Legend has it that Chinese emperor Han Wu Di (156 BC-87 BC) once looked to the lands west of his vast empire and proclaimed them with people who placed "great value on the rich produce of China".
That regal observation soon spurred exploration of those foreign lands, leading to a network of trading routes between the East and West that came to be known as the Silk Road.

The historic route declined in the centuries that followed as maritime trade increased, but there are now renewed efforts to revive the continental link - this time through the latest addition to the Eurasian Land Bridge rail.

Connecting the major Lianyungang port in East China's Jiangsu province to distant Belgium, the railway is being promoted as a shorter, more efficient way to transport goods between China and Europe. Lianyungang lies near the center of China's eastern coastline, where the country's southern economic and manufacturing hubs have helped enrich cities in provinces like Jiangsu and Zhejiang.

The land bridge traverses more than 10,000 km through China, Central Asia and Eastern Europe before arriving at European trading hubs like Rotterdam and Antwerp in about two weeks. The route is expected to benefit more than 40 countries and regions by taking less than half the time and enjoying a similar reduction in costs compared with transporting goods by sea.

Other routes under the Eurasian Land Bridge concept include an earlier one that consists of the Trans-Siberian Railway and the Russian seaport of Vladivostok. Yet another rail link considers connecting the southern Chinese city of Shenzhen with Rotterdam, through a 15,000-km route across 17 countries and regions - via Guangdong and Yunnan provinces as well as the Guangxi Zhuang autonomous region in China - before entering Myanmar, Bangladesh, India, Pakistan, Iran and Turkey toward its western destination.

Faced with higher production costs, maturing manufacturing industries and changing economic modes in eastern China's more economically developed coastal areas, Chinese authorities are now stepping up efforts to promote the benefits of the latest working route of the land bridge for Chinese goods to reach markets in the West as they look for ways to stay competitive.

Shen Dingli, professor of international studies at Shanghai-based Fudan University and executive dean of its Institute of International Studies, says the land bridge can help break the logistical barriers and bottlenecks in China's regional logistics flow as the country's western regions stand to benefit significantly from the new link.

To that effect, Chongqing, the southwestern municipality and an increasingly important manufacturing and trading hub of inland China, is already positioning itself as the latest crucial link of this Eurasian land bridge.

The megacity, one of the largest and fastest growing cities in the world with a 32-million-strong population, has opened a route to form part of the land bridge in the north at Shaanxi's provincial capital Xi'an - the historic city that flourished as the Chinese terminus of the Silk Road centuries ago.

The new link is expected to offer an attractive alternative for trading companies in Chongqing that need to operate through southern Chinese coastal ports such as Shanghai or Guangzhou before shipping their goods through the Strait of Malacca if they choose the maritime route, which can end up being more time consuming and costly.

Logistics companies such as DB Schenker and Far East Land Bridge are already using the land route to transport containers between Chongqing and European ports like Duisburg in Germany's Ruhr industrial belt.

The Chongqing-Europe link, which takes about two weeks, is banking on the megacity's Chinese goods coming from the IT, electronics, auto, steel, chemical and other sectors that are headed for European markets. Chongqing authorities say the railway will also seal the city as an international logistics hub by connecting the Yangtze River Delta economic belt to Europe.

Xu Ming, a senior official of Chongqing municipal committee, says the land bridge will be vital to China-Europe businesses.

"The old Silk Road connected the Eastern and Western empires. It was a great trading route of utmost importance and a vital artery in international commerce and the exchange of ideas between East and West.

"This new route linking Chongqing to the West is the next big thing. It can shorten present shipping times by up to 20 days. It has received full support from various government ministries and departments to ensure smooth flow and handling of goods. In terms of safety and security, it trumps the threats that maritime shipping might face, such as piracy," Xu said at this year's Liangjiang Forum in Chongqing to discuss the development of the land bridge as part of the challenges and opportunities in western China with business leaders and officials from both sides. Xu is also the director general of the administrative committee of Chongqing's new Liangjiang development area.

"This 'New Silk Road' is better, faster and more efficient as it transports valuable goods between China and Europe. China-EU trade last year hit nearly $600 billion. Europe is China's biggest export market and we are Europe's second largest. In terms of luxury goods, China is set to become the largest market and that also has great significance for the European luxury goods market," he says.

