The CPC Hebei Provincial Government issued a notice on March 5 this year on the implementation plan to coordinate epidemic prevention and control and economic and social development to ensure a good start in the first quarter.
The program requires municipalities to do 10 key tasks. Among them, “efforts to stabilize foreign trade and foreign investment” measures include: “research and development of international trains subsidy policy, stable operation of Central Europe and Central Asia trains, the expansion of ASEAN multimodal international trains, to maintain the smooth flow of international trade channels”. The units responsible for this measure are: the Provincial Development and Reform Commission, the Provincial Department of Commerce, Shijiazhuang Customs and the Provincial Department of Transport.
According to the CPC National Railway Bureau information (link), the Office of the Leading Group for Promoting the Construction of “One Belt, One Road” issued the document “China-European Liner Construction Development Plan (2016-2020)” in October 2016.
The plan is to implement the strategic deployment of the CPC to promote “One Belt, One Road”, which requires “building the China-Europe Class Train into a world-renowned logistics brand with international competitiveness and goodwill, and becoming an important platform for the construction of ‘One Belt, One Road’. platform”. The development goal of the plan is that by 2020, the annual operation of the China-Europe Classical Train will be about 5,000 trains. The plan calls for “increased support for land and other policies” and increased support from the central budget investment for the construction of the domestic section of the China-Europe railroad, etc.
A screenshot of a notice issued by the CPC Hebei Provincial Government on March 5, 2021 to coordinate the implementation plan for epidemic prevention and control and economic and social development.
Also according to the Communist Party’s National Development and Reform Commission on January 19, 12,406 Sino-European trains will be operated in 2020, an increase of 50% year-on-year, more than double the (2016-2020) planning target and 7.3 times the number of trains operated in 2016.
China-Europe Classes exploded last year government subsidies are unsustainable
The global sea and air transport were hit by the epidemic in 2020, and the capacity was hampered and the transportation cost rose sharply. As a result, international rail transport, which was originally weaker than sea and air transport in terms of price and time, has seen a big explosion in China.
According to Caixin, the Communist Party of China State Railway Group (NRSG) disclosed at its meeting earlier this year that China-European trains will run 12,400 trains and carry 1.135 million standard containers in 2020, up 50% and 56% respectively year-on-year. Freight rates soared 4 times in one year.
In the first quarter of 2021, CEB continued its strong development momentum with 3,398 trains and 322,000 TEUs of goods sent, up 75% and 84% year-on-year, respectively. However, Caixin quoted industry experts as saying that the current volume of CEB trains is beyond the norm.
Government subsidies are an important supporting factor for the rise of CEB trains. Local governments use financial funds to subsidize the freight transported via railroad liners to attract cargo sources and seize the market.
Reference table of subsidies for China-European Liner by cities in China in 2019 (Source: Logistics Baba)
In 2018, the Ministry of Finance formulated the policy of subsidies withdrawal for China-EU liner, but Caixin reported that the actual landing of subsidies withdrawal is not transparent.
From March 19, 2011, the first “Chongqing-Xinjiang-Europe” train was sent out from Chongqing, the operation of China-European liner has been more than 10 years. Governments around the world regard the China-Europe train as “One Belt, One Road” performance, and have competed for cargo sources and freight volume.
As reported by Sina Finance in June 2019, the cost of railroad transportation is usually more than double that of maritime transport, and in order to seize cargo sources from the maritime market, local governments can only suppress the freight price of China-EU trains to close to that of maritime transport by means of financial subsidies. Especially when Xi Jinping proposed the “One Belt, One Road” initiative, all places will take the China-Europe class as a political achievement, in order to compete with the number of trains, the enthusiasm of subsidies is very high.
According to Sina Finance, the Ministry of Finance has requested that the financial subsidies for China-European liners be sloped back year by year since 2018, with the full freight rate as the benchmark, the subsidy will not exceed 50% of the freight rate in 2018, 40% in 2019, and 30% in 2020; however, the implementation varies around the country.
Caixin reports that China’s high subsidies for international trains are unsustainable.
