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Saturday, October 29, 2016

The new route from China to Russia is to become part of the global route

Russia and China, together with Mongolia started implementation of a major new transport project. Although soon it will have only regional importance (especially for Siberian regions of Russia), the new route can be another branch of the global route between China and Europe.

Russia, Mongolia and China solemnly opened the transit traffic of cargo vehicles from the port of the Chinese city of Tianjin via the Mongolian capital of Ulan Bator in the main city of the Russian Republic of Buryatia Ulan-Ude.

“We are talking about the revival of the “Great tea road”, the development of it’s economic and tourist routes and integration into more global transport flows”

This symbolic run should help the three countries sign the intergovernmental agreement on international road transport along the Asian highway (ESCAP). Sign your promise until the end of 2016.

“We all believe that the development of transport along this corridor will give impetus to the development of all areas through which it will pass”, – said the head of the international cooperation Department of the Ministry of transport of the Russian Federation Alexandrov Roman.

New route from China is an alternative route to the existing ones from Beijing via Zabaikalsk in Irkutsk. It is 1500 km shorter. Truck convoy is currently in Ulan-Ude, but it is assumed that highway needs to go further to Irkutsk and Novosibirsk. Thus, the Siberian regions of Russia are connected by road network with China and Mongolia.

In fact, the participants from China to Ulan-Ude will have to assess the condition of the transport infrastructure on the route, the operation of roadside service as well as the potential development of production facilities. For six days the convoy has to travel over 2200 miles and visit 11 communities in three countries.

A part of something bigger

However, this route should only be a first step towards the implementation of more global projects. Specified economic corridor is a big joint development program, including the Mongolian “Steppe road”, Chinese silk road and the Russian program “of transeurasian development region” (referring to the Russian initiative to create a TRANS-Eurasian corridor).

This means that the leaders of the three countries are discussing the possibility to integrate this road (and rail) route in a more global transport flows.

The idea of TRANS-Eurasian transport corridor involves the creation of roads, high-speed and conventional Railways, telecommunications networks, pipelines, customs terminals from Europe (starting with London) to Russia via Moscow, Krasnoyarsk, Irkutsk, Khabarovsk and Vladivostok (further plans to bring the road through Chukotka and connect Eurasia with North America). In theory, the route from China through Mongolia easily crossed in Irkutsk with the TRANS-Eurasian transport corridor.

Initially, more ambitious project, Chinese “silk road” to Asia route through Mongolia is also not expected. However, China is ready to explore the perspectives of different routes before choosing the optimal from the point of view of distance, infrastructure, flows and business. It is not surprising that Beijing, like Russia, supported the project in 2014.

Mongolia is also trying to fit into this process. She has no access to the sea, it is sandwiched between China and Russia, who are the trading partners number one and number two. Besides Mongolia, it is necessary to expand the supply of mineral resources. Therefore, the country has developed the project “Steppe road” project-a development not only of roads from China to Russia, but in General the development of transport-logistic infrastructure in the country. Plans to upgrade all railway lines and build high speed roads with a length of over 1000 km, crossing Mongolia from South to North.

Russia and China approved the project “Steppe road” in 2014. In fact, we are talking about the revival of the “Great tea road”, the development of it’s economic and tourist routes and integration into more global transport flows. However, how realistic such plans?

A new road corridor, of course, will contribute to the development of cross-border cooperation, but so far only on a regional scale. Transformation into a global project in the foreseeable future is not expected, said managing partner Kirikov Group Daniil Kirikov. And the main problem is that neither one of the parties is not a sufficient amount of available funds for the realization of such ambitious plans.

For example, Russia has already allocated about 70 billion rubles for the modernization of BAM and Transsib and construction of the Central ring road. Resources for the implementation of other infrastructure programs is just not there. “Given the fact that the Russian economy is in a state of structural crisis, it is difficult to expect to see in the budget the necessary funds in the medium term,” says Chirico.

That gives you a new route

However, in Buryatia and in the South Siberian regions the new way is important. It is really a short and convenient way. It will facilitate the transportation of goods, accelerate their flow and also will relieve carriers from unnecessary expenditures.

As explained Kirikov, now the Russian and Mongolian carriers are forced to accept or to deliver the goods in the nearest to the border line with China, the terminal that generates the need for additional expenses for the services of Chinese transport companies. However, the agreement between the governments of the three countries will allow the carriers themselves to move deep in the Chinese territory, is to surrender the goods to intermediaries close to the border.

In addition, still carry out bilateral transport directly with China could only Russian border regions. A new road corridor, coupled with the relevant agreements will provide that and other Siberian regions, not bordering with China, says Chirico.

Buryatia and neighboring regions supply China coal, timber, sawn timber and jade, parallel importing industrial equipment, textiles and foodstuffs (instant foods, vegetables and fruits). “At the moment, China’s share in foreign trade turnover is about 15%. But this figure could significantly rise, disappears when the obstacle of high transport costs,” says Chirico.

According to estimates, by 2020 through the distribution of traffic flows on new routes, the freight traffic will grow by 17-20%. “In a further possible increase to 10% per year, which corresponds to an average annual growth of foreign trade of Russia and China,” – said General Director of the Russian Agency for road transport (Rosavtotrans) Alex Double, which is the coordinator of the run.

The growth of trade between the southern regions of Eastern Siberia and China will benefit both sides. “The demand for Russian raw materials from Chinese businessmen will give a new impetus to the development of local industries, including depressive coal industry. At the same time, the appearance on the market cheapened Chinese consumer will neutralize the impact of the crisis on the living standards of the population,” says Chirico.

China for its part will receive new markets and access to cheap raw materials. Mongolia will be provided economic growth through the development of transport and service infrastructure in the form of gas stations, catering facilities, hostels, etc.


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