities offered by rail freight transport. For example, due to an agreement signed in 2017, Belarus has become the first country in the Commonwealth of Independent States to export beef and poultry to China. According to ambitious plans, the country will export fifty containers of products to China every month. The dairy industry is another key sector: the value of the export rose by nine times and its quantity by 13 times between 2017 and 2018. The value of all agricultural products exported to China exceeded US$82 million last year, which is a 340 per cent increase compared to the previous year. As for challenges posed to the China-Europe trade, above all, capacity issues on the Belarus-Poland border are worth highlighting, which are expected to cause increasingly serious disruption as traffic grows. Delays of even a week represent the greatest problem, for which one of the main reasons is much less developed infrastructure on the Polish side. The fact that customs officials on two sides of the border do not communicate in the same language, or keep the same administration and conform to the same regulations is also a difficulty. Since Belarus is not a Member State of the European Union, documentation is one of the most difficult and time-consuming parts of managing freight transport, a local manager of the station claims. Differences in regulations pertaining to train length also increase waiting times. In Belarus, train lengths may reach up to 955 m, but in Poland they cannot exceed 600 m, that is, if a longer train arrives at the border, it must be taken apart. This takes time, and containers that are halted wait at the station until they are attached to another train, which, again, takes time. Traffic is also slowed down by the fact that in practice, rather “China-Brest” trains exist instead of direct “China-Europe” ones. That means that

Belarus: A Rail Transport Hub

trains arriving from China are not loaded by destinations, but are loaded with containers heading towards different directions. Therefore, first the load must be sorted out in Brest and trains must be composed according to destinations. This results in higher pricing, as, instead of simply putting trains onto a different gauge, the goods must be taken to a warehousing area first. Although these factors do not highlight weaknesses of Belarusian rail freight transport, they call attention to the limitations of smooth trade and to alternative routes. GREAT STONE INDUSTRIAL PARK Belarus does not want to be only an important transit country and a logistics hub in the trade between China and Europe, but also an economic centre on the border of the EU and the Eurasian Economic Union (EEU). Free trade zones and industrial parks serve this purpose, which, in addition to determining the profile of the countryâ&#x20AC;&#x2122;s exports, attract foreign direct investments of significant values. Although Chinese investments accounted for merely 1.2 per cent of the FDI flowing into the country in 2017, the trend is well illustrated by the fact that they grew eleven-fold

compared to the 2011 figure. The most significant one is Great Stone Industrial Park (GSIP), considered to be a pearl of One Belt, One Road, which will cover an area of 91.5 sq.km in the close proximity of an international airport, the Berlin-Moscow Motorway and the railway, and 25 km form Minsk. Xi Jinping regards the development of GSIP as a personal matter, as it demonstrates Chinaâ&#x20AC;&#x2122;s experience of establishing industrial parks abroad. Belarus expects it to increase the productivity and the economic efficiency of the country. As part of the BRI, the industrial park, in addition to attracting FDI of a value of US$30 billion, is expected to introduce the country into international value chains and contribute to the development of the national economic model. By the time the work is finished, the industrial park is expected to become a modern, international eco-city with an emphasis on high-tech, innovative products, and with an economic performance equalling to Belarusâ&#x20AC;&#x2122;s GDP. As achieved results are intended to be repeated throughout the country, Belarus has high expectations about the industrial park. Knowledge and technology transfers implemented within the framework of the project are expected to increase

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competitiveness, but no detailed plans have been formulated about how this should take place and how the knowledge acquired should be used. There are three levels of managing the industrial park. One of the most important components is Industrial Park Development Company, which is responsible for, among others, design, development, building the infrastructure, land and real estate management, attracting investments, marketing and operations. 68 per cent of shares of the company belongs to the Chinese side, 31.33 per cent to the Belarusian side, and 0.67 per cent to a German company, Duisburg Hafen. The ownership of the latter one has benefits for Belarus, as Duisburg is the busiest inland port in the world, and a final point of the BRI route running through Belarus and the GSIP at once. If the planned rail connection between the port and Brest and Minsk was established, Belarus’s role in freight transport between China and Europe could increase. In addition to the one-station model, the greatest appeal of the industrial park lies in tax exemptions. Land tax and immoveable property tax are not payable until 2062, and dividend tax is 0 per cent for five years after the income is declared. Income tax is 0 per cent for ten years, and 50 per cent until 2062. VAT is returned by the state. Companies operating within the territory of the industrial park will enjoy the most favourable financial and economic conditions in Belarus, as GSIP has been functioning as a “territorial special economic zone” since 8th January, 2019. Companies can, for example, import equipment and raw material duty-free. As a result of attractive tax and customs preferences, the industrial

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park is home to 43 enterprises , and their number is expected to grow to 60-70 by 2020. The companies include Belarusian, Russian, Lithuanian, Austrian, Israeli, American and German firms, but most of them are Chinese companies: ZTE, Huawei, Zoomlion, YTO Group Corporation, Xinzhu Corporation, or CGICOP are Great Stone residents. The park’s proximity to the European Union is identified as another main appeal by Belarus. However, it is questionable how beneficial it is considered to be, since some 200 km more westwards companies can operate within the EU in a regulatory environment that is compatible with the World Trade Organisation and a legal environment that is more stable than the Belarusian one. As One Belt, One Road focusses on economic integration with Europe, one of the greatest barriers to its implementation in Belarus is the country’s weak relationships with the EU. Whether Belarus will be capable of becoming a significant player in the new Silk Road depends on addressing capacity issues, creating a favourable investment climate and diversifying international trade relations. Its membership in the Eurasian Economic Union makes the conclusion of economic and trade agreements with the European Union more complicated, but the example of Kazakhstan well illustrates that it is not impossible to align different integration processes and projects. Therefore, if Belarus wants to increase its role in One Belt, One Road, it must work on the promotion of the synchronisation process, which can be interpreted as the integration of integrations.

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Poland, the European Gate of Chinese Goods

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Poland, the European Gate of Chinese Goods Author: Ráhel Czirják

Poland’s geographical location is of strategic importance, as it provides a link between Western and Eastern Europe; in addition, it has a 500-km-long coast at the Baltic Sea, thus it also plays the role of a bridge between Northern Europe and the southern countries of the East–Central European region. All these could mean an important transit role to the country, which was hindered by its poorly developed transport infrastructure after the regime change. But the situation has improved significantly by now, as large-scale construction projects could be implemented, thanks to the development resources of the European Union.

STATE CONTROL AND RAILWAY DEVELOPMENT STRATEGY Rail is still the most important element of the transport system, with almost 20,000 km (19,291.3 km) of railways in 2017, which means a railway density of 6.17 km/100 km 2 for the whole country , which is above the EU average. The majority of lines (97%) are standard-gauge, and three per cent of them are broad-gauge. Twothirds (62%) of lines are electrified, which meant 11,864.3 km in 2017. The remaining 38 per cent are not electrified, and the majority of them are broad-gauge, and electrically powered trains are operated only on 14 km of them. More than half (55%, which means 10,551 km) of railway lines are single-track, which often leads to capacity problems. By contrast, the total length of double-track lines is only 8,740 km. The majority of them (90%) are electrified. It is safe to say that all broad-gauge lines are single-track lines. The maximum speed of trains has been consistently increasing in recent years. The share of tracks with maximum speeds up to 60 km/h and between 60

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and 80 km/h have decreased (from 29.5 per cent in 2015 to 25.5 per cent, and from 16.9 per cent to 15.7 per cent respectively). But significant development is still needed to implement both passenger and freight transport efficiently. The figure below shows how maximum speeds of railway lines changed in the period between 2015 and 2017. If we focus on freight transport within rail transport, the situation is much worse. In Poland, the average commercial speed of freight trains (the quotient of the path length and time spent on covering this distance, adjusted with the individual railway undertakings’ market share measured with their transport performance) is very low (25 km/h), which undermines the competitiveness of rail transport. In the years 2013-2015 the average commercial speed of freight trains decreased due to the accumulation of modernisation works on the network towards the end of the previous EU budget perspective, which resulted in a slight improvement in 2017, but Poland is still an underperformer in an international comparison: according to data from 2016, the average speed of freight trains was 64 km/h in the Netherlands, 54 km/h in Portugal, 53 km/h in Spain and 39 km/h in Lithuania.

Maximum speeds of railway lines operated in Poland (km/h, 2015-2017) Problems with the capacity of nodal infrastructure are an obstacle to the performance of freight transport services. It is particularly an issue on sections with high traffic: at border crossings (Braniewo towards Kaliningrad, Chałupki at Czechia, Małaszewicze at the Poland-Belarus border), in ports (Gdansk, Gdynia) and in the Upper Silesia region (Dąbrowa Górnicza Towarowa, Gliwice Łabędy, Katowice Muchowiec, Kędzierzyn-Koźle. Rudziniec Gliwicki). In 2017, railway undertakings primarily focussed on the issue of limited capacity in Małaszewicze near the Poland-Belarus border crossing point, in connection with the Chinese initiative, One Belt, One Road. The grandiose Chinese economic project is a huge opportunity to boost Poland’s significance in terms of transit and transshipment. The two most important rail transport corridors linking China to the EU lead through Małaszewicze, which makes this terminal crucial for trade relations between the Asian country and Europe. However, limited capacity can lead to the avoidance of the terminal being a bottleneck, or even Poland, therefore the country must address capacity problems as soon as possible. Due to the bottlenecks in Małaszewicze in 2017, the average time of transport between China and the EU changed from 14 days to 15-18 days (and periodically 20-25 days). The reasons include the lack

of modern rail traffic control devices and an insufficient number of tracks unable to handle increased traffic. In Poland, the state authority supervising rail transport is the Office of Rail Transport (UTK – Urzad Transportu Kolejowego), which was established in 2003 by way of the transformation of the Chief Railway Inspectorate. The task of UTK is to uphold the cohesion of the rail system by supervising the technical solutions that influence rail traffic and rail system safety. The tasks of the President, heading the organisation, include regulating the rail transport market, licensing rail transport, technical supervision over the operation and maintenance of railway lines and railway vehicles, rail traffic safety, supervising the observance of passenger rights in rail transport and training railway staff. The Office of Rail Transport also performs its tasks in the field of monitoring rail market development, improving rail transport safety standards and cooperating with European institutions responsible for the functioning and development of the common rail services market. Due to its geographical location, Poland plays a very important role in the transit of people and goods in Europe, therefore railway development is a prior-

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ity. The National Railway Programme until 2023, adopted by the Council of Ministers in 2015, is its currently effective national framework document. The development document establishes the financial and implementation framework for the state’s railway development projects. A total of PLN66.4 billion is planned by the government for projects implemented within the framework of the programme. But the European Union also plays a very important role in railway development in Poland, financing for this kind of spending can be obtained from several of its funds and programmes, namely the Connecting Europe Facility, the Operational Programme Infrastructure and Environment 2014-2020, the Operational Programme Eastern Poland 2014–2020 and the 16 Regional Operational Programmes within the country. The implementer and executor of the Programme is the administrator of the national network of railway lines, PKP PLK S.A., a state-owned railway company – which is the biggest Polish beneficiary of EU funds in the railway sector and is expected to receive EU funding of EUR9.7 billion from the available facility of EUR10.2 billion. The National Railway Programme has set the following objectives until 2023, which will fundamentally determine the direction of Poland’s railway development in the near future: – Reinforcement of the efficiency of railway transport: this includes reducing the time of train journeys on all railway lines administrated by PKP PLK S.A., increasing the capacities of stations in seaports and elongating sections of railway lines allowing passenger trains to move at speeds above 160 km/h. – Enhancing rail transport safety: it is intended to be achieved by, for example, increasing the number of two-level intersections and modernized railway crossings. – Improving quality in both passenger and freight transport: ensuring access to rail transport for people with reduced mobility, increasing the number of passengers transported on the lines managed by PKP PLK S.A., increasing the quantity of the goods transported, increasing the speed of freight trains on the network of railway lines administrated by PKP PLK S.A., increasing the share of intermodal railway transport in total rail freight transport.

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RAILWAY COMPANIES In 2018, a total of 65 companies were engaged in standard-gauge rail freight transport in Poland. On the basis of the latest statistical data, a total of 240 million tonnes of cargo (239.88 million t) was transported by rail within the country by these companies in 2017 (which is some eight per cent higher than the results of the previous year). In 2017, the five most significant companies by their shares in the tonnes of goods transported included the following:

21.23% PKP Cargo 44.22%

3.98%

DB Cargo Polska Lotos Kolej PKP LHS

4.62%

CTL Logis c 5.95%

Other

19.99%

Share of Polish railway companies in the volumes of goods transported (2017, %)

The share of other companies in freight transport – calculated on the basis of the tonnes of goods transported – remained under three per cent in the previous year. On the basis of statistics published until now, there had been no change in the ranking by the year 2018, while regarding shares, a change of only a couple of percentage points can be reported. The performance of Polish rail freight transport, expressed in tonne-kilometres (which is the weight of cargo transported multiplied by the distance of the journey ) was 50,620 million tkm in 2016, and 54,829 tkm in 2017. If we rank Polish rail freight transport companies by their performances measured in tkm, and not the total weight of the cargo, results will be similar. There are the same five companies in the forefront, in a slightly modified ranking. PKP Cargo takes first place, but its share is much more dominant than in the ranking by the total weight of cargo (51.43 per cent in 2017). Lotos Kolje takes second place, which had a share of less than

Poland, the European Gate of Chinese Goods

19.25%

PKP Cargo Lotos Kolej

5.33%

PKP LHS

5.97%

52.52%

DB Cargo Polska CTL Logis cs

6.71%

Other 10.21%

Share of Polish railway companies in the total performance, measured in tkm (2017, %) ten per cent in transport performance last year (9.76%), thus the company is one place higher in this ranking than in the ranking by the weight of cargo. Third place goes to – improving one place compared to the previous ranking – PKP LHS with a share of 5.68 per cent. DB Cargo Polska takes only fourth place – which is two places lower than in the ranking by the weight of cargo. Its share is 5.32 per cent. Just like in the previous ranking, fifth place goes to CTL Logistics, with a share of 4.47 per cent. PKP Cargo PKP CARGO Group is Poland's largest, and Europe's second largest railway freight transport operator, transporting 116 million tonnes of goods per year. PKP, delivering almost 40,000 orders and operating several hundred trains daily, has Poland's largest rolling stock, consisting of 1,250 GPS-equipped locomotives and 750 trains. PKP Cargo pursues activities in nine European countries: Lithuania, the Netherlands, Germany, Poland, the Czech Republic, Slovakia, Hungary and Austria. In addition to freight transport, it is also engaged in providing logistics services. The objective of the state-owned company is to have a leading role in managing intermodal transport, for which they not only seek to forward goods arriving at Poland’s seaports, but – in relation to the One Belt, One Road initiative, launched by China in 2013 – the “New Silk Road” also forms an important direction of its developments. Accordingly, the company is dedicatedly engaged in transporting goods coming from China. Chinese consignments arrive at the Poland–Belarus border at Małaszewicze/Brest, and then are delivered to customers in Poland, Germany and the Netherlands by the company.

When freight trains from China began arriving at the Polish border town almost a decade ago, they were considered a novelty. The number of these Asian services, however, was relatively limited, with one service a month. However, a surge in the number of trains over the past year, fuelled by the One Belt, One Road initiative, has left Malaszewicze struggling to meet demand that has ballooned to as many as 200 locomotives a month. There, containers which travel from China through Kazakhstan, Russia and Belarus to the western regions of Europe are transferred to railways of the European standard-gauge (1,435 mm). The surge in train traffic from China is well illustrated by the fact that the number of transhipped containers quadrupled, meaning a total of 74,000 containers in 2017. The main terminal in Malaszewicze is operated by PKP Cargo, which seeks to reduce significant queues caused by increased traffic by, on the one hand, cooperating with private terminal operators, and also infrastructure is continuously expanded: by 2022, the capacity of Małaszewicze is planned to be increased fourfold. But construction works can be a hurdle at times; logistics and freight forwarding companies working in the area complain that they make lead times unpredictable. In order to eliminate the bottleneck of the China-Europe transport route, Poland’s infrastructure ministry is considering opening a second border crossing with Belarus. According to some opinions, congestions are not exclusively caused by capacity issues, but a more efficient organisation along the entire supply chain would be required. This is supported by a statement made by PKP Cargo in September, saying that the issues had been solved and the Małaszewicze-Brest border crossing was not a bottleneck anymore.

About the economic cooperation implemented by the “New Silk Road”, Halina Bajczuk, Deputy Director of PKP Cargo said that beside opportunities, she could also see several challenges: although the company had conducted its activities within international cooperation, partners primarily included European, Western European countries. But in relation to the BRI, they are now also cooperating with Eastern European an Asian countries, which

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Locations of PKP Cargo’s activity

Main transport routes of containers In Eastern and Central Europe represent a different mentality, culture and way of doing business. For successful cooperation, they still have to acquire these and learn more about them. Another major challenge is the current lack of capacities to transport the vast amounts of goods arriving from China in Europe. More people, more loco-

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motives, more wagons and overall, more capacities are needed. But any kind of expansion takes place more slowly in Europe than in China, where everyone is making efforts to implement the decision made by the president, and, in addition, there is only one railway company – China Railway – which is responsible for passenger and freight transport and infrastructure maintenance, while in Europe the situation is not so simple. Here, several operators work in this field – both state- and privately owned companies are engaged in loading and unloading, passenger transport, freight forwarding, railway constructions, and so on. Furthermore, transport capacities are also influenced by the decisions of the state, thus the circle of actors is further expanded by relevant ministries and public institutions. Overall, more actors make cooperation and coordination slower and more complex. Halina Bajczuk think this has been realised also by the Chinese party, thus they are more patient and appreciate efforts made for the expansion. DB Cargo Polska DB Cargo Polska S.A. is a part of the leading freight rail operator in Europe, DB Cargo AG. DB Cargo AG is the rail freight division of the German national rail-

Poland, the European Gate of Chinese Goods

There is an intermodal logistics terminal in Sławków, operated by Euroterminal Sławków Ltd. The company was established in 2010 on the basis of the CZH S.A. Branch in Katowice Euroterminal in Sławków, which had been operating since 2004. The intermodal terminal provides a link not only between different modes of transport – rail and road – but also connect railways with different gauges, the1,520 mm broad gauge and the 1,435 mm European standard gauge. The importance of the terminal can be contributed to its geographical location, as it is situated at the intersection of Pan-European transport corridors, where Pan-European Transport Corridor III connecting East and West and Pan-European Transport Corridor VI connecting North and South intersect. The location of the terminal on the outskirts of the Silesian Agglomeration creates an opportunity to connect with the main communication routes in the region, both in terms of road and rail transport. Through its operations, the intermodal terminal provides a link with seaports: freight is regularly forwarded to and from Polish Baltic ports (Gdańsk, Gdynia) and the port of Koper, Slovenia.