"Chongqing is a major manufacturing hub and draws on the strengths of the Yangtze River Delta as an economic center. Its transportation links connect important cities and regions.

"As the next major trading link between China and Europe, the economic significance of its impact on helping the European debt crisis cannot be underestimated."

Zhai Qian, deputy director general of the European Department at the Ministry of Commerce, says the European market and its development is extremely important for China and that has most recently been expressed in Chinese leaders' visits to the EU.

"The next stages of the Chinese economy spelled out in the country's 12th Five-Year Plan (2011-15) that call for sustainable development offer numerous opportunities for China-European businesses to contribute," Zhai says.

"Multi-pronged efforts are already being made to expand the exchange of goods and services between the Chinese and European markets and we will continue to encourage the development of these sectors of the new economy."

Jens Ruebbert, senior vice-president of the European Union Chamber of Commerce in China and managing director and chief administrative officer of Deutsche Bank (China), says the chamber is well aware of Chongqing's growth and it is "quite committed" to opening its next office in the megacity.

"There is no doubt about it. EU-China economic relations are hugely important. In 2011, the EU-China trade relationship was the second largest in the world. In 2012, it is expected to become the largest in the world," says Ruebbert, whose chamber now has more than 1,700 members split into 42 working groups with seven local chapters in China.

"The EU and China have both recently issued medium-term development strategies and these two strategies are very similar. The core of both the EU's 2020 strategy and China's 12th Five-Year Plan is the guide for green and sustainable growth based on innovative products. China aims to rebalance its economy through increasing domestic consumption and opening its economy further. This process will bring the economies of China and the EU closer.

"The EU offers great opportunities for China and for increasing cooperation. In a time of continued debt crisis in Europe, China has indeed opportunities to increase its investment in Europe. The European chamber is a proponent of open markets and welcomes and encourages such investment."

The Chinese government's go-west policy to spur investment inland also bodes well for EU companies that are making their presence felt in Chongqing, Ruebbert says.

"It absolutely creates opportunities for EU companies. This Eurasian railway is really very efficient. We have heard it takes less than about 16 days, it is less than half the shipping speeds with convenient customs passing and integrated operating platforms. It will also serve to further enhance the economic and trade ties between China and Europe, and to attract investment to Chongqing. It shows the logistics development of Chongqing and offers opportunities for further European cooperation. The railway is another example of the strong competitive advantages of Chongqing and contributes to efficiency of infrastructure."

Fudan University's Shen points out that the Chongqing connection in the Eurasian Land Bridge can help transfer foreign investment to western China, significantly increasing the export capacity of the megacity.

"In recent years, Chongqing has been promoting the production capacity of notebook computers to reach 1 million units annually, which is the sum of six coastal provinces. This strategy itself is a major boost to the economic boom of Chongqing and the central regions," Shen says.

Mu Huaping, director of Chongqing's Municipal Commission of Economy and Information Technology and head of the Municipal Logistics Office, says when the authorities discussed the latest rail link two years ago, they were still not confident of the project. But it has taken just that time for them to be convinced of the numerous benefits of the connection and the role it will play in cross-border trade.

"Chongqing's auto and electronics products are seeing strong growth. Of these, the low-end variety heads to Shenzhen before being transported by ship to Western markets, while more high-end products are delivered by air. We started exploring the land bridge as an alternative to these routes," Mu says.

But he says there are many issues that still need to be resolved before the bridge can be operated optimally. These include different track gauges between countries like Russia along the route, the limited storage capacity of train containers when compared to those used on ships, time-consuming land border checks and extreme temperature and environmental conditions as the trains wind through Central Asia and Eastern Europe, all of which make the cost of using the land bridge significantly higher than maritime shipping.

"Stakeholders on both sides in the West and China as well as those along the route need to work together to iron out these issues to get the land bridge rolling. We are now providing the necessary platforms for these to happen," Mu says.

To that effect, a logistics company is also being set up to serve as a platform for the rail link co-funded by the Chinese, Kazakhstan, Russian and German railway authorities.

"Lowering the cost will be the major factor in making this land bridge more competitive, especially when many Chinese exports headed to the West are extremely sensitive to price differences. These are naturally the top concerns for businesses that choose the land bridge over other forms of shipping."

Similarly, He Mingke, vice-president of the China Society of Logistics, points out that the land bridge traverses six different countries, all with political, economic and environmental conditions that could pose major obstacles to the smooth running of the railway.

