Rail crucial to trade network between China's central region and Western Europe

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.

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 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 its economic development and drive growth in the country's central and western regions. Located near the geographic center of China, Chongqing is 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 have established close economic cooperation with the international community. These 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. 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.

In recent years, Chongqing has been promoting its production capacity of laptops to reach 1 million units annually. 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, and the megacity will realize unprecedented economic value from the move.

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

(China Daily 06/08/2012 page7)