Containerized shipments provide connection between Western Europe and eastern regions: goods reach not only Russia, but the target areas of freight forwarding related to the terminal also include South Korea, Afghanistan, and many other countries. The terminal of 93,000 m2 has a total capacity of 180,000 TEU containers, handling 380,000 tonnes of steel products, 55,000 tonnes of palletized goods and és 2,000,000 tonnes of bulk goods, completed by a storage capacity of 5,200 m2.

way company, Deutsche Bahn – one of the largest logistics groups in the world, which is currently present in 14 countries in Europe, and since 2013, also in the United Arab Emirates. DB Cargo Polska S.A. was founded in 2009 as a result of a merger and acquisition of small and medium-sized companies, operating mainly in the coal transport services. Until 2016, the official name of the company was DB Schenker Rail Polska, DB Cargo Polska is primarily experienced in the transport of solid fuels, especially coal, but also liquid fuels and chemical products (including hazardous substances), steel products, construction materials, other industrial goods and consumer products, as well as containers and oversized cargo are also transported.

Lotos Kolej The company, founded in 2002, is one of the leaders on the railway transport market, and has the most modern rolling stock in Poland. Over the years, the company has been dynamically extending both the scope of its business activities and its territorial competence. Initially, the company performed local marshalling and shunting tasks, and today it provides, in addition to transportation tasks, logistics tasks and services connected with railway siding operation, rental and maintenance of rolling stock and rail tanker cleaning. It has been taking part in intermodal transport since 2009. It began its international freight forwarding activity in 2007. In 2015, the company transported a total of 12.6 tonnes of freight.

The company provides a complex service for its customers: in addition to freight forwarding, it is also engaged in logistics services, transloading, and repairing and maintaining the railway infrastructure. According to the information material published by the company, they transported 56 million tonnes of freight in 2017, and their total transport performance amounted to three billion tonne-kilometres.

PKP LHS PKP Broad Gauge Railway Line Ltd, is a company that manages the broad-gauge infrastructure of the LHS line and offers transportation, traction and logistics services on it. The LHS Line is an almost 400-km-long (394.65 km) west-east railway line – the westernmost broad-gauge line in Europe – designed for freight

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During its operation, the monthly tonnage first exceeded 1 million tonnes in 2009: in one of the months, 1.07 million tonnes of cargo was carried at an average distance of 310 km. By 2011, it had become Poland’s leading privately-owned railway carrier. According to the data of the Office of Rail Transport, the company took second place in Poland in transport work, performing 3.8 billion tonne-kilometres, and the third place when it comes to the tonnage of the carried materials, reaching 16.5 million tonnes. According to the latest data, the company has slipped back to fifht place in both rankings.

Route of LHS transport and connecting Polish and Ukrainian railways – via Hrubieszów / Izowon – with Silesia, ending in Sławków in the Dąbrowski Basin. The main attributes of the line with specific territorial coverage are transport without handling the goods at the border and the ability to drive heavy train sets. In addition to operating trains, the activities of PKP LHS also include maintaining and operating the related infrastructure – stations, transshipment terminals, warehouses, rolling stock, etc. – and logistics services. In transport, it Is an actor in intermodal transport, and as such, it takes part in door-to-door freight forwarding.

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In rail freight transport, CTL Logistics is primarily specialised in forwarding bulk goods, therefore it carries mainly steel, chemicals, wood, fuel, coal, biomass and containers. LOGISTICS COMPANIES There are hundreds of logistics companies in Poland, but in this chapter we present only one example relevant for the BRI, Hatrans Logistics Ltd., which was the first logistics company in the country to build a direct rail link with China. For this reason, interviews were conducted with several employees of the company during the fieldwork.

CTL Logistics The CTL Logistics Group, an international concern, was established in 1992, offering a comprehensive logistic service in the field of rail and road transportation of goods and shipping, and also conducting rail infrastructure-related activities, such as maintenance of railway sidings, repairs of the rolling stock, construction of railway infrastructure, as well as customs duty consultation, and supply of raw materials.

Hatrans Logistics Ltd. The company, operating in Łódź and established in 1989, is a modern distribution centre, engaged in organising international transport, customs services and individual projects, in addition to distribution and warehousing. Initially, the family-owned company, which has almost three decades of experience, was engaged only in transportation, but over time it had become clear to them that forwarding goods from one place to another formed only a part of a complex process, and several of their customers would need a warehousing option. Therefore, in order to meet an increasing demand, their capacities were expanded by a warehousing function. Today, efficient warehouse management is enabled by state-of-the-art IT solutions.

The area of the operation of the CTL Logistics Group is Europe. The core of the CTL Group’s logistics is railway transportation, but it also applies various modes of transport in an integrated system in order to deliver goods.

From the perspective of this project, the management of Express Rail Cargo, i.e. scheduled weekly freight trains travelling from Chengdu, China to Łódź since 2013, is the most significant segment of Hatrans Logistics’s activity. The logistics company

Poland, the European Gate of Chinese Goods

provides flexible rail freight services on the China– Central and Eastern Europe route as well as to the EU countries via Kazakhstan, Russia and Belarus. Each train consists of 41 wagons, carrying 40'-long containers. 2010, when the pilot service between China and Poland was launched, was an important milestone in the initial stage of building relationships. After the parties found everything in order, a regular service was launched in May, 2013. Hatrans became the first company in the region with a regular rail service to China. Today, 6-7 trains arrive from China weekly and the same number of trains return to the Asian country, which can be regarded as significant growth, as this number was only three in early 2018. Chinese subsidies on services play an important part in increasing traffic. There are no official data available about their extent, various sources mention different extents. An interviewed staff member of Hatrans said it was 50 per cent, which does not apply only to trains from China to Europe, but also the ones travelling from Europe to China, therefore the company of the old continent can make sales in Asia on extremely favourable business terms. The process, however, is still not balanced: much more products arrive from China to Europe than vice versa. Due to increasing traffic, there was another demand for expanding capacities. The company recognised the need for a terminal where everything was available in one place – and warehouses next to the terminal – saving a considerable amount of time, by eliminating the transportation of containers from one place to the other. The implementation of the terminal is currently in the planning phase, and the facility is expected to be built by 2020. The regular rail service between Chengdu and Łódź primarily carries electronics and, for example, clothing from China, while a wide range of products, such as French floors and tiles, Italian furniture, as well as parts and electronic devices on its way back, from Europe. The journey takes 12 days. The doorto-door delivery of goods is provided by other vehicles from rail destinations, and may take several days, depending on location.

Products are delivered to specific customers, and they are not sold at their destinations subsequently, after delivery. That is, the service implements the so-called push model, and not the pull one. The process takes place as follows: the Chinese party places an order, and Hatrans collects the desired products from different countries of Europe. After they arrive in Łódź, they are loaded in containers and dispatched to Chengdu. Loading goods is a task requiring great expertise, as containers are moved during the journey and transshipment to vehicles. Therefore, it is very important that, on the one hand, the products inside should not get damaged, and, on the other hand, the bulk in the container should be balanced, preventing it from moving. Otherwise, it can tip the balance of even the whole train, or may tip over during transshipment and cause an accident. Consequently, Hatrans requests a loading plan from customers, according to which loading can be performed. If, despite the plan, any damage or harm occurs, it is the customer’s responsibility. CHARACTERISTICS OF RAIL FREIGHT TRANSPORT Due to its strategic location, Poland has an important role in the transit of goods between the EU and Asia. Information about the technical conditions, regulation and development policy of railways can be read in the Actors chapter. This subchapter specifically focusses on presenting rail freight transport in Poland. As far as analyses can see, the primary threat to the transit role of Poland is the Balkan corridor, the railway line leading from the port of Piraeus in Greece, through Bulgaria or Macedonia, Serbia and Hungary, whose section from Belgrade to Budapest has not been completed yet. In terms of commercial traffic, we can establish that after a decreasing trend lasting since 2012, both the weight of goods transported by rail and turnover expressed in tonne-kilometres, and performance in international transport increased in 2017, compared to 2016. Its performance in domestic rail freight transport increased from 155,155 thousand tonnes in 2016 to 165,500 thousand tonnes in 2017 – approximating 166,114 thousand tonnes in 2012. The volume of imports increased from 34,734 thousand tonnes (2016) to 41,422 thousand tonnes (2017), The volume of transit transport across the country

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The weight of transported goods in domestic and international transport (2012-2017 thous. of tonnes)

Transport performance in freight transport in domestic and international transport (2012-2017, thous. of tonne-km)

Increasing rail freight traffic between the two countries is also reflected by transport performances expressed in tonnes-kilometres. increased from 4,462 thousand tonnes (2016) to 6,234 thousand tonnes (2017). Exports, however, recorded a decrease: compared to 2016, the volume of goods exported decreased by about one million tonnes, thus this figure was 26,729 thousand tonnes in 2017. The two figures below show the exact values of changes. When examining rail freight performance with China, we can say that rail traffic between the two countries has been continuously increasing since 2013. Polish imports from China increased from

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Overall, we can say that Polandâ&#x20AC;&#x2122;s geographical location is of strategic importance for overland trade between Asia and Western Europe: for goods transported from China to Western Europe by rail Poland is an important transit country. However, its capacities, which are limited from the perspective of increased Chinese trade, must be expanded if the country wants to realise benefits offered by this transit role, or there is a risk that Chinese goods will avoid the country and reach Western Europe on routes located further south. 631.6 thousand tonnes in 2013 to 1,671.5 thousand tonnes, while Polish exports grew from 471.2 thousand tonnes to 1,224.5 thousand tonnes.

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Hungary: a potential winner of rail freight transport

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Hungary: a potential winner of rail freight transport Author: Katalin Borosnyay-Miklós, Viktor Eszterhai

The Central Eastern European region plays an essential role in the China-EU rail transport within the Belt and Road Initiative. The regional hub of rail transport is Poland, but the region’s other states also hope to claim an increasingly large share of the dynamically growing intercontinental market. In the following, we will examine the factors that can make Hungary a winner of the rail transport between Europe and Asia.

HUNGARY’S INTEGRATION INTO THE BELT AND ROAD INITIATIVE (BRI) Examining Hungary’s position in rail transport based on the past five years’ data of the Central Statistical Office, it can be concluded that by 2017, rail freight traffic reached the pre-crisis level of 2007-2008. Freight volume increased by 5.9% between 2016 and 2017, which means an outstanding growth compared to the stagnation of previous years. In 2017, 21% of goods was transported on rail. According to the Association of Hungarian Logistics Service Centres (MLSZKSZ), the share of domestic intermodal traffic (including Ro-La until the end of 2012) within the rail freight sector shows a steady, yet modest growth: looking at the trends of the past five years, this represents an annual growth of 1-2%. Within the rail freight sector, the share of domestic intermodal transport was steadily over 16% in 2017, which, however, is still less than the 20-25 percentage typical of Western European countries. Professionals of the field hope that the reception of cargo trains running between China and the Euro-

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pean Union can be an important tipping point in the near future for Hungarian rail transport. The Belt and Road Initiative, the main goal of which is to transform connections between the key regions of Eurasia, represents an opportunity for Hungary to improve its peripheral position, which is a result of its geographical location. Two of the BRI’s economic corridors decisive in terms of rail freight transport, namely the New Eurasian Land Bridge and the China-Central Asia-West Asia Economic Corridor runs through Hungary. All this makes it possible for the country’s connections to diversify, thereby reducing Hungary’s high dependency on Western Europe. In terms of economic potential which can be realised in the short term, the upswing of rail freight transport can be identified as a realistically exploitable opportunity. Currently, China-EU rail transport faces a considerable asymmetry as Europe exports significantly less goods than what arrives from China. This creates a new opportunity for Hungarian economic operators to expand their export activities. The current conditions are very favourable for them to export goods to

Hungarian rail freight transport and combined traffic within it between 2008 and 2017. Source: MLSZKSZ

the Chinese market (with the help of Chinese state subsidies). Rail transport offers an opportunity primarily to engineering and electronics companies with higher added value, however, most of these are foreign-owned so the Hungarian government can only moderately influence their business policies. Freight transport could provide an important development potential to agriculture. In general, the Chinese market has a very strong demand for top-quality agricultural products (e.g. organic food). Major progress could be achieved in the field of viticulture, fruit and vegetable production as well as in the meat (primarily beef) and milk industries. Creating new railway links would allow Hungarian goods to directly access the Chinese market (in about 12-16 days) without being transported to a Western European port first. This would entail significant cost savings. In the longer term, rail transport – combined with AI-controlled industrial production, storage, and distribution – can lead to the industrial and commercial chains between the EU and China being substantially transformed. In the case of goods with a higher added value, this could mean that the shipping time will become more and more important in relation to product price. This is expected to reduce the significance of one of Hungary’s and the CEE region’s current competitive edges, i.e. cheap workforce and increase the importance of the countries’ geographical location. The countries which are situated between the economic centres (Western Europe and China’s eastern coastline) can thus become more important destinations of foreign investments.

NEW EURASIAN LAND BRIDGE On the New Eurasian Land Bridge, the China-EU rail freight transport currently enters and exits the EU almost entirely through Poland, while the significance of alternative routes is still relatively negligible. Although the diversification of the routes would be beneficial both to China and the EU, the chief obstacle in the way of developing new routes is the Russian-Ukrainian conflict. Ukraine favours its own products in transportation, transit consignments are often stopped, the regulatory environment is uncertain, and it is unpredictable whether Russian wagons are allowed to enter Ukraine. Moreover, as a result of the conflict, the European Union and Russia have mutually introduced sanctions against each other, which affect a substantial part of the goods transportable on rail. This does not mean that there are no alternative routes running through Ukraine, but the significance of these is still lesser than that of the Belarus-Polish (Breszt-Malaszewicze) route. With respect to alternative routes, the possibility of a Hungarian branch has been raised several times because of the country’s central geographical location. Therefore, in the past years, several attempts have been made to build both test and regular railway links with Hungary as their end point. The first through train between China to Budapest started from Xian in the spring of 2017, while the first regular railway link between Budapest and Changsha (China) has been created by the Chinese platform company Xiang Ou Express Logistics. The train to Budapest

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Budapest-Changsha connection route

has been running at least once a week since May 2017. Its route leads from China through Mongolia, Russia, Ukraine, Slovakia, and Hungary. It transports primarily consumer goods to Budapest: lamps, clothes, shoes, textile products; and carries parts and tools from Budapest. In addition to Hungarian products, it also transports Slovakian, Czech, Austrian, and Romanian goods. The shipping time between the two cities is 15-17 days, which, combined with the collection of the goods and customs procedures, amounts to 25 days. Since the summer of 2018, a regular railway link between Xiamen and Budapest has also been in operation, connecting the main industrial centres of China’s eastern coast with Hungary. Interestingly, the main problem in freight transport between China and the EU, i.e. the congestion on the Polish-Belarus border may be a guarantor of progress for Hungary in the near future. According to Chinese development plans, the number of trains running both ways between China and Europe is to be raised to 10,000 a year by 2020, which is a dramatic growth compared to the 6300 trains in service in 2018. Due to problems related to the capacity of the Polish-Belarus border, the volume of transported goods can only be increased in the next years if the new trains take an alternative route. Naturally, this problem was recognised in Poland, and therefore the Polish plan to increase the capacity of the station in Malaszewicze to four times its current size by 2022. Nevertheless, Hungary’s role as an alternative route could increase much in the

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following years. The trains easiest to divert would be primarily the ones that currently run to Poland on rail, and whose containers are then further transported to Hungary on road. Around 200-300 containers a week arrive this way, which – from a Hungarian perspective – would be more effective to transport all the way on rail. Despite the fact that rail transport is more expensive through Ukraine than through Belarus, the Ukrainian transit route is more competitive considering the cost of road transport from Poland to Hungary. Building new infrastructure is practically not necessary so results can be achieved relatively fast. The most important revenues from growing rail transport are: track access charges, service fees related to gauge changeover (Záhony), and custom revenues if the goods are cleared in Hungary. In addition, the many complementary services related to rail transport, primarily in storage and logistics, represent an important source of revenue. The inevitable stopping due to the gauge changeover enables Záhony to become once more the centre of intercontinental rail transport in the future. The station is already capable of receiving a large volume of container trains. The three frame cranes in the container terminal can currently transship 300 containers daily and the terminal can store an additional 1000-1200 containers as well as provide spedition and custom services. The RFC 6 Mediterranean Corridor also continues from Záhony and it constitutes a shorter route from China towards Slovenia, Northern Italy, and the Mediterranean region.

Hungary: a potential winner of rail freight transport?