Analysis: Behind the Chinese Communist Party’s Subsidized International Liners at a Loss
Although last year’s epidemic forced the diversion of shipping and air transport, which led to a major explosion of China-Europe liner traffic. However, according to Caixin and the Chinese Ministry of Transport, the volume of China-EU trains in 2020 will still be less than 3% of Shanghai’s port throughput (43.5 million TEU) and 0.7% of the country’s port throughput (168 million TEU) in the same period.
Moreover, the reason why international railroad transport cannot become the main force of freight transport is because there are many “different tracks” obstacles in the railway track, transportation and foreign trade system of each country. The China-Europe Classical Train is no exception, for example, the train needs to change the driver every time it reaches the national border, in the middle of which more than a dozen cars and a dozen drivers have to be changed.
Why does the Chinese Communist Party insist on investing huge amounts of subsidies in the China-Europe Classes when their actual capacity is insignificant compared to the size of the Chinese economy?
According to Meng Wei, a spokesman for the Development and Reform Commission of the Communist Party of China, in November last year, the China-European train “has become a ‘lifeline’ for anti-epidemic cooperation between China and Europe and has provided important support for maintaining the stability of the international supply chain”.
However, according to current affairs commentator Li Linyi, the 10-year-old China-European train is not necessarily a “lifeline” for fighting the epidemic, but certainly a backup lifeline for the Communist Party of China (CPC), which is concerned with the strategic layout of the CPC’s global hegemony.
“Last year’s epidemic not only hit the global economy hard, but also gave countries, including the Chinese Communist Party, a wake-up call about the transportation lifeline.” Li Linyi analyzed, “Epidemics, military conflicts, and many other unexpected events could disrupt, or even truncate, traditional shipping and air transport routes. Especially when plans to export the CCP’s ideology, such as the Belt and Road and the South China Sea struggle, are facing international resistance, creating international rail transportation lines that are not influenced by the United States will be crucial for the CCP.”
In fact, the China-European rail line started out as a political achievement project when Bo Xilai was in charge of Chongqing. According to information from the CCP’s State Council (link), during 2010-2011, the city of Chongqing initiated and opened the Chongqing-Xinjiang-Europe International Railway, the first of the China-Europe trains. Bo Xilai, who belonged to the Jiang faction of the Communist Party, was then secretary of the Chongqing Municipal Committee and collapsed in 2012 in an infighting with Xi Jinping.
After Xi Jinping launched the “One Belt, One Road” strategy, international trains were upgraded to a key project of the “One Belt, One Road” and received financial and policy support from the central government. The European trains launched by local governments were unified and named as “China-Europe Classes” on June 8, 2016.
According to the “China-Europe Railway Corridor Plan” of the State Railway Bureau of the Communist Party of China (CPC), the CPC is going to build the Western Corridor, the Central Corridor and the Eastern Corridor: the China-Europe Class Train Corridor will not only connect Europe and the countries along the corridor, but also connect East Asia, Southeast Asia and other regions; it will not only be a railroad corridor, but also a multimodal transport corridor.
A Chinese WeChat public number had posted an article at the end of last year to explain that “the CEB train, which is readily subsidized to the tune of $1 billion +, is a phallic plot to subvert US maritime hegemony.”
According to the article, the return rate of empty containers on the China-EU trains is extremely high, and most of the freight costs are paid for locally, so what is the plot? — “plotting a giant experiment to subvert U.S. hegemony and reshape the global supply chain.”
China-Europe railroad corridor planning map (source: CPC State Railway Bureau)
The article argues that international trains such as China-Europe are an important attempt to integrate China’s supply chain into the “Eurasian supply chain”, with the goal of opening up the supply chain network between China and Europe, China and ASEAN, so that imported goods of medium and high value from Eurasia can better meet the diversified needs of China’s upstream and downstream industries, thus realizing the potential of the U.S. and China to “decouple” from each other. The goal is to link China with Europe and China with ASEAN in the supply chain network, so that Eurasian imports of medium and high-value goods can better meet the diversified needs of Chinese industries upstream and downstream, thus achieving an important strategic turn towards “decoupling” between the United States and the Chinese Communist Party.
Epoch Times: Documents Leak Communist Party Promoted International Railways Years Ago
In fact, internal documents obtained by this reporter show that the Chinese Communist Party has been promoting the operation of various international railroads for years.