"The success of the land bridge will ultimately depend on factors including a concerted political will and coordination of technology and operational systems for businesses to become confident enough to use it."

But Claudio Facchin, senior vice-president of Swedish-Swiss power and automation technology giant ABB Group and president of its North Asia Region, says European companies such as his are already taking advantage of Chongqing's efforts to play a central role in China-EU trade via new channels such as the land bridge.

"We see the particular importance of being here in the western region, particularly in Chongqing. It has been growing at almost double the speed of the country, which we all know is the largest growing market."

Facchin's confidence in the growth of the region and the logistics advantages of the megacity follow those by various industry leaders including IT giants Acer and Hewlett-Packard.

Automakers have also been quick to move, with Ford China investing in at least three factories inland. Germany's largest steelmaker ThyssenKrupp has also said it was planning an assembly shop, painting workshop and quality-control laboratory in the region to help provide parts for major automakers.

Similar to the aims of the new land bridge, all are placing high bets on the Chinese economic engine to sustain development in both East and West.

Also at the Liangjiang forum, Jochum Haakma, chairman of the Netherlands Council for Trade Promotion, cited a Chinese saying of an auspicious purple cloud being blown from the east, to allude to the help that the Chinese economy will give to its beleaguered counterpart in the West.

"We have seen from all this that China is in relatively very good shape while the European Union is anything but. So whenever this purple cloud appears again in the East, in China, you should send it straight to the West to help us."
 

The latest Eurasian Land Bridge linking Lianyungang in East China's Jiangsu province with Rotterdam in the Netherlands started rolling out about two decades ago, and a subsidiary line from Chongqing to Europe via the Xinjiang Uygur autonomous region began running last year.

With the completion of this rail link across Eurasia, China's central region will benefit from unprecedented growth in its logistics sector, which will in turn help reshape its trade network.

Wealth is generated from labor and realized through trade and the basis of trade lies in transportation. Modern logistics needs to protect the unimpeded flow of supplies around the globe in the shortest time possible. In an era of globalization, capital flows need to be supported by an international financial network. Likewise, the flow of cargo goods requires an international transportation network that can adapt to local conditions at a reasonable cost.

In view of the high costs of air transportation, there are only two practical ways for large-scale logistics - sea and land freight. But rail is the only viable model for intercontinental land transportation.

Most of China's first-tier cities are located in its eastern coastal areas, and they have the natural advantage of Pacific maritime trade. But China's economic transformation has to be gradually realized through the development of its inland region.

Trade between China's central region and Western Europe can only be realized through land transportation via Central Asian countries and Russia, as geography limits the development of its logistics sector.

The Eurasian railway system that began opening 20 years ago can be described as the "New Silk Road" of China's modernization. It has significant economic and strategic value, as goods produced in the central region for export to Europe do not have to use sea transportation via the country's eastern ports.

Besides the development of Central China, the country's western regions can also benefit from the new Eurasian Land Bridge, with this "New Silk Road" comprehensively breaking the barriers and bottlenecks in China's regional logistics flow. As the latest link to the new land bridge, the Chongqing line is also of great importance to the areas around the southwestern municipality.

Chongqing became a municipality to help simplify administration, boost economic development in the area and drive growth in the country's vast central and western regions.

Located near the geographic center of China, Chongqing is also an important city for national security because of its inland position as well as the protection offered by the world's highest plateau in its west. But Chongqing's geo-strategic advantages also become a barrier for it to reach out to the world.

Linking it to the Eurasian Land Bridge helps it address this weakness.

Regional development must ride on the back of rapid national economic development. On the one hand, the coastal areas, supported by human and natural resources inland, have established close economic cooperation with the wider international community. These more developed areas stand at the forefront of China's economic reform. On the other hand, as labor and material costs in the coastal areas rise, the growth of foreign trade in these areas is slowing down. The financial crisis in Europe and the United States has also hampered international trade. As such, the regional imbalance in China's economic development should be used to consolidate the competitiveness of the country's exports.

In this context, foreign investment in China is moving to the central and western regions including Chongqing. The latest development in the land bridge significantly increases the export capacity of Chongqing and its surrounding areas.