Major railway corridors between Europe and China and the location of Záhony

Besides the New Eurasian Land Bridge, which handles significant intercontinental traffic, another corridor of the BRI, the China-Central Asia-West Asia Economic Corridor, and a section of it, the China-Europe LandSea Express Line, with considerable traffic, is also essential to Hungary in terms of rail transport. CENTRAL ASIA-WEST ASIA ECONOMIC CORRIDOR AND CHINA-EUROPE LAND-SEA EXPRESS LINE The Central Asia-West Asia Economic Corridor connects China’s eastern coast with the EU through Xinjiang province, Central Asia, Iran, Turkey, the Balkans, and Hungary. There are already plans for creating a railway link (between Iran and Turkey and in Central Asia) of suitable quality. According to Chinese concepts, this contiguous modern railway link between China and Europe could be realised by 2030. The completion of the Central Asia-West Asia Economic Corridor can be expected only on a longer time scale, but it could reach Hungary faster thanks to the partly land, partly sea connection. Goods arrive to Hungary on rail from the Piraeus port, which is majority owned by China, through Macedonia and Serbia. From here, they can be further shipped to the major economic centres of the EU. Therefore, Hungary is highly interested in boosting this more dynamically developing sea-land transport route, the so-called China-Europe Land-Sea Express Line. The significance of the route lies in the fact that it considerably shortens, i.e. by 8-14 days the usual shipping time between China and Europe. For these reasons, Piraeus already poses a challenge to some large western ports (Piraeus handled 5.5 million containers in

2018). Its traffic is expected to further increase in the future, in which the development of land (rail and road) transport routes passing through the Balkans can play an important role. Upgrading the Budapest-Belgrade railway line is a key element of the China-Europe Land-Sea Express Line. This Chinese proposal was decided on the 2013 Bucharest Summit of the “16+1 cooperation” (which became “17+1 cooperation” with Greece joining in 2019), which had been created at the initiative of China. Trains currently cover the distance of nearly 350 km in 8 hours. This time is expected to decrease to 2 hrs 40 mins after the upgrade, thanks to a double-track electrified line suitable of a speed of 160 km/hr. 159.4 km of the upgradable section falls within the territory of Hungary (line 150). The Hungarian section of the route, which is to be built mostly from Chinese loans, is particularly important to China as it would be the first time that Chinese companies could build a railway in an EU Member State, which could be used as a reference in other European infrastructure development projects. In Serbia, constructions have already been started on two out of the railway’s three sections, while works on the last one are expected to begin in 2020. The entire Serbian section will be completed by late 2022 according to the plans. Hungary signed the contract on the complete design and implementation of the Hungarian section in 2019, which is planned to be launched in 2020. The modernisation of the railway section to be realised mostly through Chinese loans offers the following benefits to Hungary. Most importantly, the

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Route of the China-Europe Land-Sea Express Line

two capitals will become easier to reach thanks to the modernisation of the section. Its upgrade will become sooner or later inevitable despite the fact that the line is not included in the European rail core network. Simultaneously, it strengthens the possibility for Hungary to become a logistics centre at European level and its role as a regional hub to increase. According to the expectations, the advanced railway connection will increase Hungaryâ&#x20AC;&#x2122;s ability to attract capital, which, coupled with relatively cheap workforce, could attract Chinese assembly plants to Hungary. The hope for increasing Chinese wages and decreasing shipping costs strengthens these expectations. The future rail link will not only allow Chinese goods to reach Hungary, but there will be also more opportunities to export domestic products. This not only concerns the Chinese market as the Belt and Road Initiative will also make other regions (e.g. Middle East, Caucasus, Central Asia, etc.) easier to access. Participation in the BRI can thus open new economic perspectives for Hungary, reduce its unilateral dependence, and increase its role as a bridge. The rail link to be realised in the framework of the BRI is, in fact, not only significant with respect to the Chinese

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market; it will also result in easier access to other regions (e.g. the Balkans, Middle East, Russia, Caucasus, Central Asia, etc.). All this can be particularly important to domestic small and medium enterprises, for which the Chinese market will most likely remain unreachable (due to their sizes, capital shortages, the lack of market and language knowledge), but they can become more competitive in nearer markets thanks to the transport costs reduced by the transforming infrastructure network. SUMMARY Can Hungary become a beneficiary of rail freight transport? The Belt and Road Initiative seems to rearrange the structure of world trade. Joining the New Eurasian Land Bridge and the Central Asia-West Asia Economic Corridor holds the promise for Hungary to be a winner of this rearrangement. However, Hungary will not become the main beneficiary of the rail transport between Europe and China solely due to its geographic location. In order to realise this, we need realistic goals and related strategies, appropriate developments, and the improvement of services (acceleration of customs clearance, simplifying technological options, etc.).

Magyarország a vasúti áruszállítás lehetséges nyertese?

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The physical geography of the Silk Road

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The physical geography of the Silk Road Author: Atilla Grandpierre

It has been long known that the Eurasian steppe has played a prominent role in world history. However, it is contradicted by the fact that the steppe is characterised by a semi-arid climate, thus it could not support a large population. When examining the physical geographical features of the steppe we can draw the conclusion that it is actually the steppe being a vast plain has great significance, because a flat terrain means the most favourable conditions for transport. But if this vast plain is that has great significance for the role played in world history, flat lands contiguous with the steppe plaid a prominent role together. A district, much larger than the steppe, the Great Eurasian Puszta (grasslands), including the Carpathian Basin, the Chinese Plain and the Indus Valley, is being outlined. We will highlight that the fertility of the soils, the precipitation conditions and other substantial physical geographic conditions of these three districts are the most favourable in the whole world. The vast majority of the region consisting of an area of 16 million sq. km, embraced by the triangle formed by the Carpathian Basin, the Chinese Plain and the Indus Valley, is flat land. Here evolved the ancient Silk Road in ancient times, which, in fact, played the main role in ancient history.

Nature and History The ancient civilization appeared and developed in places where the available physical geographic conditions were particularly favourable for its appearance. Until the emergence of agriculture and cities, and the unfolding modern industrial revolution, Nature, the landscape, the land had the determining role, to which the people growing together with the land adapted spiritually and intellectually. From the Carpathian Basin to the Pacific Ocean and Northern India, nature religion, animism and shamanism dominated since ancient times to the latest centuries, organically integrated with ancient knowledge, ancient philosophy and a moral attitude of respect for Nature. The role of natural factors is still extremely important in the history of peoples. It was especially true during ancient history. They had a great impact on

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developments in the ancient history of peoples until man lived in a civilization harmonious with Nature. Considering natural factors is a must if we want to understand ancient history ever more profoundly in the context of reality, which is more profound and more permanent that the context of historical events, therefore it is of primary significance in a longer term.. It is especially true in the era of ancient history, when man lived in harmony with Nature, in Natureâ&#x20AC;&#x2122;s lap, and conceived themselves as the earthly continuation of Natureâ&#x20AC;&#x2122;s creative force. And this was even more the case, for example, in the district of Eurasian shamanism, which just corresponds to the Silk Road belt. In the traditional culture of the peoples of the Silk Road, maintaining the order and the equilibrium prevailing in Nature is a moral obligation. Since according to the ancient Eurasian nature religion, everything in

Districts of surviving traces of animism and shamanism in Eurasia. The Carpathian Basin, Siberia, East Asia, Korea, Central Asia, Tibet and Nepal preserve shamanism, animism and shamanism are strong in Southeast Asia (Banstola 2017). These districts belonged to the same culture a couple of millennia ago. Eastern Europe, Asia and Africa preserve traces of shamanism and animism. Hungary: some shamanistic elements have survived. Eastern Europe: some shamanistic elements have survived in certain districts. Central Asia: some shamanistic and animistic elements have survived in certain districts. China, Southeast Asia: mostly animistic but also some shamanistic elements are present. Areas marked by red: district of original ancient shamanism. Areas marked by green: traces of original ancient animism. Reality is much more complex than this picture. Naturally, today’s dominating world religions – Christianity, Islam, Buddhism, Hinduism – are present almost everywhere, but they are not indicated on this map.

Nature has a soul, it cannot be violated. In traditional Eurasian societies, the system of dependencies between Nature and man was maintained for centuries. The peoples of the Silk Road, or at least the older members of them, still remember that destroying the spiritual world jeopardises the equilibrium in Nature. The traditional Eurasian culture can be called eco-animism, eco-shamanism, because it is programmed to protect the environment. Notion of the Steppe Steppe means a semi-arid climatic zone, a region with scarce water supply, which does not replace the rainfall that evaporates during a year. Of the classification of climate types, the system introduced by Köppen in 1900 and recently updated by Peel, M. C., Finlayson, B.

L., and McMahon is the most frequent one worldwide. As a first approach, the definition of ‘semi-aridity’ can be characterised by a mean annual precipitation between 250 mm–500 mm on the basis of Köppen’s classification system. ‘Semi-aridity’, however, also depends on the annual and even the summer and winter average temperatures; the higher the temperature is, the more rainfall evaporates. The steppe extends between latitudes 40° and 55° north from the Great Plain in the Carpathian Basin to Manchuria situated at the Pacific Ocean, spanning a distance of over 9,000 km. The steppe occupies a territory of no less than 7 to 8 million sq. km. Despite its semi-arid nature, the steppe played a prominent role in history. ‘When studying steppe cultures, we constantly come across striking manifes-

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Religions in Eurasia circa 600 A.D. The district of nature religion–shamanism ranges from Central Europe, the northern and eastern parts of Great Britain to the Caucasus, the Pacific and the Indian Oceans. Based on the Historical Atlas for Secondary Schools.

tations of the so-called “syndrome of cultural continuity” so characteristic for the majority of cultures of the steppe belt of Eurasia’, Evgenij Nikolaevich Chernykh, excellent Russian archaeologist writes. In her book Prehistory of the Silk Road, Elena Efimovna Kuzmina presents a large number of archaeological finds that determine ‘the pivotal role of Eurasian steppe populations in establishing pan-Eurasian ethnic and cultural relations in the course of the Copper and Bronze Ages’. The role of the steppe belt in world history was significant also in the Middle Ages, and faded only in the 18th–19th centuries. How can the steppe’s significance in world history can be explained? Fundamentally, the steppe is a climatic category. In terms of rainfall, semi-arid climate means more expenditure than income year by year. However significant the role of the steppe was in ancient history, due to its semi-arid nature it counts as a relatively unfavourable zone, which cannot provide local self-supply, and support a significant population. What is then the reason for the prominent historical role of the steppe?

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Let us consider that the steppe is not just a semi-arid belt of any kind, because it has a characteristic that is a particularly beneficial for keeping contact, and through it, culture and history: it is a vast flat land. Flat lands, especially if they cover a vast area, have had enormous historical significance since the Palaeolithic, which deserves special attention. Significance of Vast Plains to the Development of Civilization Of all types of land, plains are the most favourable for transport, and making contacts within and between different cultures. Spatial distances can be bridged by transport. On a geological timescale, plains, offering the most favourable, ideal mode of making contacts, provide the most favourable transport conditions for the peoples living in this district for millennia. The ideal opportunity of making contacts is crucial for the emergence, survival and further development of cultures, and the unification of the population. Thus, vast plains, especially if they include fertile belts with favourable rainfall patterns, are districts deserving the special at-

The physical geography of the Silk Road

tention of history both in terms of intellectual life within cultures and the relationship between cultures. Transportation is basically a geographical notion. For the development of civilization, the establishment of transport routes that are as passable as possible is crucial. Establishing good transport conditions is of key importance for organising community life, establishing and operating social institutions, maintaining and developing the cultural standard. Jean-Paul Rodrigue recognised that changes in mobility have been the outcome of technological developments that improved speed, range, price, affordability and comfort. Regions that possess greater mobility are often those with better opportunities to develop. Mobility is thus a reliable indicator of development. In ancient history, great plains were the districts that had the greatest mobility. Transport has a central role in the development and growth of the economy. Moreover, transportation is responsible for the development of civilizations from very old times. In all regions, unity ensured by transportation is a pre-requisite to civilization. If we study those nations which have been generally regarded as highly civilized,

we find a rather high degree of correlation between their stage of advancement and the art of transportation. This does not mean that the art of transportation is always the cause of cultural development; indeed, it is sometimes the result. However, it remains true that no great civilization has been built without some well-defined system of transportation (ibid). It is manâ&#x20AC;&#x2122;s innate aspiration to perfect, elevate and enrich life, which entails the aspiration to overcome barriers in space and time. Overcoming barriers in space requires building relationships and developing transportation. The development of transportation is closely related to civilizational achievements. Humanityâ&#x20AC;&#x2122;s aspiration to overcome distances necessarily entails the need for developing required civilizational achievements. Since transportation is the easiest on great plains, these were the first districts where the basic achievements of transportation could develop. If the historical prominence of the steppe is related to the fact that it is flat, the vast flat districts in the immediate vicinity of the steppe must be also considered: the vast district of the Eastern European Plain and the Western Siberian Plain to the north of

The map of the Eurasian steppe district (Based on Dong, Wen and Liu 2016).

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the steppe, the Turan Plain, the Plain of Seven Rivers, the Chinese Plain and the Indus Valley are all flat lands. If vast expanding flat districts have historical significance, this giant cluster of plains, covering almost one-third of Eurasiaâ&#x20AC;&#x2122;s area of 55 million sq. km, must have world historical significance. That is why it is worth taking a closer look at the historical significance of transport. The Notion of the Puszta The fundamental significance of transport requires the introduction of a new notion, the notion of the Great Eurasian Puszta. The Great Eurasian Puszta is a vast, basically flat district in Eurasia which comprises, in addition to the absolutely flat areas overlapping each other, all neighbouring large, flat districts that are accessible without significant transportation difficulty. The Great Eurasian Puszta is a system of plains, basins, deserts and plateaus that are closely linked to the steppe and are passable. In addition to the steppe and the forest steppe, having a fair network of roads, the Puszta also comprises the entire Carpathian Basin, the Kuban Region, the Torgay Region, the Turan Plain, the Iranian Plateau, the Indus Valley, the Tarim

Basin, the Gobi Desert, the Loess Plateau in the Ordos Region, the Manchurian Plain, and the Chinese Plain. The total area of the Puszta is more than 16 million sq. km. There is no larger region with a unitary character in the world. In fact, the taigaâ&#x20AC;&#x2122;s flat land, marked by green in Figure 4 also belongs to the district marked by yellow to its south. These districts are not regarded in a stricter sense as parts of the Puszta because life is even harder in them, they can support a considerably smaller population, therefore they did not play a prominent role in the epoch of ancient history. The two basic categories of landforms are plains and mountains. This means that it is not the steppe that constitutes a basic region, but the Puszta. While the steppe is a climatic category, the Puszta is a transportation one. While the steppe crucially depends on climatic changes, and therefore its silhouette changes relatively rapidly, the flat nature of the vast Puszta can be changed only by geological forces. The Puszta changes on a geological timescale, therefore it can be regarded as fundamentally unchanged for millennia.

Silhouettes of the Great Eurasian Puszta.

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The physical geography of the Silk Road

Distribution of highly fertile soils on the steppe and in its surroundings. Areas covered by black earth, alluvial soils or brown forest soil are the most significant in the Carpathian Basinâ&#x20AC;&#x201C;Western Siberia belt and near the Pacific Ocean, the Chinese and the Manchurian Plains. Physical geographic conditions link the ancient history of the Carpathian Basin and that of the Silk Road. To civilization, the road network is what vasculature and a neural network is to a living organism. A single-cell microorganism has no vasculature; in ever more complex life forms, vasculature and the neural network have an increasingly significant and central role. Road networks have been of prime importance also to telecommunications, up to the late modern period. The most favourable district for the evolvement of road networks is a vast, flat land. The Eurasian Puszta is the largest and the most favourable great region cluster in the world from a transportation perspective. It is much more so than the steppe; of all regions of the world, the Puszta is the most suitable for the development and interconnection of cultures, due to its size, flat nature, fertility, climate, geographical position and large population. In addition to the fact that the Puszta is the most favourable and largest region, for the emergence, survival and development of civilizations a large population is also of key importance. Therefore, it is also worth examining â&#x20AC;&#x201C; besides its dimensions and its flat

nature â&#x20AC;&#x201C; how suitable the Puszta is to support a large population. It has been long known that loess regions and the alluvial soils of large rivers are especially important to the emergence of civilizations. Loess in itself is a very loose rock, and the soil is formed as rocks crumble. Since it is much more porous, it crumbles much more easily, organic substances are much better integrated, therefore soil formed on loess are one of the most fertile ones. The most favourable soils are formed on loess surfaces, along rivers with large floodplains and on the steppe. Black earth (with a foreign word, chernozem) is the highest quality soil in the world. Black earth forms a contiguous district of an average width of 600 km running from the western brink of the Carpathian Basin, along the Danube, then 4,000 km long on the Eurasian Plain to the Ural and Siberia. This is the largest black earth district of the world. If we want to see all districts of fertile soils at once, we can also include soils formed on loess surfaces, brown forest soils containing a high percentage of humus, and alluvial soils having excellent fertility.

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Precipitation conditions in Eurasia. While the mean annual precipitation is between 500 and 750 mm around the Carpathian Basin, the Chinese Plain and the Indus Valley, it is typically 250-500 mm on the steppe, with a semi-arid climate. In Mesopotamia, between the Tigris and the Euphrates, there is a semi-desert climate, with precipitation between 0 and 250 mm. Fertile soils are really fertile if sufficient precipitation conditions are also available. Let us look at the prevailing precipitation conditions around the Puszta. It has been lately revealed that the Ordos region, regarded as a periphery until recently, played, in fact, a central role in the development of the Chinese civilization. Around 2000 B.C., the loess highland in Ordos was China’s political, cultural and economic centre, and home to a complex society. The most important symbols from the Bronze Age, which had a crucial role in the civilization of the Chinese Plain, appeared on the Ordos Plateau much earlier, near the Shimao archaeological site. A great part of the Chinese Plain’s inventions from the Bronze Age are considered to have arrived from the Eurasian steppe. The style of Shimao’s stone statues, wall paintings and archaeological finds show that its inhabitants had a close relationship with Eurasian peoples, through an extensive trade network. Archaeologists now think that the Chinese civilization is a result of interactions with several different cultural centres.