Screenshot of “Status of International Train Projects” by the Changchun Xinglong Comprehensive Free Trade Zone Administrative Committee on April 18, 2016.
In its April 18, 2016 report on the status of the “Changman-Europe” and “Changghun-Europe” international shuttle train projects, the CPC’s Changchun Xinglong Comprehensive Free Trade Zone Management Committee said that in August 2015, as an important vehicle of the “Belt and Road” strategy, the “Changman-Europe” and “Changghun-Europe” international shuttle trains were launched. In August 2015, as an important carrier of the “Belt and Road” strategy, the “Changman-Europe” international freight train was opened for trial operation in both directions. The “Changman-Europe” international freight train starts from Changchun, leaves via Manzhouli, passes through the Siberian Passage and enters the European hinterland from Poland.
The Project also disclosed that “the National Committee of the Chinese People’s Political Consultative Conference, the National Development and Reform Commission, the Ministry of Commerce and the General Office of the State Council came to investigate the project and spoke highly of it, which is expected to occupy an important position in the next step of national planning and integration of international shuttle trains.”
Screenshot of the CPC Baoding Municipal Government’s official letter requesting a visit dated June 29, 2017.
The document “Request for Comrade Ma Youfeng to Lead a Baoding City Economic and Trade Delegation to Visit Belarus Lithuania Russia” dated June 29, 2017 by the Baoding Municipal Government of the Communist Party of China (CPC) of Hebei Province shows that in order to “follow up the national ‘One Belt, One Road’ construction strategy, “The city intends to send an economic and trade delegation headed by Comrade Ma Youfeng, director of the Municipal People’s Congress, to visit Belarus, Lithuania and Russia.
The document discloses that the main task of the visit is “to discuss the diversion of materials from the JI-Europe international train”. According to the document, the “JEE International Freight Train”, which starts from Baoding and ends in Minsk, is not only the first China-European train in North China, but also a new international logistics land transport route.
Invitation letter sent by China Merchants Zhongbai Business Logistics Company to the CPC Baoding Municipal People’s Congress on May 15, 2017.
An invitation letter sent on May 15, 2017 by China Merchants’ China-White Trade Logistics, a subsidiary of the Communist Party of China (CPC) central enterprise, to the CPC Baoding People’s Congress and other institutions, inviting Ma Youfeng, then director of the Baoding People’s Congress, to carry out an official visit to Belarus.
After Xi Jinping proposed the “One Belt, One Road” strategy for foreign expansion in 2013, the CPC established the Leading Group for Promoting the Construction of the Belt and Road in February 2015 and issued a White Paper on promoting the construction of the Belt and Road in March of the same year. Since then, international intermodal trains connecting mainland China and inland Europe have received strong support and development from the central to the local level.
At the same time, international railroads connecting China and Asia are also valued and promoted by the CPC, including the China-Vietnam (Vietnam), China-Laos (Laos) and China-Myanmar (Myanmar) trains, which have been vigorously promoted in recent years. Among them, the China-Vietnam train has been opened and the China-Laos railway will be completed soon, but the China-Myanmar railway is still blocked in Myanmar.
One of the reasons the China-Myanmar International Railway is known as a strategic corridor in the southwest is that the Communist Party covets Myanmar’s Indian Ocean seaports, such as Kyaukpyu.
Most of China’s major shipping currently goes through the Straits of Malacca and the South China Sea region of the Pacific Ocean, which are also the focus of international attention.
Li Linyi analyzed, “If the China-Myanmar railway is repaired, China’s foreign trade could bypass the Malacca Strait and enter the Indian Ocean directly.”
As early as 2010, the Communist Party of China proposed to open the China-Myanmar railway and reached several agreements with the Burmese government, but all fell through due to opposition from the Burmese political establishment.
Xi Jinping visited Myanmar in January this year, and in February the Burmese military staged a coup d’état that was condemned by Western countries. But the Chinese Communist Party insisted on making overtures to the Burmese military, a move seen as an attempt to open up the China-Myanmar corridor and open up a gateway to the Indian Ocean that is not easily blocked by the United States.
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