In recent years, Chongqing has been promoting its production capacity of laptops to reach 1 million units annually, which is the total of six coastal provinces. This strategy alone is a major boost to the economic boom of Chongqing and the central and western regions. The smooth flow of the "New Silk Road" through Chongqing offers one of the best logistics options available, and the megacity will realize unprecedented economic value from the move.

While some worry that the Chongqing subsidiary line could weaken the strategic and economic value of the older continental rail link, most of which is in Russia, an increase in the amount of Chinese goods headed for Europe using the Chongqing line will continue to benefit Russia.

But the current Chongqing addition to the land bridge is still not the most effective in terms of distance and the Chongqing-Lanzhou Railway is expected to shorten the journey further when it is completed. Given the obvious geographical advantages, even Southeast Asian countries will be able to take advantage of the land bridge framework to realize a logistics revolution in Eurasian transportation.

The "Malacca dilemma" is also an issue that has cropped up in discussions over a Eurasian rail link. While a new Eurasian continental bridge does not change the geographical constraints of transport through the Malacca Strait, it will effectively slow down China's geo-economic vulnerability. Since a considerable part of Sino-European logistics will be carried through the new Eurasian continental bridge, China's continental advantages will be fully realized. Reducing the dependence on sea transport, especially through a reduction in the use of the Strait of Malacca, will be conducive to the diversification of China's economic cooperation with other countries and help improve the country's diplomatic independence and autonomy.

The author is a professor of international relations at Fudan University.

Led by Dongfang Electric Corporation (DEC), International, President Mr Luo Zhigang, the Chinese delegation had frank exchange of views with PR authorities in a very congenial atmosphere during a meeting at the railways headquarters, a participant told Dawn on Monday.

Railways General Manager (Operations) Junaid Qureshi informed the Chinese about extreme shortage of locomotives that had disrupted and forced the scaling down of train operations. He sought an earliest assistance by the Chinese to put their locomotives back on track.

The Chinese team suggested that the fastest way to get locomotives might be to speed up the implementation of the 75 locomotives repeat order and go for phase-II and phase-III of a maintenance contract to carry out rehabilitation and overhaul of the existing locomotives as the existing contract was merely for supply of running spares.

However, the Chinese team mentioned that they would not participate in the current tender for 150 locomotives due to restrictive specifications and gave the friendly advice that their exclusion from the bidding process would result in far greater prices to Pakistan Railways.

Dalian Locomotive Works (DLOCO) General Manager Li Depu spoke about the 69 locomotives project and expressed his deep concern over lack of funds and other reasons that had not been permitting the PR to carry out proper maintenance and upkeep of all its locomotives whether of Chinese or other origin.

DEC President Mr Luo reiterated his interest in railways projects like hiring of locomotives, supply of 500 wagons and 40 power vans besides Sino-Pakistan Rail Link.

DEC Vice-President Mr Hu Weidong confirmed DEC/DLOCO’s solidarity with Pakistan Railways in its time of crisis.

The Railways GM thanked the Chinese delegation and expressed his sincere desire to speed up the procurement of new locomotives and rehabilitation of existing ones according to government rules and procedures.

The Chinese delegation also comprised DEC Project Managers Luo Wencheng and Huang Xuehui and DLOCO Project Manager Li Zhidong while the PR was represented by Additional General Manager Asad Ihsan, Chief Mechanical Engineer Locos Mubeen and Deputy Chief Mechanical Engineer (Loco) Salman Sadiq.

In a breather to the Indian infrastructure conglomerate GVK, the Queensland state government in Australia granted approval to lay a single railway line connecting the Galilee Basin to the port of Abbot Point. The 500 km railway line will help GVK and other Indian and Chinese private firms who won mines in the state to ship coal to their destinations.

The nod from both Queensland and Australia governments to build the rail project comes just a day after the federal government in Australia decided to defer its permission to allow an environmental clearance for developing the coal mines based on a report released by the Unesco. The United Nations' wing said that extensive development along the Galilee Basin would pose a grave threat to the existence of the Great Reef, situated along the coast of the Queensland state.

Russia is mulling extending its wide-gauge railroad track to Vienna as part of a plan for a Eurasian land bridge between China and Europe targeted at cargo that currently travels on container ships.

Russia’s Trans-Siberian Railroad already hauls containers on the route but it has failed to meet expectations and more than 95 percent of Europe-Asia container traffic is currently shipped by sea.

A major problem for rail freight transiting Russia is the extra cost and time involved in switching from its 1,520 millimeter gauge to the narrower 1,485 mm gauge in Europe and China.