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Within the boundaries of the Puszta, precipitation conditions are the most favourable around the Carpathian Basin, the Chinese Plain and the Indus Valley. The Carpathian Basin, the Eastern European steppe, the Iranian Plateau, the Indus Valley, the loess highland around Ordos and the Chinese Plain are all excellent grain production regions. As such, they could provide food for a huge population. While the steppe and these plateaus contributed to sustaining the population of the Puszta with their suitability for agriculture, grain production and stockbreeding, the concerned or nearby mountains – the Carpathians, the Ural, the Caucasus, the Altai, the Pamir, the Tien-san –, with their ores, provided first-rate resources for metallurgy. Let me give an overview of major physical geographic factors of the Puszta, from the perspective of factors that are favourable for civilizations. Civilizational Significance of the Puszta The special characteristics of the Puszta include: (1) it is uniquely favourable for transportation; (2) it has a uniquely large area;

The physical geography of the Silk Road

(3) it has uniquely fertile soil, including the world’s largest loess region and black earth belt; (4) it has huge rivers, and several significant interfluves; (5) it can provide self-sufficiency, due to its vast size, and its mosaic-like nature consisting of diverse districts that significantly differ from each other and have their own local characteristics; (6) its majority lies within the favourable, temperate and sub-tropic climatic zone; (7) the largest mainland; as a whole, it is difficult to control it by an external power due to its location in the heart of Eurasia and its vast size. The Puszta is characterised by all these special characteristics that are favourable for the development of civilization together. The Puszta, due to being the most favourable for transportation, the size of its area, its geographical location, its uniquely fertile soils, large rivers, its capability of ensuring self-sufficiency, and its favourable climate, can support a large population. On this basis, we can draw the conclusion that its physical geographicafactors identify the district of the Puszta as the district where the ancient civilization of humanity developed. Since these physical geographic factors have extremely long, geological time horizons, these especially favourable conditions for the development of civilization were in place for an extremely long time. And this means that the ancient history of humanity dates back to a period that is significant historically as well as geologically, i.e. a period of millions of years. The history of the Puszta dating back to ancient times has extraordinary civilizational significance again. In the case of a civilization with a relatively large population, a past that is significant also on a geological scale means an extraordinary resource for the survival and development of the culture. As a first approach, it can be assumed that the longer a civilization with a high level of knowledge exists, the more opportunities arise to acquire newer knowledge, to develop knowledge. We should call attention to the civilizational significance of one more factor. Especially favourable transportation is capable of unifying the population as well as the physical and the spiritual culture. The unifying effect of transport is the most powerful in districts where transport conditions are the most favourable. As the Puszta is the world’s largest unified region and

has the most favourable transport conditions in the world, the unifying effect of transportation is the most powerful here. In pre-historic times, culture was fundamentally uniform in the Puszta district for a period of at least 40,000 years. The complex of imagery (e.g. cave paintings, Venus figurines) and the locations of the Upper Palaeolithic art (40,000–10,000 B.C.) in the district of the later Silk Road, linking the Atlantic Ocean to the Pacific Ocean reveal remarkable uniformity. It has made scientists draw the conclusion that religion and cosmology were fundamentally identical, uniform and continuous in this vast Eurasian district for more than the last 20,000 years, and man followed patterns of thinking that were very similar to today’s ones. There are many other traces to support the tens-of-thousands-year-old past of the Eurasian ancient culture, such as the diffusion of the Gravettian people – inventors of the bow – in this district, cave paintings, the appearance of clothing, and the idea of a kingdom descending from the sky (a find in Sungir), the unification of the microlith culture, genetic uniformity, etc. (in more detail see Grandpierre 2019, chapters 8 and 7). Thus, there are sufficient grounds to assume that the especially favourable transport conditions of the Puszta represented the most powerful unifying effect mechanism to its population. Against this background, the assumption that the Puszta is capable of unifying the population in this vast district and create one of the ancient peoples of mankind is well founded. The significance of this unification to the development of languages is demonstrated by the example of the Chinese Plain. In his book written about the languages of China, S. Robert Ramsey writes, ‘the Chinese language, like China itself, is geographically divided into the North and the South. The Northern varieties of the language, the Mandarin dialects are spread across the Yellow Plain and the Loess Plateau. There is a qualitative difference between these two areas. The Mandarin area is unusually uniform; virtually all of the dialects spoken there are mutually intelligible – or very nearly so. But the Southern, non-Mandarin area is extremely varied and within it sharply divergent forms of speech are often separated by only a few miles. The physical character of the land on which the Chinese live has apparently affected the ability to communicate. Mandarin dialects are particularly frequent in the hill country. The open terrain made possible linguistic unity and cohesion’.

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Presumably, the effect of transportation unifying cultures and languages is typical not only of a district of the Puszta located in Northern China, but of the entire Puszta. And if this is the case, however surprising it may be, we would basically expect, from a historical perspective, the prevalence of a fundamentally uniform language in the districts of the Puszta or at least in a major part of it (major exceptions include the Chinese Plain and the Indus Valley; e.g. in terms of language, the Chinese Plain merged with the Chinese Han nation at least 3,000 years ago). We should also consider that it is such a large population that it accounts for, genetically, the majority of the population in Europe, Central and South Asia. Considering the unifying effect mechanism of the Puszta in transport and social organisation, also shaping history, re-evaluates the picture created so far of the civilizational significance of the steppe. On the one hand, bringing the significance of transport to the fore places it in a more fundamental context, a larger geographical district in space and geological perspectives in time, and attaches civilizational significance to it; on the other hand, it has a more important role in world history through its unifying effect. The fact that the semi-arid district (the steppe), the black earth district and the ideal transport route (the Puszta, and, in a broader sense, the Eurasian Plain) greatly overlap in the case of the steppe has contributed to the failure to recognise the major civilizational significance of the Puszta. Thus, the district of the Puszta is referred to as the ‘steppe’, ignoring the Puszta as an ideal transport route and, as a result, its civilizational significance. The steppe is spatially narrower than the Puszta, but there is another difference: its physical geographical features, except for its eastern and western centres of gravity, the Carpathian Basin and the Chinese Plain, are much less favourable. That is the reason why the currently common belief that the steppe could not play a major role in civilization because its total population is negligible compared to the population of Western Europe, China or India has been formed. This stance, in the light of the above, is not duly substantiated. The Puszta is the largest and most fertile region in the world. Its excellent transport conditions, favourable climate, large rivers, the fact that it is situated in the heart of Eurasia, and its richness in natural resources contribute to its significance in world history. During

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ancient history, the district was especially favourable for the emergence and accumulation of knowledge required by civilization, and it is also one of the busiest regions of human civilization by introducing the cultures of neighbouring districts into its own cultural circuit. Its central location and its especially favourable physical geographical and cultural features make the Carpathian Basin the centre of traffic in Europe as well as the western centre of gravity for the peoples of the Puszta during ancient history. Similarly, the Chinese Plain can be regarded as the eastern centre of the Puszta, because of its favourable physical geographical and cultural features. It has been revealed recently that both in terms of population number and the level of culture, the Carpathian Basin was a major pole of the ancient Silk Road 7,000 years ago. Developed agriculture, metallurgy, developed pottery, the spiral pair – a key symbol symbolising the development of life and the cosmic unity of lives and their transformation into each other, which has become really significant in China, as a yang-yin symbol – appeared in this district. In the sixth millennia B.C., the wave of 1-2.5 million people that flowed to the north, the west and the northeast from the Carpathian Basin was more than the double of China’s population of less than 600,000 people in those times. A population of 1 million people, burying with sceptres, thus cultivating an especially high culture, and flowing to the east from 5100 B.C. also contributed to this number. Throughout the millennia, however, China has played an increasing role both in terms the size of its population and its level of culture. In the last 2,000-3,000 years, China has become the dominant centre of the Silk Road. The Notion of the Silk Road According to the still prevailing understanding, the Silk Road means trade routes and a diverse cultural effect mechanism, the loose relationship of different cultures, in which the emphasis is placed on the differences between cultures. The Silk Road has been considered to be the main artery of the flow of culture, languages, art, religious and philosophical ideas, information and innovative inventions, in addition to trade items, between Asia and Europe. This has made the history of the Silk Road a particularly important chapter of the cultural history of humanity. The fact that the Puszta covers and connects most of the ancient

The physical geography of the Silk Road

In her book The Prehistory of the Silk Road, published in 2008, prominent Russian archaeologist, Elena Kuzmina proved that the most important, northern route of the Silk Road was the one that traversed the Eurasian Plain, and, starting from the North China Plain, linked Central Asia to the northern shore of the Black Sea for millennia. Long-distance trade routes always emerge between two interested parties. We know that China was the starting point of the Silk Road. If China is one of the parties, who was the other one around 4000 B.C.? Yang-yin symbol from the Ariuşd-CucuteniTripolie culture from the Copper Age between 5000 and 3000 B.C. (Sergeyev 2017). Silk Road expands the view about the Silk Road and adds a new meaning to it. The geological timescale of the Puszta expands the notion of the Silk Road towards ancient history, and its significance in transport calls attention to the fact that the Puszta provides a particularly adequate environment for an almost unknown, ancient Eurasian civilization. The notion of the Silk Road is being re-evaluated in the light of the significance of the Puszta. In this broader sense, the Silk Road is the Puszta and its surroundings which have independent ethnic, linguistic and cultural roots but are in a close cultural interaction with the Puszta. The cultural scope of the Silk Road extends over, besides the Puszta, the neighbouring, mountainous districts. These include, for example, South China, Korea, Northern India, Iran, Mesopotamia, Anatolia, the Caucasus, the Balkan and Italia. Remarkably, these districts had significant, independent cultures in antiquity. Thus the Puszta, ensuring extraordinarily favourable conditions for the connection of these cultures, exerted a significant impact on the independent development of these high cultures. It is also remarkable that China established its own road network in the district of the entire Silk Road from the second century B.C. The fact that transport is of primary importance to the development of civilization, sheds new light to what the Silk Road was and how significant it was. The civilizational significance of the Silk Road is considerably increased spatially, temporally and culturally by the fact that it encompasses the Puszta, representing the most favourable transport conditions. Thus, the steppe, the Silk Road and the Puszta mean three different districts.

Demographists have shown that at the end of the Neolithic, at the beginning of the Copper Age, between 5700 and 5000 B.C., the most significant demographic revolution of the time took place in the Carpathian Basin, and a population of 2-3.5 million people expanded to the east, the north and the west. These three centres, the Carpathian Basin, China and India, form a triangle that outlines the Silk Road district. On the northern shore of the Black Sea, in the sixth to fourth millennium B.C, the Ariuşd-Cucuteni-Tripolie archaeological culture was present, which ruled the steppe in the Copper Age and the Bronze Age as a sceptre-holding people of around 1 million, settled east of the Carpathian Basin, and which belonged to the Old Europe civilization, unfolding from 6200 B.C. The Carpatho-Balkan province was the centre of the Old Europe civilization, from where metallurgy diffused. Thus, the two major poles of the ancient Silk Road are the Carpathian Basin and the Chinese Plain. In relation to the ancient history of the Silk Road in the period between 5500 and 200 B.C., the term Ancient Silk Road is used for the northern Silk Road of the time. As far as we know it today, silk has been known since the third millennium B.C. Still, adding the attribute ‘Ancient’, we keep the term Silk Road also in relation to these ancient periods, because this name is well-known, and suggests at first sight that there was an extraordinarily significant transport route, between the two endpoints of which the exchange of trade items and ideas took place, and which, in addition to its commercial and cultural significance, significantly affected Eurasia’s demographic conditions as well. To date, the Silk Road has been perceived as a trade route loosely connecting fundamentally different cultures, and it was significant because it linked developed China to developed Western Europe. However,

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The silhouettes of the Silk Road districts, marked by the Carpathian Basin–Indus Valley–Chinese Plain triangle. The silhouettes of the Puszta are marked by green. The figure also shows the northern Silk Road, the route that linked the cradle of Chinese civilization to the Carpathian Basin. Western Europe’s development can be derived from ancient Greeks and Romans, which determines the age of the northern Silk Road as a period of less than 3.000 years. The civilizational significance and unifying effect of the transport conditions of the Puszta fundamentally modify this picture, expanding it in space and time, increasing the size of its population and the level of its ancient culture, extremely enhancing the civilizational role of the Silk Road.

to heightening their historical sense of belonging to each other. The northern Silk Road is a special region for the peoples living here not only because it is our common homeland dating back to our ancient history, but also because it is a unique phenomenon of Nature that has special characteristics. Understanding the physical geography of the Silk Road is of key importance in obtaining a comprehensive picture of what our civilization is and its future.

The significance of the Puszta in transport increased even more from the domestication of the horse (around 4000–5000 B.C.). Today, the appearance of high-speed railways, reaching an average speed of 300 km/h, makes the Silk Road and overland transport a region having the most economical, most advantageous transport conditions again, and the civilizational significance of this district, in the light of the foregoing, can be regarded again as a landmark.

Physical Geographic Conditions Particularly Favourable for the Development of Life

Knowing the natural, social and economic conditions of the northern Silk Road as thoroughly as possible is of fundamental importance to shedding light to the ancient history of the peoples living here and

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The assumption that a high level of knowledge of humanity is the most likely to develop in districts where physical geographic conditions are the most suitable for it is obvious. In our days, as natural resources are shrinking and needs are growing, physical geographic conditions have again come to the fore and have become decisive factors of development. Districts where conditions were relatively the most favourable for the development of life in the long term are the primary candidates for the most prominent

The physical geography of the Silk Road

knowledge centres in world history. Knowledge, by definition, has an accumulating nature. Elements of knowledge acquired in different eras are added to the knowledge preserved from previous eras by tradition. Physical geographic conditions favourable for the development of life, due to their geological timescales, are particularly favourable for the processes elevating the ancient culture of humanity onto a high level. As the higher the quality of knowledge is, the more capable it is of elevating higher, the ancient culture of humanity could reach a very high standard on the geological timescale. The Equation of the Development of the First Civilization after the Ice Age How could we find an adequate method to express the civilizational significance of the physical geographic conditions of the Silk Road? As a first approximation, the effect of factors favourable for the emergence of civilization, its high level and development, multiply. This is simply contributable to the fact that, for example, under identical circumstances, a region twice as large can be home to a population twice as large and twice as many opportunities arise to increase knowledge. It particularly happens when there is a life-centric civilization, the main aim of which is to increase physical, mental and spiritual well-being, both in the individuals’ course of life and society. Similarly, a soil which is twice as fertile may provide twice as much food. If we review the physical geographic conditions that are favourable for civilization, the figure we get by multiplying them is more suitable for describing the civilizational significance of the region than these separately are. This train of thought leads to describing how favourable geographical regions are for the development of civilization by one single figure. This figure can be determined from an equation, by multiplying the appropriate factors. This equation can be used to determine the geographical district of the ancient civilization. The physical geographic equation of the development of civilization can be given as follows. The probability of the emergence of civilization in a given district = A (proportionality factor) x how favourable the district is for transport x area x fertility of soil x number of large rivers and interfluves x favourable climate (temperate zone) x advantageous geographical position x geographical uniformity x geographical protection x a favourable amount of precipitation x

how rich it is in other natural resources (minerals, thermal waters) x duration of constant presence of conditions favourable for development. For a clearer overview, these factors are also given in a list: (1) how favourable the district is for transport, (2) size of the area, (3) fertility of soil, (4) number of large rivers and interfluves, (5) favourable climate (temperate zone), (6) advantageous geographical position, (7) geographical uniformity, (8) geographical protection, (9) a favourable amount of precipitation, (10) how rich it is in other natural resources (minerals, thermal waters), (11) duration of constant presence of conditions favourable for development. Proportionality factor ’A’ ensures that the value of the multiplication should take 1 for the most favourable one of all regions that exist in reality, so that other potential regions could be easily comparable to it. At this point, it is sufficient to consider the physical geographic features of the Puszta in this context. In the case of the Puszta, almost all of the many multipliers in the equation of the development of civilization fall into the favourable–very favourable category. In the epoch of ancient history, the peoples of the Puszta regarded Nature as deserving the highest respect, fuelling the development of civilization with another, spiritual resource. In the age of an ecological crisis, ecological viewpoints gain increased importance again. The further deterioration of the environment can be stopped by a fundamental change of our mindset. As long as Nature is not respected, the way of the world remains the same, and the ecological crisis will become widespread. In the Western world, being above the ecological threshold, the quantitative increase of material production will entail the further deterioration of the environment and the long-term ‘sustainable economic welfare’ and the quality of life (Lawn 2003). As long as we consider Nature to be lifeless, material viewpoints will dominate our decisions about Nature. In order to build an ecological civilization, such a scientific theory is required that forms a reliable basis of the idea that Nature is the living Universe. This theory is available today (Grandpierre 2012, 2015, 2019).

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In the 21st century, a more profound, ecological change of era is taking place. As the hegemony of the materialistic Western civilization is coming to an end, the most favourable physical geographical and cultural conditions for the change of era are in place along the Silk Road linking the Carpathian Basin to the Chinese Plain. As ecological viewpoints are becoming increasingly important, the knowledge of the Silk Road, accumulated on a geological timescale, may become the most significant treasure of the intangible world heritage of humanity. The New Renaissance, being born in our time, is expected to set out in the Silk Road district.

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THE AGE OF EURASIA

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BOOK RECOMMENDATIONS 179

Belt and Road: A Chinese World Order by Bruno Maçães Author: Alexandra Zoltai

In his book, Bruno Maçães, a former Portuguese politician, a non-resident senior fellow at the Hudson Institute and a senior advisor at Flint Global, gives a detailed account of a unique geopolitical initiative of our era, China’s Belt and Road project. According to his basic thesis, China is building a new world order with the help of the programme determining Eurasia’s future, and its implications can be interpreted correctly only if history, politics, economy and culture are considered from a combined perspective.

INTRODUCTION For seventy years, the author claims, economic and political power concentrated in the hands of the United States and its allies, while the Eurasian supercontinent remained divided. Today, however, we are witnessing the evolvement of a new world map, during which, parallel to the weakening of the USA’s global power, the rise of Asian countries tips the balance of power to the East, creating a new geographical entity, Eurasia. stretching from Lisbon to Jakarta. China has the most important role among the centres of powers in the supercontinent, since the country is working on creating a new global economic system, placing China in its centre, with the help of the Belt and Road programme’s overland and maritime transport corridors. As the author concludes, whoever is able to build and control the infrastructure linking the two ends of Eurasia will rule the world. Naturally, beside China, India, Russia and the European Union also count as prominent actors, but the world demonstrates an increasingly integrated development path during the new Eurasian century.

