One Belt, One Road: will China’s vision reshape global trade?

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The train that arrived in Barking on 18th January is the first ever direct rail freight service between China and the UK.

Its 7,500 mile journey started in the city of Yiwu in eastern China and took 18 days, passing through seven countries. Its cargo, consisting of 34 shipping containers, was textiles and consumer goods. But what makes it so exciting is that it represents a milestone in a changing world economy and geopolitical environment.

Launched by Chinese President Xi Jinping in 2013, this new freight train service is part of a broader strategic initiative, and a vision for reviving the Silk Road – the network of trade routes that, for centuries, was central to connecting the East and West from China to the Mediterranean Sea. This strategic initiative is known as “One Belt, One Road” and China is investing billions of dollars to fund it. Its overall aim is to connect and cooperate with over sixty countries via land and sea routes.

Hundreds of OBOR-related projects are already underway or in planning, including plans for a high-speed rail network – built by Chinese companies – linking Greece’s main port of Piraeus to Hungary, and later Germany. And London is just one of several European cities that are becoming destinations for China’s rail cargo.

China’s freight service provides a third transport option between China and Europe, at roughly half the price of air cargo and two weeks quicker than by sea– perfect for companies shipping time-sensitive commodities and capital-intensive goods. In 2016 alone some 40,000 containers went from China to Europe by train, and by 2020, the volume is expected to increase to about 100,000 containers. 

And these new Silk Road routes also open up trade opportunities for the West. After all, China is the EU’s second largest export market, and there is no reason why the infrastructure being put in place couldn’t also be used for transporting goods from west to east.

According to the Economist, “OBOR matters because it is a challenge to the United States and its traditional way of thinking about world trade. In that view, there are two main trading blocs, the trans-Atlantic one and the trans-Pacific one, with Europe in the first, Asia in the second and America the focal point of each. Two proposed regional trade deals, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, embody this approach. But OBOR treats Asia and Europe as a single space, and China, not the United States, is its focal point.”

There is much to admire in China’s visionary and expansive trade policy in the midst of current global trade developments in the Western sphere. Generally, of course, political reform deadlocks, debts of state-owned businesses, and ever increasing regulatory requirements present great challenges and limitations. But at the same time, China has been following its strategic goals and visions consistentlyfor a long time and latest developments send a clear message: China will come by air, sea, or train, and it is here to stay.

It’s a welcome development that the West should embrace to seize new trading opportunities.

Claire Umney

Claire Umney is General Manager of AEB (International) Ltd. and has been working with the company since 2008, when she joined as a Project Manager. Claire has worked within the Logistics and Supply Chain sector for over 16 years with extensive experience in business process consultancy, business development, and software solution implementations – ranging from warehouse and transport management, carrier…

http://www.aeb.com/uk

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