Russian Railways says extending its wide-gauge track to Vienna would enable containers from China to move into the road, rail and inland waterway network in Central Europe.

Extending Russia’s rail track into Europe would take at least a decade and cost several billion dollars.

The European Union lent it support to the plan at a recent conference attended by high-level European, Russian and South East Asian transport officials and rail executives, but it pressed Moscow to remove barriers slowing the growth of European rail freight across Russia.

Rail freight traffic between the EU and its Eastern trading partners is expected to soar by over 30 percent between 2007 and 2020, European Transport Commissioner Siim Kallas told the conference in the Russian seaside resort of Sochi.

“More and better connections are needed and so is a strong cooperation with Russia, the third most important trading partner of the EU.”

“Russia might also become a major transit country between the EU and China in the wake of the Eurasian land bridge … but we still need to solve important issues.”

China’s rapid export growth has brought some of its east coast ports to saturation point, while others are too shallow for larger container ships and have limited internal connections, Kallas said. New Chinese industries are moving westward “and a little closer to Europe.”

Rail companies have recently launched successful Europe-China services from the ports of Hamburg and Antwerp, but “there is still a long way to go” before rail can offer a real alternative to maritime transport, particularly in quality of service, price and speed.

A major problem is the discriminatory fees levied by Russia and other Central Asian countries on international rail freight that leaves, enters or transits their territory.

“We expect these fees to be phased out as part of Russia’s WTO [World Trade Organization] accession,” Kallas said.

Extension of wide-gauge trackage could boost China-Europe freight corridor.

Adani Enterprises will look for partners to help fund a $2 billion coal rail line from Australias Galilee Basin to the Pacific Ocean, it said on Thursday, after winning state approval for its proposed route. The approval is crucial to Adanis $10 billion coal and rail project and potentially other projects in the untapped Galilee Basin, where five major mines could produce more than 200 million tonnes of coal a year. The biggest hurdle to the Galilee Basin projects is affordable access to port, as the region is much further from the coast than Queenslands other coal-rich basins. 'We are eager to cooperate with third parties in such development but also keep open the option of going it alone as deemed in our best business interests,' Adani Group Australia Chief Executive Harsh Mishra said in a statement. At current prices for thermal coal, analysts question whether the Galilee Basin mines would be economically feasible, which could make it tough for companies like Adani to raise funding for their projects. Thermal coal prices have shed 20 percent this year to a near two-year low of $92 a tonne at the Australian port of Newcastle, based on globalCOALs index. Adani declined to name potential partners. Others working on projects in the same region as its Carmichael project are Brazils Vale and privately owned Chinese company Macmines Austasia. Australian coal rail operator QR National and Adani proposed projects along the same corridor and may end up working together on a route to ship coal to an existing QR National rail line that could take coal to the port of Hay Point or Abbot Point further north. That would be cheaper to build than a brand new 500 km rail line planned by GVK Power and Infrastructure for its $10 billion Alpha coal, rail and port project, on a route to Abbot Point that also won approval from the state of Queensland this week. QR National is already in talks with Vale to ship coal from its Degulla project.
 

NANCHANG - China is now eying building standardized "public resources trading markets" as an effective tool in a renewed fight against graft in the scandal-plagued construction sector.

He Yong, deputy secretary of the CPC Central Commission for Discipline Inspection (CCDI), called for accelerated building of unified and standardized "public resources trading markets" to improve the efficiency and quality of resource allocation, at a two-day national conference which began Monday in Nanchang, capital of Jiangxi province.

The "public resources trading markets" should feature centralized trading, standardized operation, and should be governed and run separately, He said.

The markets should give full play to their fundamental role of allocating public resources, he said.

The central government has been pushing forward the building of such markets, as they are believed to be vital to ensuring the transparency and fairness of the bidding process of key construction sectors and prevent power-for-money deals.

So far, 730 standardized public resources trading markets have been built at or above county-level nationwide, including eight at the provincial-level, figures from the conference showed.

Corruption can occur in all links in the chain of a construction project, from land use approval to project management, public bidding and construction material purchase.

About 16,700 people have been punished for disciplinary violations linked to construction projects since a two-year national campaign to clean up the construction sector was launched in 2009, according to a statement from the national conference.