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Bruno Maçães thinks the Belt and Road initiative is actually China’s plan to build a new world order, replacing the US-led international system. In the new world order, which is being outlined now, different regions will have different levels of sovereignty, while China could extend its influence over two-thirds of the world. Shown on a map, Belt and Road cannot be really regarded as a project or initiative, but rather a process which illustrates the slow but unavoidable extension of Chinese influence. The main aim of the book is to give a detailed analysis of the Belt and Road project, which affects the future of the whole world, from the perspective of history, international affairs, economy and culture, in the Eurasian space meant in a broad sense. The book is divided into five chapters; structurally, first it gives a general account of the antecedents of the Belt and Road project and its real significance; then, it gives an overview of the development of the overland New Silk Road Economic Belt and the 21st Century Maritime Silk Road, detailing infrastructure projects related to particular regions. Chapter 3 examines the initiative’s interactions with the world economy,

itiative is to gain independence from global systems that China cannot control, which is, in a geostrategic sense, intended to address the issue of uninterrupted raw material imports. The author believes that Belt and Road is the best illustration of China’s transformation from a regional power into a global one. The uncertainty about the geographical dimensions and the implementation time-frames of the large-scale project reflects China’s intention to revive the traditional Tianxia system, the main point of which is to build a particular system of relationships between China and specific countries, in which the others recognise China’s leading role. In return, they enjoy considerable independence, and a win-win situation, acceptable for everyone, evolves in a pollical and economic sense. As opposed to the old system of vassals, where China’s cultural supremacy was beyond doubt, in the 21st century only economy would bind sovereign states together. The author thinks it is important to point out that the informal, less defined nature of the initiative continues to prevail; creating an institutional, rules-based system is not a priority for China, which may have positive as well as negative implications for participants in the future. while Chapter 4 endeavours to introduce the global political context and transforming international relations. The last chapter focusses on consequences, and it also outlines alternatives. THE BELT AND ROAD INITIATIVE In the first chapter, the author, also drawing on his own personal experiences, gives an overview of the circumstances under which the Belt and Road initiative was announced, its responses abroad, and the roots of the project’s positive reception. He thinks that for a long time China could, almost unnoticed, emerge as a major power as a result of reforms introduced under Deng Xiaoping, but by now, the international political and economic environment have changed. Belt and Road reflects a change towards a more active Chinese foreign policy, where China seeks to act increasingly as a rule-maker. There is great demand for infrastructure development in Eurasia’s developing countries since its positive economic effects are illustrated by China’s example. For China, it is not just an excellent investment opportunity but also an outlet for the heavy industry. For Beijing, however, the main aim of the in-

THE SILK ROAD ECONOMIC BELT AND THE 21ST CENTURY MARITIME SILK ROAD The second part of the book presents the details of the initiative to readers, examining the development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road and the progress of infrastructure development projects in particular. Promoting connectivity is a common interest of participants, which, however, also includes the building of telecommunications networks between Europe and Asia in addition to railways, motorways and ports. The development of the 5G network is definitely a priority for China. Regarding the funding of infrastructure developments, the author dwells on the role of the Chinese state and privately-owned companies and banks, presenting both positive and negative consequences. He also analyses the issue of the debt trap, frequently referred to by western authors, with Sri Lanka being a classic example. Examining overland routes, basically there are three different ones. One of them links Northwest China to Europe, through Central Asia and Russia; the other one leaves from China, runs across Central and Western Asia towards the Mediterranean coast; and

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the third one links Southwest China to the region of the Indian Ocean via the Indochinese Peninsula. The tree routes can be further divided into six economic corridors, which do not just mean transport routes linking the endpoints, but have much more complex geo-economic implications since, as opposed to the ancient Silk Road, it is such economic integration that promotes the urbanisation of the region, the connections between production chains and the emergence of economic centres. Undoubtedly, industrial parks and free-trade zones will have a prominent role in this process. Regarding completed projects, the author primarily emphasises the significance of Kazakhstani and Pakistani results.

chains, the efficiency of which is illustrated through the example of cobalt by the author. He claims that who rules cobalt commands the battery market; who rules the battery market commands the electric car market; and who rules the electric car market commands the world. That is, in case of China, possessing cobalt supplies has resulted in dominating the electric car market. His viewpoint is that the Belt and Road can be also interpreted as a transnational industrial policy and is closely connected with the Made in China 2025 concept. The significance of the latter lies in the fact that it focusses on developing the industries of the future, and therefore, with foreign investments China aims

In the case of the 21st Century New Maritime Silk Road, there are three different routes. The China-Indian Ocean-Mediterranean Sea Blue Economic Passage leaves from China and runs via the South China Sea, the Indian Ocean and the Red Sea to African and European ports. The second is the China-Oceania-South Pacific Blue Economic Passage, and the third is the Polar Silk Road, which runs in the Arctic region along the Russian coast towards Northern Europe. The main purpose of the initiative is to guarantee the safety of transport routes, develop transport and port infrastructure, and promote economic growth and industrialisation in coastal regions. The development of ports is closely related to the establishment of industrial parks and urbanisation, also supported by the “PortsPark-City” model, featured in Chinese documents. The author thinks that the geopolitical significance of ports should not be neglected, especially in Southeast Asia, where, due to maritime border disputes, Chinese projects are viewed differently compared to other regions of Eurasia.

at laying the foundations of future developments through technology transfer. Creating a Chinese standard accepted by partners is also particularly important to Beijing, as there is fierce competition in this respect with western countries (e.g. USA, Germany). When dwelling upon the economic rivalry between the USA and China and the consequences of the trade war, the author takes the view that losing the central role in global value chains of industrial production would be the hardest blow to the Chinese economy. Exports are decreasing due customs tariffs and they could impede the funding of the ambitious projects in the long term. The Belt and Road initiative places China at an advantage when having access to raw materials available in developing countries, and in addition, the country may secure its leading role with partners and rivals through the re-arranging of global value chains, as the events in Kazakhstan and Pakistan have already proven. INTERNATIONAL POLITICAL CONTEXT

EFFECTS ON THE WORLD ECONOMY In the next part of the book, the author examines the role of China and the Belt and Road initiative in the world economy. In his opinion, due to imbalances and distortions in the Chinese economy, large-scale reforms are required to keep annual economic growth at 6-7 per cent, and the BRI is obviously intended to implement these. Since China does not wish to adjust its economic policy to the world economy, it has taken its economic development strategy onto a global level, which has been embodied in the Belt and Road project. In the world of global value chains, in order to retain competitiveness with the most advanced economies, China is forced to create new, more efficient value

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In the next chapter, the author examines the relationship between China and other major powers from the perspective of the Belt and Road initiative. India’s role is explained in full detail; he thinks that the country’s negative attitude is primarily contributable to the fact that India’s government regards Chinese plans as a major threat to national security, since the China-Pakistan Economic Corridor would not only turn the issue of Kashmir into a fait accompli but would also take the conflict with Pakistan onto a regional level. It would also cut off India from Iran and Central Asia in the supply of raw materials. The book acknowledges that in terms of the economy and the military, China’s edge is obvious, but in terms of soft

Belt and Road: A Chinese World Order by Bruno Maçães

power, New Delhi’s leading role is emphasised, which could be a significant obstacle to Chinese expansion. He does not think that an open struggle between the two countries will ever materialise, but as a latent conflict it is already one of the most important variables of world politics, as India’s rise may represent realistic counterweight to China in the future. The author regards the US government’s Indo-Pacific concept completely justified from the perspective of political geography, as the region is viewed as an integrated whole also by major powers’ strategies. An initiative by the “Four Countries”, that is the USA, Japan, India and Australia, may present an alternative to China’s Belt and Road project, and the clash of opposite views may present an important test case of the Eurasian integration in a geopolitical sense. Today, the USA can see a serious strategic threat in Chinese plans, and seeks to prevent their implementation, also deploying its allies. As a result, a new cold war situation may be expected. From the perspective of Belt and Road, countries are rated either as participants or geopolitical rivals, while India and Japan are regarded as a temporary category, whose role in the initiative is not yet clarified. Initially, the European Union responded to Chinese plans positively, cooperation between China and Central and Eastern European countries has become of central significance in interconnecting Asia and Europe. Beijing regards the region as part of the new Chinese world order, and Western Europe tends to be seen as a guard of the old order. France and Germany, in fears of losing their economic influence, share the scepticism of the EU’s leadership about Belt and Road, but a European consensus has been derailed by the opposite opinions of Central and Eastern European countries. The author concludes that the EU, as it is unable to enter a large-scale geopolitical confrontation, wants to take part in the Chinese project, but without losing its leading role, and wants to control events together with China. THE WORLD’S FUTURE IN THE BELT AND ROAD’S PERSEPCTIVE In the last chapter, the author outlines several scenarios about China’s role in the world, and he also summarises the criteria for implementing Belt and Road successfully. In his view, the project will have crucial influence on the future of mankind both physically and theoretically. Sustainable ecosystems, i.e. cities, will provide spaces for rivalry between states and political models and economic power will over-

shadow territorial expansion. China’s successful urban development concept is illustrated by – drawing on his personal experiences – the example of Forest City, Malaysia. In his view, several factors might pose a risk to the success of Belt and Road. As the leadership in Beijing, for political reasons, is forced to produce achievements, the impatience, and in certain cases, wrong decisions of leaders may not only result in economic losses, but the failure of the entire initiative and the fall of China’s long-term political ambitions. Funding of the project also represents a serious dilemma, since the indebtedness of participating countries may have negative political implications, while the capacity of the Chinese economy may also curtail the implementation of plans. Overall, as the Chinese strategy is based on the results of Belt and Road, its success in a political sense is beyond doubt, and China will certainly reach the final stage of its development. The author presents four different scenarios about China’s future. According to the first one, China will become a prosperous economic power, and will adapt to the western political-social system, will not try to replace the US-led world order, and will seek harmonious cooperation with the world. The second suggests that China adapts to the western-type system, but also takes the role of the global leader as the USA is retreating, creating a new, China-centred world order, which converges with the previous ones. The third scenario envisages the clash of the two opposing world orders, and after China’s victory, Beijing will build a completely different, Sino-centric world order against the West, which will offer a realistic alternative to the deficiencies of the current, US-dominated system. Under the fourth one, however, this attempt will have only limited success, thus the world orders marked by China and the USA will be forced to co-exist, and a certain balance of power will evolve between the two major powers, while the world will be divided into two spheres of influence. He concludes that on the basis of China’s development period of the past 40 years, it cannot be foreseen which scenario will take place (although there is very little chance for the realisation of the first one) as a plethora of variables should be considered. A declining Western influence, China’s global central role, a transforming map of Eurasia are rather certain, only the exact characteristics of the new Chinese world order are still unknown, but we are also taking part in shaping it, therefore our future does not depend exclusively on the intentions of Chinese leaders.

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The New Silk Roads. The Present and Future of the World by Peter Frankopan

Author: Alexandra Zoltai

Peter Frakopan’s best-seller about the New Silk Road initiative launched in 2013, The Silk Roads: A New History of the World was published in 2015. The book was so popular that the author decided to take up his pen again and add an update on what has happened about the project since 2015 and, as a result, how our world has changed. This is how this follow-up, The New Silk Roads: The Present and Future of the World was published in 2018.

INTRODUCTION In his latest book, Peter Frankopan mainly aims at mapping the network of relationships intertwining the New Silk Road. His starting point is that our world is undergoing a significant transformation but this transformation is uneven, and he thinks there is a sharp contrast between what is going on in the west and in the east. As regards the West, a strong isolation can be observed; suffice to mention the Brexit-phenomenon or Donald Trump; by contrast, in the East, intensifying cooperation is evolving along the New Silk Road. In his book, the author dwells on all Silk Road countries from Europe to China, specifically addressing Russia and the Middle East, and with his book, he tries to prove and, at the same time, remind everyone of how profoundly and completely our world is interconnected. Finally, he concludes that global power is transforming and shifting, as western powers are not included in the leadership of this new-

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ly forming world order. The most important aim of the book is to make everyone realise that we need to reconsider who we are and where we are in the world, and how we can see this emerging world order because this is required for positioning ourselves correctly. THE ROADS TO THE EAST The author begins the first chapter with a personal experience, then he gives an overview on the role of globalism in our everyday lives today. His starting point is that most famous football clubs have owners from abroad, and many of them, such as Aston Villa, West Bromwich Albion or AC and Inter Milan have been sold to the Chinese. Then he gives an account of the global expansion of large International companies, and the role that they play in the economy of specific countries. In the author’s opinion, Vasco de Gama’s expedition 500 years ago brought about a significant change in the central trade and

political life of the world, by opening new trade routes beyond Europe, the Indian Ocean and South Asia, placing Western Europe at the heart of global trade routes. Frankopan claims that today a shift of a similar scale is taking place, although in the opposite direction. Asia and the New Silk Road are rising, but not in isolation form the west, but quite the opposite, closely linked to developed economies, particularly the USA and Europe. THE ROADS TO THE HEART OF THE WORLD In the first half of the second chapter the author outlines where the western world and the eastern one are heading. Given the events of recent years, Frankopan thinks you can’t argue with the fact that major changes have been and are taking place in the western world, which raises serious questions about the future of the West, and forces it to make its choice. Donald Trump’s victory at the latest presidential election is a sign of that; he launched a strongly isolationist policy but great changes are taking place in politics also across Europe where extremist and populist forces are gaining strength, and, simultaneously, Brexit is further weakening the unity of Europe. This isolation and dissent are contrasted with the process that has been taking place along the New Silk Road since 2015. As far as the author can see, along the newly emerging trade routes participants strive for mutually beneficial cooperation and building an adequate communication platform. There are several examples: the Asian Development Bank, the Asian Infrastructure Bank, but also the emergence of such groups as the Shanghai Cooperation Organisation, the Eurasian Economic Union or the BRICS association. In the second half of the chapter, the author guides us through Central Asian and the Middle East, where he examines the geopolitical situation of specific countries, and their relationships with their neighbours, the countries of the region, and major powers. After these are explored, the author concludes that countries situated along the inner section of the Silk Road seek to enter into cooperation keeping each other’s interest in view, and they have understood that they need to find solutions not only to the structural problems of the region but also to potential conflicts between countries. The characteristics of the regions can be shaped appropriately if these are observed. He mentions the recently arranged gas deal between Iran and Turkmenistan

as an example: they could put their conflicts aside and make an agreement. Furthermore, the author expects Turkey to have a greater role in the life of Central Asia in the future, economically, politically and culturally. The dramatic change in the world’s economy, politics and concentration of military power, taking place now, will be also felt in the Middle East; old alliances will be upset, or even broken off, but new ones may be forged, which is a reference to the thaw that has begun between Saudi Arabia and Israel. THE ROADS TO BEIJING The author starts this chapter with an introduction to the New Silk Road, which was announced in Kazakhstan in 2013 by China’s President, Xi Jinping. Then, however, he notes that in his speech delivered in Chennai in 2011, Hillary Clinton had already talked about the intention to revive the ancient Silk Road, but no practical steps followed. The author, rightly, draws the conclusion that talking about improving connections in the region is one thing,

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funding them is quite another. So, when President Xi Jinping followed up his talk in Astana with concrete proposals, something was afoot. As a result, the “One Belt, One Road” (OBOR) project, also known as the Belt and Road initiative (BRI), providing a link mainly between Eurasian countries, beyond China’s neighbours as well, both on land and sea, was quickly outlined. China has demonstrated its commitment to the project with loans of several billions of dollars. A lot of projects to build and upgrade motorways, bridges, power plants and deep-sea ports have been launched all over Asia, in Bangladesh, Pakistan, Cambodia, Myanmar, Sri Lanka, Indonesia, Vietnam, the Philippines and Thailand. These developments, however, are not confined to Asia: Africa has received US$8.7 billion for developing a railway, which would stretch from Mombasa to the Ugandan border; it is Kenya’s biggest infrastructure project since independence from Britain in 1963. Frankopan argues that there are three important motivations behind the BRI, which determines Xi Jinping’s and naturally, China’s foreign and economic policy. The first one is that it has a long-term vision about the future, and accordingly, takes China’s needs into account. As a result, natural resources and energy are paid particular attention. Building pipelines that enable oil and gas to be pumped from Central Asia and Russia to China, has also been a priority. The success of the strategy made China the largest importer of crude oil in 2017. His second main point is that Chinese economy should

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shift from production to the services industry. Since in most Asian countries there is great demand for infrastructure development, BRI offers a very good opportunity to Chinese companies as China is the project’s main lender. Furthermore, that would provide a solution also in China to promote development in the inner regions of the country, in addition to developed coastal cities, and to boost tourism. The third major motivation is safeguarding security, primarily within China, which the Chinese government feels threatened by the Muslim Uyghur minority, who live in Xinjiang province, and a large number of them travelled to Syria to fight for the Islamic State. It ended up in the decision to exercise closer state control over the area. China also seeks to impose an order it can benefit from outside its boundaries, that is why China has assumed a greater role in settling the situation in Afghanistan. This is what prompted the building of man-made islands on the South China Sea. The BRI can succeed only if an appropriate, conflict-free international environment is provided for it. The author thinks the New Silk Road is already everywhere, not only in Central Asia, but in the whole of Asia, Africa, Europe and also on the American continent. As a result, today all roads lead to Beijing, and not Rome any more. He goes even further, wondering whether the important decisions of our world, which shape our globe, are made in Washington, London or Brussels, or rather somewhere along the Silk Road.

