China Diversifies Export Channels Amid Geopolitical Tensions

Over the past year, China’s Belt and Road Initiative has seen rapid development in Central Asia. This has been evidenced by the launch of several railway and road routes connecting China’s industrial and economic centres to logistics hubs in Uzbekistan, Turkmenistan and Tajikistan.

China’s improved transport to the region reflects two interrelated trends: growing trade momentum and Central Asia’s strengthening position in continental logistics.

Last year, China became the largest trading partner of all the Central Asian countries for the first time as trade jumped by 12 per cent to exceed US$100 billion. China’s exports to the region, dominated by high-value goods, are twice the value of its imports. It explains the rapid containerisation of cargo, a trend also evident in Chinese shipments to Europe.

More than 20,000 freight trains were dispatched along the direct China-Europe route last year. In the first half of this year, the figure grew by 20 per cent year on year to 11,178. The trend is probably due to the growing risks associated with maritime shipping. Today, express railways connect 129 Chinese cities to 235 cities in 26 European countries. Part of the rail freight traffic to Europe is routed through Central Asia, driving the expansion of direct routes to the region.

The development of transport routes to Central Asia is part of China’s wider strategy to diversify its land-based export channels. This is particularly relevant as escalating geopolitical tensions around the world destabilise maritime trade hubs.

Since April last year, freight trains have been running between Chongqing in China and the Uzbek capital of Tashkent. Departing twice a month, the trains cross the Kazakh border and cover 4,700km in about 12 days, cutting the time taken to transport goods from southwestern China to Central Asian countries by 30 per cent, improving profitability.