The rule breakers, who received Communist Party's disciplinary penalties, were implicated in about 22,200 cases of corruption, according to the statement.

Among them, 90 are prefecture-level officials while another 1,585 are county-level officials. Some 8,824 of them have been referred to judicial authorities.

The Communist Party of China (CPC) Central Committee decided in July 2009 to launch a two-year campaign to tackle corruption in the construction sector.

As of April this year, central inspection teams had probed more than 100,000 construction projects and more than 30,000 cases have been rectified.

They also conducted sample inspections on 123 projects in key fields such as land and water resources, public transportation, railway, and municipal construction and rectified 325 disciplinary violations in the course.

Minister of Railways Sheng Guangzu, said at the same conference, that the ministry would allow bids for its foreign-funded projects and specialized equipments such as vehicles to enter local public resources trading markets by the end of this year.

The ministry had vowed previously to open bids for railway contracts to local markets in an effort to reform its bidding management and to fight graft.

All railway-related projects should enter "local public resources trading markets" in accordance with authorization or the location of the projects, according to a document released by the ministry last month.

So far, 21 large and medium-sized construction projects, under the administration of the railways ministry construction projects, were looked after by the Beijing Engineering Construction Trading Center, and involved a total trading volume of 2.65 billion yuan ($416.37 million).

Railway project bidding had been harshly criticized by the public after two high-speed trains crashed into each other in Zhejiang province, resulting in 43 deaths and injuring more than 200 other people last July.

According to investigation results announced last December, malpractice and illegal contracts were found in the bidding process administered by the Ministry of Railways and its subordinate bureaus, which resulted in the failure of a train control system that had never undergone field testing before launch.

Jiao Yong, Vice Minister of Water Resources, also announced at the conference, that the ministry had decided all its large and medium-sized construction projects or those involving a total investment of more than 30 million yuan will enter the public resources trading markets from 2013.

And the rest of the ministry's construction projects will enter the market by July next year, according to Jiao.
 

The Chinese steel industry is gearing up for an expected surge in demand in the wake of a speedup in the approval of major infrastructure and industrial projects, experts said.

As the State Council announced a series of policies to stimulate the economy by accelerating the approval of many important projects, including railway, energy, and infrastructure construction in rural region and western China, steel industry analysts said the pipeline of new work will increase demand for steel in the long term.

They expected steel prices to rebound as early as the end of this month as a result.

The price of hot rolled steel in China is currently 4,168 yuan ($655) per metric ton, down 9 yuan from last week.

"The successive approval of new projects will help rebuild market confidence, but it will still need time to take real effect," said Ma Li, analyst at Lange Steel Information Research Center.

Ma estimated the steel market will become particularly strong in the third quarter of this year. The resultant demand for new heavy construction equipment, which requires mainly high-end and special steel product, will also give the overall sector a significant boost.

"The construction steel market will gain the biggest benefits from the new policies, and the demand for equipment manufacturing steel will increase too," Ma said.

Han Weidong, a senior steel industry expert with Lange, added that given the approval of major infrastructure projects is a relatively long process, steel prices are likely to stop falling, and may even rise because of the "new projects' stimulation".

Yu Jie, deputy manager of Beijing Chaoyin Xinde Trading Co Ltd, said: "New projects, including airports, real estate, transportation and rural infrastructure, are all big consumers of steel, which will boost the market."

According to the latest data from the China Steel and Iron Association, the steel inventory in 26 major markets in the country reached 15.61 million tons by June 1, an indication, it said, of ongoing oversupply in the market.

In April, China produced 60.57 million tons of crude steel, a 2.6 percent increase compared with the same period last year.

According to data from the customs office, China exported 4.67 million tons of steel in April, 361,000 tons less than the previous month, a 7.2 percent drop month-by-month.

Currently, many provinces are focusing on the approval of both new and suspended projects.

According to reports from Lange, up to 80 percent of suspended railway projects have been restarted, while urban rail projects are becoming a new investment point as the enthusiasm for high-speed railway cools down.

It added that the overall investment for water conservancy construction will be more than 140 billion yuan in the country. Highway construction will also keep pace with last year's level and may even grow slightly.
 

The Chinese are not happy over conditionalities in a tender floated by the Pakistan Railways for procuring 150 new locomotives as this excludes them from the competition, a leading Pakistani daily said Wednesday.