The New Silk Roads. The Present and Future of the World by Peter Frankopan

THE ROADS TO RIVALRY In this chapter, Frankopan considers potential rivalries along the New Silk Road, which are likely to be the most fierce between the two great powers, China and the USA. This chapter mainly focusses on Trump and the new US foreign policy agenda, also exploring the countries of Asia, the Middle East and Europe which are rivals to the USA in some form, thus the main focus of the chapter is American isolationism. The greatest emphasis is on the opposition between the USA ad China, as today, it goes beyond the issue of the South China Sea or Africa or general political or economic disagreements. It is China’s existence that poses a threat to US hegemony. The author quotes Henry Kissinger, who said that China presents a fundamental challenge to American strategy, which will not be easy to deal with, as they do not understand China’s history and culture. The author closes the chapter saying that this new American foreign policy has left the USA with a very small number of true allies. THE ROADS TO THE FUTURE In this chapter, Frankopan explores and ponders on the future and geopolitical situation of specific regions and countries. He starts with Europe, which, he believes, is able to concentrate almost exclusively on itself. He thinks that politicians, law-makers and bureaucrats in Europe hardly focus on anything else than European issues. China, Russia, Iran and Turkey are the countries that have already realised the fact that the world is undergoing a major change. There are several countries in Asia that have also sensed this change and are working on being able to actively shape it. Most of them have developed several possible blueprints setting out the opportunities and challenges that may occur in the short- and medium-term, and examined them to see which outcome is the most beneficial to them. BRI is one of them, Saudi Arabia’s Vision 2030 is another, but the Eurasian Economic Union of Russia, Belarus, Kazakhstan and Armenia, as well as Kazakhstan (Bright Road), Vietnam (Two Corridors, One Economic Circle), Turkey (Middle Corridor), Mongolia (Development Road) also have development projects with transformative potential, but Laos, Cambodia and Myanmar also have

development projects, and even India has devised several similar plans (Act the East policy, Trilateral Highway project, Go West strategy). The Chinese efforts have supporters not only in Asia and Africa, but also in Europe. China, having felt the division within Europe, established the 16+1 platform, providing an opportunity for dialogue between Central and Eastern European countries. The author believes that these counties have turned towards China in the hope of China’s money and investments, but also because these countries can see the future of the world in the East. Supporting this, Frankopan quotes Hungarian Prime Minister, Viktor Orbán, who, in his speech, emphasised that the world economy’s centre of gravity was shifting from the East to the West, and, with this insight, he is positioning Hungary in the future correctly. The author’s message to those who cannot see the situation so clearly is that there is a new world being born. Xi Jinping has a slightly different approach to the change in global power, and as far as he can see, it is not a new world being born, but the old world being reborn. There will be more connectivity, broader and more profound cooperation. He points out, however, that this will not be easy and will not take place smoothly; furthermore, it is also important to recognise that during these processes, such tensions and conflicts can arise that have been hidden so far, and even the existing ones require adequate solutions. However, these conflicts are not the only threats to a proper transition to the new world is threatened. The global economy will be greatly affected by the slowdown of the Chinese economy, its correction or crash, which will embed China ever more deeply in the global supply chain. Another great challenge is posed by rapid technological advancement, as artificial intelligence will greatly change the everyday life of mankind. Frankopan makes it clear that these are, without doubt, hard and dangerous times. On the one hand, the United States seeks to shape the world according to its own interests, while the Chinese government is talking about mutually beneficial cooperation between countries and cultures, but it is overshadowed by increasing fear about the emergence of a new empire. Obviously, this new world is being born in front of our eyes, but its course can be easily influenced by such factors as conflicts, epidemics or climate change.

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Ancient Hungary

The Rise of Peoples of the Carpathian Basin and the Silk Road Author: Atilla Grandpierre

Adopting a comprehensive natural scientific approach, Atilla Grandpierre draws a fundamentally new image of ancient Eurasia and ancient history in his landmark work, providing a diverse basis for our national self-identity.

How can a realistic picture of the ancient history of a people be obtained? Chronicles, giving a picture of ancient history, have been labelled as untrustworthy since the 19th century, officially extinguishing the historical basis for original self-identities of people. The new picture is usually based on comparative linguistics. Linguistic data clusters, however, without historical data, have allowed for countless arbitrary interpreta-

tions. It is also the case with archaeological and genetical data. In this situation, the right path to pursue is to give the associated sciences of history full consideration, combining the results of physical geography, anthropology, genetics, archaeology, religious history, folklore research and linguistics, comparing the preserved national consciousness of common origin of the peoples

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The Steppe, the Puszta and the Silk Road in the region in focus and the data of the most reliable historical sources. In the book, Ancient Hungary the results of these sciences are interpreted on the basis of a new, comprehensively ecological science, which is substantially identical with the life-, community- and nature-centric worldview of the ancient Eurasian civilisation and therefore, is suitable for interpreting the surviving clues of ancient culture in their own, contemporary context. It is revealed that, beside the Seklers-Hungarians’ homeland in the Carpathian Basin, there was a “secondary homeland” with a more comprehensive context, the Eurasian Puszta (grassland), covering a much wider region than the steppe, Ancient Hungary, home to our eastern peoples and kindred nations. It is revealed that an ancient Eurasian civilisation, from which the Mesopotamian, Egyptian and Indian civilisations developed in line with local cultures, evolved in the Puszta in prehistoric times. This ancient Eurasian civilisation was life-, community- and Nature-centric, and that is why its discovery is of fundamental importance to the development of a healthy, ecological civilisation and the rise of humanity and especially the peoples of the Silk Road.

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“The Re-birth of Ancient Eurasia” – Some thoughts from the book New (living) universe We are able to create real values if we are able to attribute real meaning to life and the Universe. By Universe, we do not mean an integrated whole of only material worlds, but of all living beings, the world of Nature where man lives. The main point of a worldview is to provide an overall view on the world. In order to change the course of the world, a fundamentally new, more complete and more profound picture of man is also required. Comprehensive science, with a generalisation of physics and a mathematical introduction of biological expediency, provides a basis for an independent science of life and reason, creating a unified, comprehensive science. Comprehensive science lays the foundations for the theory of the Living Universe, providing a comprehensive scientific basis for ecology, as Nature can be evaluated at its own values if it is alive. If Nature is alive, we have to consider it while making decisions. The comprehensive worldview is an ontologically comprehensive, multilaterally balanced worldview ob-

Ancient Hungary

tained on the basis of comprehensive science, which is more profound than the materialistic scientific worldview, and it is also the universal moral world order, in a nutshell. Our system of natural commitment to universal life, with the commitment to the protection of health, individual ways of life, family, nation, humanity, life on Earth, and Nature lays the foundations for and enhances our moral commitments to universal values. Worldview is the most efficient form of human knowledge. Worldview is a consistent system of how people interpret and evaluate the world. As such, it is a core system determining our decisions. Worldview is of crucial importance for our life, as it fundamentally determines the theoretical direction of our decisions. As all actions of all people require decisions, and decisions are made in accordance with the worldview, all people have a worldview, even those who do not know about it. Newborn babies have a life-centric worldview. The comprehensive worldview is a healthy worldview, because it focusses on elevating the whole man, the whole quality of life, and not only on a physical level, but also on a spiritual and intellectual one, not only individually, but also in relation to our community and to our personal relationship maintained with Nature.

A healthy worldview is the essence, the basis and the main drive of a healthy civilisation. An important factor of the rise of peoples is raising a family with a healthy approach, and in this respect, we can learn a lot from the child-rearing of natural peoples, which is fundamentally different from the western one. The maps of the book summarising the results of eleven, independent sciences stunningly overlap: our homeland is the Carpathian Basin, end the Eurasian Puszta with an area of 16 million sq. km from the Carpathian Basin to the Pacific Ocean and Northern India. Western civilisation and an East Asian world view â&#x20AC;&#x201C; a nature- and life-centric worldview Above a certain threshold, the steady growth of the production of national economies, which is one of the most important tools of the fundamental goal of western civilisation, the growth of power, has more disadvantages for our well-being than advantages â&#x20AC;&#x201C; this is the ecological threshold. Human reason can unfold if the emotions and thoughts related to the community level are highly developed. The comprehensive worldview, as a way of the rise of nations, can be implemented in harmony with other peoples and nature. According to the researches of MĂĄria Kopp, while the living

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conditions of the populations in western countries have improved materially, the quality of their spiritual and intellectual life have not improved, but deteriorated. In the West, the life of nations is centred around a modern national consciousness, and similarly, the life of individualist people is centred around an individual consciousness. The East Asian worldview is fundamentally different from the Western one. While the Western one calls the worldview materialistic, the East Asian worldview is community- and nature-centric, and there is a tremendous civilisational resource in this life-centric worldview. The era of comprehensive sciences Comprehensive science, which is capable of provide an exact scientific basis for the healthy, ecological worldview, has evolved in the 21st century. A new comprehensive science: the fusion of music, folktales, genetics, archaeology, physical geography, physics, biology, theology, history, and psychology. A fundamental science has an independent principle, and gives an explanation for the whole of the related wold of phenomena. The

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comprehensive worldview and view of history enable us to recognise where manâ&#x20AC;&#x2122;s place in the universe is, and on this basis, to set the goal to create new, life-centric economics and civilisation, that is, long-term, sustainable (ecological and family-centric) growth. Ancient and New Silk Road â&#x20AC;&#x201C; ancient and new Eurasia Today, the rise of the peoples in the Carpathian Basin and the rise of the peoples of the Silk Road, the development of science and the Eurasian ancient culture, the communications and transport systems have converged; it is the era of unification, and the time has come to understand the higher quality of ancient knowledge. The ancient history of the Carpathian Basin is closely related to the ancient history of the Silk Road, because the rise of our people is closely related to the rise of the peoples of the Silk Road. From the Carpathian Basin to the Pacific Ocean, a natural worldview prevailed, iin which universal life represented the highest value. In this ancient era, when life was respected, an intimate unity and identity with nature was typical.

Ancient Hungary

Modern religions diffused in Eurasia in the last 3,0003,500 years. Around B.C 1200, a standard philosophy, nature religion, shamanism flourished. This nature religion has been preserved in our folk traditions and our language. Hungarian ancient history is rooted in that at least 40,000-year-old, life-, community- and Nature-centric, Eurasian ancient culture, which organically continued in the 7,700-year-old civilisation of the Ancient Europe in the Carpathian Basin. Metallurgy, copper- and bronzesmithing were born in the Carpathian Basin. Eurasia’s folk music cultures are connected into a whole by the Carpathian Basin. Groups of Chinese folk music that can be related to the folk music of other people are scarce, with one exception, and this is Hungarian folk music. Only melodies with Hungarian relations can be regarded as still vivid, modulating elements of Chinese folk music; their number is especially large, comparable to its independent corpus of folk songs of internal origin. Th more than a ten thousandyear-old, highly developed, pentatonic Hungarian folk music diffused from the Carpathian Basin to the East, as far as China, and to the North, to Scandinavia. Hungarian folktales played an important role in the evolvement of the “Eurasian folktale-continent”. In her book, The Prehistory of the Silk Road, Elena Kuzmina writes that the ancient Silk Road led through the steppe: between China and the Carpathian Basin. The Carpathian Basin constituted one pole of the main route of the Ancient Silk Road, and China constituted the other. Innovation and technology have diffused from here: developed agriculture, irrigation agriculture, metallurgy, developed pottery, spiral pair, forming a cosmic unity; the Ancient Silk Road could also be the main route of contemporary philosophy. Physical geographic factors – the Carpathian basin is the centre of life The Carpathian Basin is the largest basin system of Europe – 333 thousand sq. km. The Carpathian Basin is the world’s largest geographical, hydrological and ecological region, which is a unique unit for life. Triple climatic effect (continental, oceanic and Mediterranean) prevails here. The Steppe, as a climatic category, is a contiguous, semi-dry climatic zone lying between 40° and 55° latitude north of the equator, on a land area of some 8 million sq.km. The Puszta is a transport category, situated on an area of 20-24 million sq. km, which, being unchanged geologically, was an important passage for thousands of years. It has a large area with fertile soil between rivers, and lies in

the temperate ad subtropical zones. The Puszta penetrates and connects a large section of the pre-historic and ancient Silk Road. The Silk Road, which used to be a connection between trade routes, a system of diverse cultural impacts and cultures, the main artery of the flow of languages, artistic and philosophical ideas, information and innovative inventions between Asia and Europe. The new ecological civilisation – NEW RENAISSANCE Since 2007, China has been building an ecological civilisation, the 21st cebtury continuation of an organic way of thinking, ancient Chinese philosophy, the Eurasian ancient culture. The construction of the New Silk Road provides even greater benefits for the peoples living in the region of the Silk Road, which can lead to the rise of Eurasia – ancient traditions are intrinsically linked to each other. The ecological civilisation can become more effective than modern civilisation if it creates its scientific basis, building on local attributes, creating a particular culture. As during the Renaissance, the revival of ancient Greek knowledge enabled Europe to become a world leader, a return to the higher-quality knowledge system and morality of ancient Eurasia may be the most important key. An ecological value system is inherent in the ancient worldview, knowledge, religion, folk music, folktales and common traditions of the peoples of the Silk Road. The discovery of the ancient high culture inherent in the folk music of the Silk Road may promote the rise of the people of the region, and the advent of a NEW RENAISSANCE. The mission of the Hungarians lies in, by re-discovering this particularly rich ancient culture, promoting the rebirth of the Eurasian ancient culture and the building of an ecological civilisation. This a renewal which allows the creative power, the “creative genius” to fully unfold, and provides, in addition to material well-being, that social public awareness becomes elevating, and, through that, provides rich, infinitely sustainable spiritual and intellectual development that creates lasting value. The comprehensive worldview, with its commitment to the protection of health, individual ways of life, family, nation, humanity, life on earth and Nature, means an extremely effective system which starts from all levels at once; the most efficient form of human knowledge. If we represent the comprehensive worldview in our whole social scope, we promote the implementation of the most efficient knowledge and the universal human system of commitments.

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Book recommendations

"THE BELT AND ROAD" AND CENTRAL AND EASTERN EUROPE BY JANG JIEMIAN The book reviews the relationship between China and the Central and Eastern European countries from various perspectives. Accordingly, the book is basically divided into three parts, exploring, among others, the opportunities of the Belt and Road initiative, the national strategies of Visegrad and Balkan countries, and the expected outcomes of infrastructure projects from regional, national and sectoral perspectives. The authors of the essay-collection are Chinese and Central and Eastern European scholars who are recognised experts in their research areas and their main aim is to provide an unbiased, balanced evaluation of the real significance and the results of the 16+1 Cooperation, and to formulate proposals about the future perspectives of the Cooperation.

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TRANSPORTATION AND THE BELT AND ROAD INITIATIVE: A PARADIGM SHIFT BY NICHOLAS DE LOISY Despite the considerable attention The Belt and Road Initiative (BRI) has received from politics, the infrastructure, and the media, reports and articles on the subject contain incorrect or contradictory information or false statements. As the author points out, the media, as part of a global information warfare campaign, reported misleading information intentionally, to confuse the situation even more. This book aims at clarifying confusion about the megaproject and giving answers to actually arising questions. To this end, it includes a first-time-ever-published list and statistical tables of all the BRI projects up to 31st December, 2018, classifying infrastructure projects in full detail, placing special emphasis on transportation modes. In addition, it also presents the initiativeâ&#x20AC;&#x2122;s positive effects on the development on humanity and its efforts to promote globalisation.

THE LEVELLING: WHAT'S NEXT AFTER GLOBALIZATION BY MICHAEL Oâ&#x20AC;&#x2122;SULLIVAN After the fall of communism, the history of mankind is at a turning point again, but parallel to the emergence of the new world order, the process of globalisation has also reached its final stage. Beside the benefits of globalization, its pitfalls, such as wealth inequality, indebtedness, political recession, and imbalances across the world's economies, also deserve close attention and they also call for reforming the system. The author believes that a major transition in world economics, finance, and power is undergoing, resulting in a levelling-out of wealth between poor and rich countries and regions, and the transformation of the institutional system, as WTO, the IMF and central banks are losing their former power. The main aim of the book is to offer an alternative to such challenges as stunted economic growth, political discontent and the issues of setting up political-economic structures that serve broader needs.

EURASIAN INTEGRATION AND THE RUSSIAN WORLD: REGIONALISM AS AN IDENTITIARY ENTERPRISE BY ALIAKSEI KAZHARSKI This volume examines Russian discourses of regionalism as a source of identity construction practices for the country's political and intellectual establishment. Its basic idea is that post-Soviet Russia has not been committed towards transitioning into a liberal democratic nation state based on Western values; instead, it has been working on constructing Russia as a supranational community which transcends Russia's borders. In order to justify his arguments, the author examines resources written by Russian authorities and think tanks between 2007 and 2013, demonstrating how Russia, as a supranational entity, has tried to implement an Eurasian economic integration, and the "Russian world" and "Russian civilization" doctrines. He concludes that both ideologies, the geoeconomic and culturalist, have gained prominence in Russia's foreign policy discourses.

ONE BELT ONE ROAD: CHINA'S LONG MARCH TOWARD 2049 BY MICHAEL H. GLANTZ The book aims at providing a brief overview of China's One Belt, One Road Initiative, later re-labelled the Belt and Road Initiative, its main objectives, specific infrastructure development projects, and the complex system of relationships between the participating countries and China. The authors’ main aim, in their own words, is to whighlight the initiative’s geographic and functional expansion around the globe on land, sea and in space. The book address details on the long-term sustainability of the OBOR/BRI, the appropriateness of infrastructure projects, seeking to summarise lessons that need to be learnt for the success of the megaproject. The capacity of the Chinese economy, the potential indebtedness of participating countries, the USA-China trade war and the slowdown of global growth are all factors that stakeholders should consider.

THE BELT AND ROAD INITIATIVE IN THE GLOBAL CONTEXT BY LINGGUI WANG, JIANGLIN ZHAO This essay-collection explores, with scientific sophistication, the issues related to the theoretical background and the practical implementation of the BRI. The chapters dwell upon the opportunities for multilateral cooperation, the associated risks and challenges, and approaches to promoting the BRI, also providing a detailed analysis of the responses of 30 countries and the impact of the projects on the development of specific regions. The book is based on papers presented at the "International Symposium of the Belt and Road Initiative in the Global Perspective", co-organized by the National Institute for Global Strategy of the Chinese Academy of Social Sciences and Beijing Foreign Studies University in Beijing in September, 2016. A total of 39 experts from more than 30 countries have contributed to this book. The book was published as the latest, sixth volume of the China’s Belt and Road Initiative series.

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THE MAP OF KNOWLEDGE: A THOUSAND-YEAR HISTORY OF HOW CLASSICAL IDEAS WERE LOST AND FOUND BY VIOLET MOLLER A significant part of modern knowledge – may it be mathematics, philosophy, astronomy or geography – originates from the ancient Greeks. This knowledge spread continuously across the Mediterranean. But after the fall of the Roman Empire, a considerable part of these books and manuscripts were destroyed. Some of them, however, survived the turmoil of times, and later contributed to a scientific and cultural prosperity in the region. The author follows three key texts – Euclid's Elements, Ptolemy's The Almagest, and Galen's writings on medicine – on an intellectual journey through the history of seven cities (Alexandria, Bagdad, Córdoba, Toledo, Salerno, Palermo and Venice), exploring the major stations on the path to the re-birth of classical knowledge (the Renaissance) and the real significance of contemporary centres of culture.

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CHINA'S VISION OF VICTORY BY JONATHAN D. T. WARD After seventy-five years of peace in the Pacific, China has emerged as a new challenger to American power in the region, since the Chinese Communist Party has set the ambitious goal of the great rejuvenation of the Chinese nation, which would also result in the end of a US-led world. The question arises: will the USA be regarded as a superpower a generation later? Can American persistence and willpower outcompete Chinese strategists? The author seeks answers to these questions, while examining China's ambitions and plans from a new perspective. From oceans to space, from the Arctic to Africa, from subsurface warfare to the rise of China's global corporations, this book will guide the reader on the path to understanding the most important conundrum of the next decade, the USA-China great game.

THE FUTURE IS ASIAN: GLOBAL ORDER IN THE TWENTY-FIRST CENTURY BY PARAG KHANNA In his new book, renowned strategist and best-selling author, Parag Khanna explores the rise of Asia and the birth of a new world order. His main idea is that the Asian continent will play a central role again in the new, multipolar world, which, however, will not mean exclusive Chinese dominance. The author believes that we should not be afraid of the recreation of the vassal system that existed centuries ago, since China would not be able to implement it for political, economic and demographic reasons. That is why Beijing will not become an Asian or global hegemon, but a crucial component of the Asian and Eurasian mega-system. One of the most important messages of the book is that in the new world order, power will be seized by a technocratic leading elite in Asian countries, following the example of Singapore, and they are destined to achieve greater results, both nationally and globally, than declining American democracy.

könyvajánló

RETHINKING ASIA: REALITIES & ASPIRATIONS OF THE NEW EURASIA BY HUNGSOO KIM

SUPER CONTINENT: THE LOGIC OF EURASIAN INTEGRATION BY KENT E. CALDER

Without doubt, the 21st century will be about the rise of Eurasia, and there are many data to support this. The region represents an important centre of power, and not only in a political sense: 60 per cent of the world’s population lives here and the region accounts for 47 per cent of global GDP. Accordingly, the Asian and Eurasian cultural influence can be felt all over the world. The objective of the book is to focus attention to the increasing importance of Eurasia, and how it affects the development of the world. The book is partly a travel journal and partly a scientific volume, which follows the journeys of the students and junior research fellows at Harvard, Stanford, MIT and Tufts University through 18 cities in 11 countries in Eurasia. The organisation of journeys is contributable to Hungsoo S. Kim, president and co-founder of the Centre for Asia Leadership Initiatives, whose main aim is that each year an increasing number of young people studying in the USA should gain on-site experiences about Asia and get familiar with the major actors of the governmental, corporate and community spheres.

A Eurasian transformation is underway, and Asia assumes a central role in the process. The Belt and Road initiative also brings a deepening Eurasian continentalism into focus, the significance of which is not known to many. The aim of the author is to explore all the changes that can be associated with Eurasia’s transforming role, and to present an explanation of events from a theoretical and an empirical viewpoint. He addresses the beginnings of Chinese reforms, the collapse of the Soviet Union, China's response to the global financial crisis and Crimea's annexation. In his opinion, comprehending China’s rise requires a combined analysis of two ongoing transformations taking place in the country and in the Eurasian region, while, owing to Belt and Road, we can also expect the prevalence of the geo-economic logic, which is what happened several hundred years ago.

UNDERSTANDING CHINA'S BELT & ROAD INITIATIVE: THE INSTITUTIONAL ECONOMICS APPROACH BY SHALEH SAHRIAR The Belt & Road Initiative is an innovative and great proposal which has been often termed as the 'project of the century'. At the same time, the initiative is subject to ongoing debate, and creates significant divisions even in scientific circles. As the creation of a theoretical framework posed a serious dilemma for professionals in the past, this is, therefore, the author’s major focus and the book is the first systematic attempt to explain the Belt and Road project from the perspective of institutional economics. The analysis covers economic, social, political and strategic matters and also debunks some established myths. The book would be of immense value to researchers, teachers and students interested in history, economics, political science and international relations.

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LIST OF SOURCES New Silk Road – The Belt and Road Initiative • BALDING, Christopher: Why Democracies Are Turning Against Belt and Road, Foreign Affairs, 2018.10.28. https://www.foreignaffairs.com/articles/ china/2018-10-24/why-democracies-are-turning-against-belt-and-road (2019. 2. 11.) • China, Central Asia seek cooperation on Silk Road Economic Belt, In: Xinhua, June 16, 2015. http://news.xinhuanet.com/english/2015-06/16/c_134331124.htm • ESZTERHAI Viktor: Az Egy Övezet, Egy Út geopolitikai jelentősége a történelmi távlatban. In: Geopolitika.hu, 2016.11.3., http://www.geopolitika.hu/ hu/2016/11/03/az-egy-ovezet-egy-ut-geopolitikai-jelentosege-a-tortenelmi-tavlatban/ (2019.2.21) (ESZTERHAI, 2016) • HEILMANN, Sebastian – MORITZ, Rudolf – HUOTARI, Mikko – BUCKOW, Johannes: China’s Shadow Foreign Policy: Parallel Structures Challenge the Established International Order. China Monitor, Number 18. 2014. 10. 28., http://www.merics.org/fileadmin/templates/download/china-monitor/China_Monitor_No_18_en.pdf (2016. 12. 01.) • LIU, Yang – KONG, Weiyi – MA Qian: Feature: Ancient Silk Road revived under China's Belt and Road Initiative, In: Xinhua, 2016.1.18., http://news.xinhuanet. com/english/2016-01/18/c_135021097.htm (2019. 2. 11.) • LUBIN, David et al.: China’s Belt and Road at Five. A Progress Report. CITI Bank, 2018 December. https://www.citivelocity.com/citigps/chinas-belt-road-initiative/ (2019. 2. 16.) • MO, Jingxi: BRI no Marshall Plan or political strategy. In: China Daily, 2018.08.25. http://www.chinadaily.com.cn/a/201808/25/WS5b80a6eea310add14f387b8d.html (2019. 2. 11.) • PARENTI, Fabio Massimo: Belt and Road carrier of China’s new soft power. The Global Times, 2018.5.9., http://www.globaltimes.cn/content/1101509. shtml (2019. 2. 15.) • REG: Greater Mekong Subregion Economic Cooperation Program, Joint Ministerial Statement: Seventh Economic Corridors Forum, Asian Development Bank, June, 2015. • SAHOO, Pravakar & BHUNIA, Abhirup: BCIM Corridor a game changer for South Asian trade, East Asian Forum. 2014.07.18., http://www.eastasiaforum. org/2014/07/18/bcim-corridor-a-game-changer-for-south-asian-trade/ (2019. 2. 11.) • Thailand-China railway cooperation a boon for both, Xinhua, December 4, 2015. http://news.xinhuanet.com/english/2015-12/04/c_134885659.htm • Vision and Actions, 2015. http://www.carecprogram.org/index.php?page=corridor-1 • WANG, Yiwei: The Belt and Road Initiative: What will China offer the World in its rise. Beijing, New World Press, 2016. • Xi Jinping Attends Second Meeting of Heads of State of China, Russia and Mongolia, Ministry of Foreign Affairs of the People’s Republic of China. 2015.07.10., http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1280848. shtml (2019. 2. 12.) • ZHENG, Yanpeng: New rail route proposed from Urumqi to Iran, In: Chinadaily, November 21, 2015., http://www.chinadaily.com.cn/china/2015-11/21/content_22506412.htm (2019. 2. 11.) • 曲星: 2013中国外交新政, 世界知识, 2014. http://www.ciis.org.cn/chinese/2014-04/04/content_6796786.htm Geography of rail freight transport: the Eurasian Economic Corridor • PAIGEO BRI Projekt: 032-es interjú • AZ EURÓPAI PARLAMENT ÉS A TANÁCS 913/2010/EU RENDELETE (2010. szeptember 22.) a versenyképes árufuvarozást szolgáló európai vasúti hálózatról https://eur-lex.europa.eu/legal-content/HU/TXT/PDF/?uri=CELEX:32010R0913&from=EN • BelarusFacts (n. d.): Railway transport of Belarus. http://belarusfacts.by/en/ belarus/economy_business/key_economic/rw/ • BENDARZSEVSZKIJ Anton (2017): A Transzszibériai vasútvonal 100 éve. PAGEO Geopolitikai Kutatóintézet, 2017. február 1. http://www.geopolitika. hu/hu/2017/02/01/a-transzsziberiai-vasutvonal-100-eve/ • BERGER, Roland (2017): Eurasian Rail Corridors: What Opportunities for Freight Stakeholders? International Union of Railways, October 2017. https:// uic.org/IMG/pdf/corridors_exe_sum2017_web.pdf • CIA (2019): The World Factbook – Kazakhstan. https://www.cia.gov/library/ publications/the-world-factbook/geos/kz.html • CIA (2019): The World Factbook: China. https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html Letöltés időpontja: 2019. 02. 05. • CIA (n. d.): The World Factbook https://www.cia.gov/library/publications/ the-world-factbook/fields/384rank.html#CH Letöltés időpontja: 2019. 02. 05. • CIA (n. d.): The World Factbook. https://www.cia.gov/library/publications/ the-world-factbook/geos/rs.html • COMMISSION IMPLEMENTING DECISION (EU) 2015/1111 of 7 July 2015 on the compliance of the joint proposal submitted by the Member States concerned for the extension of the North Sea-Baltic rail freight corridor with Article 5 of Regulation (EU) No 913/2010 of the European Parliament and of the Council concerning a European rail network for competitive freight. http://rfc8.eu/files/public/uploads/Downloads/COMMISSION_IMPLEMENTING_DECISION_EU_20151111.pdf • COMMISSION IMPLEMENTING DECISION (EU) 2017/178 of 31 January 2017 amending Implementing Decision (EU) 2015/1111 on the compliance of the joint proposal of the Member States concerned to extend the North Sea-Baltic rail freight corridor with Article 5 of Regulation (EU) No 913/2010 of the European Parliament and of the Council concerning a European rail network for competitive freight. http://rfc8.eu/files/public/uploads/Downloads/Downloads_Ruropean_Context/Commission_Implementing_Decision_EU_2017_178.pdf

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• Decision of the Executive Board of Rail Freight Corridor North Sea – Baltic (RFC8). 13th October 2015. http://rfc8.eu/files/public/uploads/Downloads/ Decision_of_the_ExBo_approving_IP.pdf • DR. BOILE, Maria, KORTSARI, Annie (2014): Europe - Asia Railway Transport: Issues & Prospects. Project Near2 Summary. http://www.near2-project.eu/ Portals/0/NEAR%202.16selido2.pdf • GERDEN, Eugene (2018): Belarus eyes becoming major China–Europe cargo hub. Feb. 1. 2018. https://www.joc.com/rail-intermodal/international-rail/belarus-eyes-becoming-major-china%E2%80%93europe-cargo-hub_20180201.html • GERDEN, Eugene (2018): Rocketing Asia-Russia container rail volume spurs investment calls. Aug 05, 2018. https://www.joc.com/rail-intermodal/ track-upgrades-seen-increasing-russia%E2%80%99s-china-europe-rail-volume-growth_20180805.html • HILLMAN, Jonathan E. (2018): The Rise of China-Europe Railways. Center for Strategic & International Studies (CSIS), March 6, 2018. https://www.csis.org/ analysis/rise-china-europe-railways • HKTDC Research (2018): The Belt and Road Initiative. 3 May 2018. http://china-trade-research.hktdc.com/business-news/article/The-Belt-and-Road-Initiative/The-Belt-and-Road-Initiative/obor/en/1/1X000000/1X0A36B7.htm • JENSEN, Tomas-Peder, VANA, Toomas (2018): Rail transport has become more competitive in speed and cost. Tschudi Logistics. https://tschudilogistics.com/rail-transport-china-cis-europe/ • Kazakhstan Temir Zholy” Development strategy until 2025 (2016). https:// www.railways.kz/sites/default/files/development_strategy_ktz_until_2025. pdf • KTZ (n. d.): Development of Transit Transportation. https://www.railways.kz/ en/freight-transportation/development-of-transit-traffic • LO Chris (2013): Russian Railways: connecting a growing economy. railway-technology.com 30 April 2013. https://www.railway-technology.com/ features/featurerussia-railways-connecting-growing-economy/ • Rail Freight Corridor North Sea – Baltic: Geographical Outline. http://rfc8. eu/corridor/geographical-outline/ • RAILPAGE (2018): Russia rail aims for Asia imports to South and Central Europe. 4 October 2018. https://www.railpage.com.au/news/s/russia-railaims-for-asia-imports-to-south-and-central-europe • Railway Gazette (2013): Presidents open Kazakhstan to Turkmenistan rail link. 13 May 2013. https://www.railwaygazette.com/news/infrastructure/ single-view/view/presidents-open-kazakhstan-to-turkmenistan-rail-link.html • Railway Pro (2018): 2018 China (Hunan) International Rail Transit Industry Expo. August 3, 2018. https://www.railwaypro.com/wp/2018-china-hunan-international-rail-transit-industry-expo/ Letöltés időpontja: 2019. 02. 05. • Rodrigue, J-P et al. (2017) The Geography of Transport Systems, Hofstra University, Department of Global Studies & Geography, https://transportgeography.org. Alternatively, the book can also be cited: Rodrigue, J-P (2017), The Geography of Transport Systems, Fourth Edition, New York: Routledge. • Russian Railroads (n. d.): International Transport Corridor No.2 http://eng.rzd. ru/statice/public/en?STRUCTURE_ID=4319 • Russian Railroads (n. d.): Overview. http://eng.rzd.ru/statice/public/ en?STRUCTURE_ID=20 • Russian Railroads (n. d.): Trans-Siberian Land Bridge. http://eng.rzd.ru/statice/ public/en?STRUCTURE_ID=4316 • Russian Railroads (n. d.): Trans-Siberian Land Bridge. http://eng.rzd.ru/statice/ public/en?STRUCTURE_ID=4316 • SAMRUK-KAZYNA (2018): Belt & Road Updates 2018 – „Expansion continues”. January 2018. https://www.sk.kz/upload/iblock/898/8982ade4e1075b33189e5044b01ff98e.pdf • SHANG-SU Wu (2017): The Limits of China's 'Silk Road' to Europe. In: The Diplomat, January 13, 2017. https://thediplomat.com/2017/01/the-limits-ofchinas-silk-road-to-europe/ • SHEPARD, Wade (2016): Khorgos: Where East Meets West. In: The Diplomat, Issue 17, April 2016. https://magazine.thediplomat.com/#/issues/-KEA7ZGeq9eue1HY7vUC/read • The Economist (2017): New rail routes between China and Europe will change trade patterns. Sep 16th 2017. https://www.economist.com/business/2017/09/16/new-rail-routes-between-china-and-europe-will-changetrade-patterns • TransRussia (2018): Transport & Logistics in Russia: Returning to Growth. A Market Insights report from TransRussia/ TransLogistica. http://www. transport-exhibitions.com/TransportShows/media/TransportLibrary/Downloadable%20files/Transport-Logistics-in-Russia-Returning-to-Growth.pdf • van LEIJEN, Majorie (2019): Kazakhstan moves more cargo by rail to China in 2018. railfreight.com, 11. 02. 2019. https://www.railfreight.com/beltandroad/2019/02/11/kazakhstan-shifts-eastwards-with-more-cargo-to-china-in-2018/ • van LEIJEN, Majorie (2019): New Silk Road succeeds in cost reduction, less volatile than ocean freight. RailFreight.com, 18. 03. 2019. https://www.railfreight.com/beltandroad/2019/03/18/new-silk-road-succeeds-in-cost-reduction-less-volatile-than-ocean-freight/ • WEEDY, Simon (2018): Belarus economy benefiting from China-Europe trains. 03. 01. 2018. Railfreight.com https://www.railfreight.com/corridors/2018/01/03/rail-freight-china-through-belarus-up-report-draft/ • WILLIAMS, Glyn (n. d.) Railways in Kazakhstan. https://www.sinfin.net/railways/world/kazakh.html • World Shipping Council (2017): Top 50 World Container Ports. http://www. worldshipping.org/about-the-industry/global-trade/top-50-world-container-ports • ZHANALTAY, Zhengizkhau (2016): Recent Development in the Railway Network of Kazakhstan. Eurasian Research Institute, Kazakhstan, Weekly e-bulletin No. 55. http://www.ayu.edu.tr/static/aae_haftalik/aae_bulten_en_55.pdf