An editorial in Dawn said Chinese suppliers met railway officials Monday and "politely conveyed their resentment over the specifications of locomotives that exclude them from the competition and facilitate their rival, an American company".

"They have also warned that their expulsion (albeit on technical grounds) from the bid would raise the cost of procurement of locomotives," it said.

The daily said that the point made by the Chinese manufacturers must be looked into and the "railway authorities should come clean on it".

"Just blaming the Chinese manufacturers for the poor quality of engines provided to the railway for keeping them out of the competition will not do, particularly when most of the damage to them has been done because of lack of funds for their proper maintenance and upkeep," it added.

The daily noted that the railway is dragging its feet on an earlier agreement for the purchase of 75 locomotives from China.

"With the department facing an acute shortage of locomotives to keep its trains running, it needs to move on the fast track to acquire the new engines. The railways' treatment of the Chinese suppliers who appear to be willing to do business that will help put our trains back on the rails is perplexing," it said.

The editorial reminded the railway authorities that it was Chinese locomotive manufacturers who came to their rescue by providing 69 locomotives on credit when "no one was ready to deal with us in the wake of the nuclear tests".

"The same locomotives are still pulling our trains."

Russia-China cooperation on development of high-speed rail and a trans-Eurasian rail corridor has "huge potential, the president of Russian Railways (RZD) said here Friday.

Under a government strategic plan, Russia will build by 2030 some 20,000 km of new railways, including 5,000 high-speed lines, Vladimir Yakunin told Xinhua on the sidelines of an international railway forum.

"Russia is expected to develop a railway network, including high-speed rail lines, from Kazan and Yekaterinburg (in central Russia) to Khabarovsk and Vladivostok (in the Far East region)," Yakunin said.

"In this field, we are willing to cooperate with China's railways and financial institutions," he added.

"China has rich experience in high-speed rail construction, which creates rooms for further cooperation between the two countries in this field," he added.

Meanwhile, Yakunin admitted that there are some delays in implementing a memorandum of understanding signed by Russia and China in 2009 on joint development of high-speed railway system in Russia.

There is no change in Russia's stance on the construction of high-speed rail, but the state-owned RZD is still seeking suitable finance and profit modes, he explained.

Yakunin, who will soon visit China with a Russian delegation led by President Vladimir Putin next week, said that he would meet with China's railway authorities on further bilateral cooperation.

On the development of a rail corridor from the southwest Chinese city of Chongqing to Germany's Duisburg, Yakunin said that China and Russia have signed cooperation documents and formed joint ventures.

Last July, the new route was officially launched in Chongqing. It offers a major shortcut to traditional sea trade routes and shorten travel time to Europe from about 36 days by container ship to just 13 days by freight train.

"This is the first step of the corridor construction," Yakunin said.

The train services are expected to be increased to once per day in the future as Chongqing's exports to Europe increase. Currently the train leaves Chongqing for Duisburg once a month.

Russia is now pondering the future transit fee policy following the development of the route and will later coordinate with the Chinese side, he said.

Besides, Yakunin said the new trans-Eurasian rail corridor is taking shape, thanks to the joint efforts of Russia, China and Kazakhstan.

Amid global economic uncertainties, such a corridor will boost the global and regional economy and enhance the competitiveness of countries of the railway routes, he said.

The Ministry of Environmental Protection has brought construction on a railway in northeast China's Heilongjiang province to a halt due to environmental violations, local authorities said Friday.

Further inspections will be conducted for the Harbin-Qiqihar passenger railway, the Heilongjiang provincial environmental protection bureau said.

Construction on the railway has violated several parts of the Environmental Impact Assessment Law, with some areas under construction lacking proper impact assessment approval, according to the bureau's investigation.

Several construction sites have been moved without authorization, threatening the Zhalong Sate Nature Reserve, a major habitat for cranes, according to the investigation.

The ministry has asked the builders to submit all environmental impact assessment paperwork before August 1.

Construction on the 286-km-long railway began on July 5, 2009.

European Commission Vice-President Siim Kallas, responsible for transport, participated in the 7th rail business forum "Strategic Partnership 1520" in Sochi, Russia. Vice-President Kallas seized this opportunity to lead fruitful discussions on the way forward to boost East-West rail traffic towards Russia and China and to spur modal shift on these routes.