Rail freight transport in numbers • Abramović, B., Zitricky, V. & Biškup, V. (2016) European Transport Research Review, Topical Collection on The Future of rail freight transport and logistics, 8: 27. doi:10.1007/s12544-016-0215-7 https://mpra.ub.uni-muenchen. de/86705/1/MPRA_paper_86705.pdf, 12. • BARROW, Keith (2018): China – Europe rail freight: in it for the long-haul. Wilhelm Patzner, CEO of Far East Land Bridge, talks to Keith Barrow. IRJ -International Railway Journal, January 17, 2018. https://www.railjournal.com/ in_depth/china-europe-rail-freight-in-it-for-the-long-haul • BERGER, Roland (2017): Eurasian Rail Corridors: What Opportunities for Freight Stakeholders? International Union of Railways, October 2017. https:// uic.org/IMG/pdf/corridors_exe_sum2017_web.pdf • DB Schenker (2013): Get your business rolling with innovative rail logistics solutions between China and Europe. Trans Eurasian Rail Logistics. Germany, April 1, 2013. https://www.dbschenker.com/resource/blob/489132/e3caffd7ced19e657ea7f60be0823f9b/china-rail-data.pdf • Erdősi, F. (2011). Oroszország nemzetközi közlekedési infrastruktúráinak kényszerei, globális és regionális szerepei. Tér És Társadalom, 19(1), 1–20. • Hofman, I. (2016): Politics or profits along the “Silk Road”: what drives Chinese farms in Tajikistan and helps them thrive?, Eurasian Geography and Economics • Infrastructure Economics Centre (2017): HSR <<Eurasia>> Demand for Freight Transit. p. 6. https://uic.org/IMG/pdf/2017-11-22_01_hsr_eurasia_uic_iec.pdf • Központi Statisztikai Hivatal (2013): KITÖLTÉSI ÚTMUTATÓ „A VASÚTI ÁRUSZÁLLÍTÁS ADATAI” című kérdőívhez (Nyilvántartási szám: 1180). https:// www.ksh.hu/docs/hun/info/02osap/2012/kitoltesi/d122131.doc (2018. 07.17.) • Liliopoulou, A., Roe, M., Pasukeviciute, I. (2015) Trans Siberian Railway: from inception to transition, European Transport \ Trasporti Europei (27), pp. 46-56 https://www.joc.com/rail-intermodal/rapidly-rising-china-europe-rail-volume-strains-existing-structures_20171204.html • Maa H., Wang Z., Zhu, K. (2015): Domestic content in China’s exports and its distribution by firm ownership, ournal of Comparative Economics, (43, 1), pp. 3-18 • News Central Asia (2018): China-Europe railway connection – different approaches, same objectives. http://www.newscentralasia.net/2018/12/03/ china-europe-railway-connection-different-approaches-same-objectives/ • News Central Asia (2018): China-Europe railway connection – different approaches, same objectives. http://www.newscentralasia.net/2018/12/03/ china-europe-railway-connection-different-approaches-same-objectives/ • Nožička, Jiří (2016): Development of railway transportation between China and the European Union countries. In Knowledge for Market Use 2016 : Our Interconnected and Divided World. Olomouc: Societas Scientiarum Olomucensis II., 2016. s. 324-333. http://dspace.upce.cz/bitstream/handle/10195/67337/Nozicka.pdf?sequence=1&isAllowed=y • Reugebrink, Freddy (2016): Container transport by rail to and from China. DSV Experts Insight, • Rodemann, H., Templar, S. (2014) The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management http://dx.doi.org/10.1016/j.jrtpm.2014.10.001 • SLADKOWSKI, Aleksander és CIEŚLA, Maria: Analysis and Development Perspective Scenarios of Transport Corridors Supporting Eurasian Trade. In: Aleksander Sladkowski (szerk.), Transport Systems and Delivery of Cargo on East–West Routes. Svájc, Springer International Publishing, 2018. 86. https:// www.railengineer.uk/2018/04/10/containers-lots-of-from-china/ • Tracy E., Shvarts E., Simonov, E., Babenko, M. (2017): China’s new Eurasian ambitions: the environmental risks of the Silk Road Economic Belt, Eurasian Geography and Economics, Volume 58, 2017 - Issue 1, pp. 56-68 • UIC (2018): Freight at UIC. International Union of Railways, June 2018. p. 3. https://uic.org/IMG/pdf/brochure_freight_2018_h_web.pdf • 国际联运 International transport http://www.crct.com/index.php?m=content&c=index&a=lists&catid=22 (2018.07.16.) China: the origin of the Iron Silk Road • Organizational Structure http://www.crct.com/index.php?m=content&c=index&a=lists&catid=16 • A kínai elektronikus cégjegyzék alapján: http://www.gsxt.gov.cn/index.html • Babak Besharati et al.: The Ways to Maintain Sustainable China-Europe Block Train Operation. Business and Management Studies Vol.3, No. 3. 2017 szeptember http://redfame.com/journal/index.php/bms/article/view/2490/2619 • China-Central and Eastern Europe Investment Cooperation Fund Land Transport Options Between Europe and Asia: Commercial Feasibility Study. Chamber of Commerce of United States, 2006. július. http://www.osce.org/ eea/41310?download=true. • Container transport by rail between China and Europe; In: DSV White Papers https://www.dsv.com/downloads-and-services/white-papers/rail-freight-between-europe-and-china • EU-China Summit: Rebalancing the strategic partnership; In: European Commission Press Release Database, 2019.04.09. https://europa.eu/rapid/ press-release_IP-19-2055_en.htm • Gray, Jeremy-Schlautmann, Christoph: How China put Duisburg back on the trade map; In: Handelsblatt, 2018.08.15. https://www.handelsblatt.com/ today/companies/the-freight-game-how-china-put-duisburg-back-on-thetrade-map/23583018.html?ticket=ST-3020794-WAlzftiPCpt0RsNlJDHN-ap6 • Jakóbowski, Jakub et al.: The Silk Road - The EU-China Rail Connections: Background, Actors, Interests. Center of Eastern Studies, OSW Studies No. 72. Warsaw, 2018. február. 27. Land Transport Options Between Europe and Asia: Commercial Feasibility Study. Chamber of Commerce of United States, 2006. július. http://www.osce.org/eea/41310?download=true. • PAIGEO BRI Projekt: Interjú 001 • PAIGEO BRI Projekt: Interjú 003

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Kazakhstan – the strongest chain link of Eurasia • ’A Bet on Belt and Road: Can Kazakhstan become the success story of Central Asia?’ In: Belt & Road Advisory, 2018. július 1. https://beltandroad. ventures/beltandroadblog/2018/7/1/a-bet-on-belt-and-road-can-kazakhstan-become-the-success-story-of-central-asia (utolsó letöltés: 2019. január 11.) • A DP World hivatalos weboldala: https://www.dpworld.com (utolsó letöltés: 2019. január 3.)

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Russia: beyond the Trans-Siberian Railway • Development strategy of Russian railways holding for the period until 2030 (general) http://eng.rzd.ru/statice/public/en?STRUCTURE_ID=7 • ERAI About http://www.index1520.com/about • Head of Russian Railways Proposes High-Speed Cargo Trains from Europe to China. In: Executive Intelligence Review, 2016. december 21. https://larouchepub.com/pr/2016/161221_high_speed_cargo.html • International Projects – China - Cooperation on logistics; http://eng.rzd. ru/statice/public/en?STRUCTURE_ID=95&layer_id=4516&refererLayerId=4518&id=2390 • Memberships & Affiliations; In: RZD Russian Railways – The Company; http:// eng.rzd.ru/statice/public/en?STRUCTURE_ID=90&layer_id=4516&refererLayerId=4518&id=2645

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• PAIGEO BRI Projekt: Interjú 027 • Patzner, Wilhelm: China – Europe rail freight: in it for the long-haul; In: International Rail Journal, 2018.01.17. https://www.railjournal.com/in_depth/ china-europe-rail-freight-in-it-for-the-long-haul • Russia – Europe; In: RZD Russian Railways – Freight http://eng.rzd.ru/statice/ public/en?STRUCTURE_ID=84 • Russian Railways – The Company – Strategy http://eng.rzd.ru/statice/public/ en?STRUCTURE_ID=7 • Share Ownership; In: TransContainer https://trcont.com/en/investor-relations/shares/share-ownership • Shepard, Wade: 2 Days From China To Europe By Rail? Russia Going For High-Speed Cargo Trains. 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In: Stalker Zone, January 16, 2019, https://www.stalkerzone.org/a50-billion-dead-end-why-the-silk-road-from-europe-to-china-bypassed-ukraine/ 2019.07.26. • Bao Nuomin: Transit containers of China-Europe freight trains via Belarus up 25 pct in Jan.- Sept. In: Belt and Road Portal, October 9, 2018, https://eng. yidaiyilu.gov.cn/qwyw/rdxw/68142.htm 2019.07.27. • Belarus Railway and Logistics Strategy: Activity 1 – Broad Assessment of Belarusian Railways. World Bank, September 2017. • Belarus’ food export to China 4.4 times up in 2018. In: Belarus News, February 7, 2019, https://eng.belta.by/economics/view/belarus-food-export-to-china44-times-up-in-2018-118524-2019/ 2019.07.30. • Belarusian Railway, https://www.rw.by/en/corporate/about_us/infrastructure/electricity_supply/ 2019.07.25. • Belarusian Railways working to facilitate merchandise export to China. 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plans-to-boost-china-europe-rail-freight-traffic-via-belarus-almost-twofold-by-2020-111437-2018/ 2019.07.30. • Plans to reopen Belarusian-Polish border checkpoint for trains in Q2 2019. In: Belarus News, March 22, 2019, https://eng.belta.by/economics/ view/plans-to-reopen-belarusian-polish-border-checkpoint-for-trainsin-q2-2019-119675-2019/ 2019.07.28. • Railway transport of Belarus. In: Belarus Facts, http://belarusfacts.by/en/ belarus/economy_business/key_economic/rw/ 2019.07.31. • Seven countries discuss China-Europe freight rail services in Minsk. In: Official Website of the Republic of Belarus, April 11, 2018, https://www.belarus.by/ en/business/business-news/seven-countries-discuss-china-europe-freight-rail-services-in-minsk_i_77702.html 2019.07.30. • State Customs Authorities of the Republic of Belarus, http://www. customs.gov.by/en/news1-en/view/number-of-transit-goods-increasedby-20-9386-2018/ 2019.07.29. • Vladimir Morozov: Main Routes of Container Transit via Belarus in the China-Europe-China Communication. International Railway Congress, March 2019. Letöltve innen: https://rail-congress.com/wp-content/uploads/Presentations/Session-1/5_Morozov.pdf Poland, the European gate of Chinese goods • CTL Logistics hivatalos honlapja, http://www.ctl.pl/en (Letöltés dátuma: 2018.10.29.) • DB Cargo Polska hivatalos honlapja, https://pl.dbcargo.com/rail-polska-en (Letöltés dátuma: 2018.10.29.) • Európa regionális földrajza tankönyv • Euroterminal Sławków: Transshipment services, http://www.euterminal.pl/ en/15:Transshipment_services (Letöltés dátuma: 2018.10.29.) • GOH, Brenda – GOETTING, Marcin: In Europe’s east, a border town strains under China’s Silk Road train boom. In: Reuters, 2018.06.27., https://uk.reuters. com/article/uk-china-europe-silkroad-insight/in-europes-east-a-bordertown-strains-under-chinas-silk-road-train-boom-idUKKBN1JM36M (Letöltés dátuma: 2018.10.29.) • GOH, Brenda – GOETTING, Marcin: In Europe’s east, a border town strains under China’s Silk Road train boom. In: Reuters, 2018.06.27., https://uk.reuters. com/article/uk-china-europe-silkroad-insight/in-europes-east-a-bordertown-strains-under-chinas-silk-road-train-boom-idUKKBN1JM36M (Letöltés dátuma: 2018.10.29.) • Intermodal Terminals in Europe: Euroterminal Sławków, http://www. intermodal-terminals.eu/database/terminal/view/id/176 (Letöltés dátuma: 2018.10.29.) • LEIJEN, Majorie van: Why Malaszewicze is the most debated place ont he New Silk Road. In: railfreight.com, 2018.09.11., https://www.railfreight.com/ specials/2018/09/11/why-malaszewicze-is-the-most-debated-place-onthe-new-silk-road/ (Letöltés dátuma: 2018.10.29.)

• LEIJEN, Majorie van: Why Malaszewicze is the most debated place ont he New Silk Road. In: railfreight.com, 2018.09.11., https://www.railfreight.com/ specials/2018/09/11/why-malaszewicze-is-the-most-debated-place-onthe-new-silk-road/ (Letöltés dátuma: 2018.10.29.) • LHS hivatalos honlapja, https://lhs.com.pl/en (Letöltés dátuma: 2018.10.29.) • Office of Rail Transport (UTK): monthly statistic 2018, https://utk.gov. pl/en/markettatistics-and-ann/monthly-statistics/monthly-statistic-2018/14413,Freight-rail-transport.html?search=851574976 (Letöltés dátuma: 2018.10.29.) • Office of Rail Transport (UTK): monthly statistic 2018, https://utk.gov. pl/en/markettatistics-and-ann/monthly-statistics/monthly-statistic-2018/14413,Freight-rail-transport.html?search=851574976 (Letöltés dátuma: 2018.10.29.) • PAIGEO BRI Projekt: 034 interjú • PAIGEO BRI Projekt: 035 interjú • PAIGEO BRI Projekt: Interjú Halina Bajczuk-kal • PKP Cargo: About us, https://www.pkpcargo.com/en/who-we-are/moreabout-us/ (Letöltés dátuma: 2018.10.29.) • PKP Cargo: Strategy, https://www.pkpcargo.com/en/who-we-are/strategy/ (Letöltés dátuma: 2018.10.29.) • PKP LHS, http://pkp-lhs.eu/mapki.html (Letöltés dátuma: 2018.10.29.) Hungary: a potential winner of rail freight transport? • PAIGEO BRI Projekt: Interjú 003 • 班列介绍 http://www.hnxokx.com/bljs/ • van Leijen, Majorie: The Poland-Belarus border crossing: what are the alternatives?; In: RailFreight.com, 2018.10.16. https://www.railfreight.com/beltandroad/2018/10/16/the-poland-belarus-border-crossing-what-are-the-alternatives/ • Hu, Yongqi: Li calls to accelerate China-Europe land-sea express line; In: China Daily, 2017.11.29. http://www.chinadaily.com.cn/china/2017-11/29/ content_35118630.htm • COSCO Shipping, Overseas Terminals; https://ports.coscoshipping.com/en/ Businesses/Portfolio/#OverseasTerminals • Kynge, J.- Beesley, A. – Byrne, A. : EU sets collision course with China over ‘Silk Road’ rail project; In: Financial Times, 2017.02.20. https://www.ft.com/content/003bad14-f52f-11e6-95ee-f14e55513608 Bruno Macaes: Belt and Road • Bruno Macaes: Belt and Road. A Chinese World Orde. 2019 Peter Frankopan: The New Silk Roads. • Peter Frankopan: The New Silk Roads. The Present and Future of the World. London, Bloomsbury Publishing, 2018. Ősi Magyarország • Grandpierre Attila: Ősi Magyarország. A Kárpát-medence és a Selyemút népeinek felemelkefése. Titokfejtő Könyvkiadó, 2019.

LIST OF PICTURES AND FIGURES The Belt and Road Initiative Map 1. made by the author Geography of rail freight transport: the Eurasian Economic Corridor Figure 1. https://uic.org/IMG/pdf/corridors_exe_sum2017_web.pdf Figure 2. wikimedia commons Figure 3. wikimedia commons Figure 4. Belarus - Railway and Logistics Strategy : Activity 1 - Broad Assessment of Belarusian Railways. World Bank, September 2017. Appendix 2. http://documents.worldbank.org/curated/en/320641546839741457/pdf/Belarus-Railways-Broad-Assessment-2017.pdf Figure 5. h ttps://rail-congress.com/wp-content/uploads/Presentations/Session-1/5_Morozov.pdf Figure 6. h ttp://rfc8.eu/corridor/geographical-outline/ Figure 7. Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32013R1315 Rail freight transport in numbers Figure 1. Eurostat Kazakhstan – the strongest chain link of Eurasia Figure 1. Belt & Road Updates 2018. Samruk Kazyna, 2018 January. Table 1. Belt & Road Updates 2018. Samruk Kazyna, 2018 January. Belarus: the intersection of rail transport Figure 1. Wikimedia Commons Figure 2. World Bank Figure 3. World Bank Figure 4. World Bank Figure 5. Wikimedia Commons Figure 6. https://rail-congress.com/wp-content/uploads/Presentations/ Session-1/5_Morozov.pdf

Poland, the European gate of Chinese goods Figure 1. h ttps://utk.gov.pl/en/markettatistics-and-ann/marketanalysis/2017/14664,Report-on-rail-transport-marketoperations-2017.html 94 Figure 2. Office of Rail Transport (UTK): monthly statistic 2018, https:// utk.gov.pl/en/markettatistics-and-ann/monthlystatistics/ monthly-statistic-2018/14413,Freight- railtransport.html?search=851574976 (Downloaded on: Oct. 29, 2018) Figure 3. Office of Rail Transport (UTK): monthly statistic 2018, https:// utk.gov.pl/en/markettatistics-and-ann/ monthly-statistics/ monthly-statistic-2018/14413,Freight- rail- transport.html?search=851574976 (Downloaded on: Oct. 29, 2018) Figure 4. PKP Cargo: Strategy, https://www.pkpcargo.com/en/whowe- are/strategy/ (Downloaded on: Oct. 29, 2018) Figure 5. PKP Cargo: Strategy, https://www.pkpcargo.com/en/whowe- are/strategy/ (Downloaded on: Oct. 29, 2018) Figure 6. PKP LHS, http://pkp-lhs.eu/mapki.html (Downloaded on: Oct. 29, 2018) Figure 7. h ttps://utk.gov.pl/en/markettatistics-and-ann/marketanalysis/2017/14664,Report-on-rail-transport-marketoperations-2017.html 62 Figure 8. h ttps://utk.gov.pl/en/markettatistics-and-ann/marketanalysis/2017/14664,Report-on-rail-transport-marketoperations-2017.html 62 Figure 9. h ttps://utk.gov.pl/en/markettatistics-and-ann/marketanalysis/2017/14664,Report-on-rail-transport-marketoperations-2017.html 66 Figure 10. h ttps://utk.gov.pl/en/markettatistics-and-ann/marketanalysis/2017/14664,Report-on-rail-transport-marketoperations-2017.html 66 Hungary: a potential winner of rail freight transport? Figure 1. MLSZKSZ

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credits EDITOR-IN-CHIEF Norbert Csizmadia EDITORAL BOARD Ágnes Bernek Levente Horváth Marcell Horváth László Körtvélyesi Géza Salamin Péter Szatmári György Szapáry István Szilágyi

AUTHORS Katalin Borosnyay-Miklós Péter Bucsky Ráhel Czirják Norbert Csizmadia Duan Jielong Viktor Eszterhai László Gere Atilla Grandpierre György Matolcsy Alexandra Mogyorósi Alexandra Zoltai

COPY EDITOR Szilvia Kalla ART EDITOR Gyula Nagy PUBLISHED BY: Pallas Athéné Innovation and Geopolitical Foundation H-1014 Budapest, Úri str. 21, Hungary DATE OF PUBLICATION October 2019

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