"Rail freight traffic between the EU and its Eastern neighbours is expected to soar by over 30% between 2007 and 2020. More and better connections are needed and so is a strong cooperation with Russia, the third most important trading partner of the EU. Russia might also become a major transit country between the EU and China in the wake of the development of the Eurasian landbridge. Today's discussions were a first step forward, but we still need to solve important issues."

The conference triggered a comprehensive debate over the future shape of railway transport across whole Eurasia. The main topics included regulatory and interoperability issues, the development of freight traffic on the Trans-Siberian route, the transportation charges on goods in transit and the coordination of infrastructure projects aimed at removing bottlenecks and facilitating seamless transport. In this view, Vice-President Kallas emphasized the need to enhance both the bilateral EU-Russia transport dialogue and the cooperation within international railway organisations. He also underlined the contribution the EU rail industry might play in solving existing interoperability barriers.

Participants included high-level government and railway representatives from Russia, the Commonwealth of Independent States, European and South-East Asian countries, stakeholders and major Russian and European transport companies.

On the margins of the event Vice-President Kallas met for the first time the newly appointed Transport Minister of the Russian Federation Maxim Sokolov, and exchanged views on the development of the EU-Russia cooperation across all transport modes. In particular, Vice-President Kallas reminded Mr Sokolov of the importance for Russia to respect its formal commitment on the phasing-out of Siberian overflight royalties, which had been a precondition for the EU's green light for Russia's WTO accession.

The importance of the external dimension of the EU transport policy was underlined in the 2011 White Paper on Transport "Roadmap to a single European transport area-Towards a competitive and resource-efficient transport system". Since transport is fundamentally international, the very success of the EU transport policy is linked to challenges related to the development of transport beyond the EU borders, and in particular with its neighbours. Fostering environmentally friendly transport solutions such as rail, delivering improved infrastructure connections and closer market integration with our neighbours are therefore priorities of the EU transport policy.
 

After a three-year wait, China Railway Construction Corp. Ltd. (CRCC) recently won permission to launch a major copper mining project in Ecuador.

The production agreement signed April 25 by Ecuador’s government and Corriente Resources, a Canadian company jointly controlled by state-owned CRCC (HK:1186) (US:CWYCF)(CN:601186) and the Chinese state mining giant Tongling Nonferrous Metals Group Holdings Co. Ltd. (CN:000630), clears the way for digging to begin at the Mirador pit.

The deal first proposed in 2009 also marks the latest milestone in a quest by CRCC and other Chinese engineering firms to expand beyond domestic construction businesses by investing in mines around the world.

For example, CRCC’s main, state-owned competitor China Railway Group Ltd. (CRG) (HK:390)(CN:601390) (US:CRWOF), declared in a first-quarter 2012 financial report that it invested more than 200 million yuan ($31.5 million) in mineral resources last year and plans to open major mines this year.

“In the future, mining revenues will become a new growth point for the company,” the CRG report said.

In setting sights on the international mining industry, CRCC and CRG are betting that revenues from resource extraction in far-flung lands can make up for a slowdown affecting their domestic track-and-tie business.

Business has cooled since the Chinese government last year decided to cut back on railroad projects. Contributing to the decision was a corruption scandal in the national railways ministry and a deadly collision of two China Railways bullet trains that killed 40 people.

CRCC signed only 137 billion yuan worth of new railway contracts in 2011, down 68% from 2010, while CRG said its new contract orders fell 76% to 97 billion yuan. CRCC’s operating revenues declined 2.7% between 2010 and last year, while CRG’s net profit for the same period fell 9.6%.

“Market expectations are for domestic railway construction investment to slow further over the next few years,” an infrastructure construction analyst told Caixin. “For railway contractors such as CRG and CRCC to further develop, they will have to transform and seek new growth points for their businesses.

“The construction industry is highly impacted by state investment that can’t guarantee a company’s future development path.” he said.

Shifting gears
Market analysts say CRCC and CRG are following a trail blazed several years ago by another state-owned construction conglomerate, China Metallurgical Group Corp.

China Metallurgical shifted focus from its traditional field — domestic steel factory construction — to overseas mining. It now operates a lead and zinc mine in Pakistan, and has invested in nickel, copper and iron ore facilities in Papua New Guinea, Afghanistan, Australia and Argentina.

Its best-known asset is the Aynak copper mine in Afghanistan, which has 690 million tons of proven reserves including 11 million tons of high-grade copper.