In recent months, rail transport between Kazakhstan and China has been actively developing. Chinese railways in Kazakhstan are not only laying the foundation for long-term ties between the two countries, but these tracks have also facilitated the opening of channels to Europe that bypass Russia. The Russian conflict in Ukraine forced many countries, particularly Russia’s neighbors such as China and Kazakhstan, to develop their own contingency plans, including the development of alternative transport routes.
A flurry of railway plots and plans
A recent series of bilateral visits to China by a delegation from Kazakh Temir Zholy (KTZ), Kazakhstan’s state-owned railway operator, stressed the importance of upgrading and upgrading bilateral freight rail transportation facilities. In March, KTZ visited its counterpart in the Chinese city of Xi’an. Both parties agreed to build a terminal on the territory of the dry port in Xi’an. This port already receives 40 percent of Kazakh imports, according to the KTZ press service.
Soon after, KTZ went to Urumqi, the capital of China’s Xinjiang region, and carried out various other deals with China Railway Urumqi Group Co., Ltd., the state-owned railway operator of the railway network within Xinjiang. The key points agreed were the improvement of tracks on the Bakhty-Ayagoz and Dostyk-Moiynty railways with the possible construction of an additional Kazakh terminus in Urumqi. The KTZ press release also reported the construction of a second railway line on the Jinhe-Alashankou railway.
At the same time, China has been testing alternative routes to Europe via Kazakhstan. The Trans-Caspian Corridor, more commonly known as the Middle Corridor, has been seen as a desired alternative. The Middle Corridor is a multimodal transport project that seeks to connect Turkey with China through Georgia, Azerbaijan and the Caspian Sea through Kazakhstan or Turkmenistan, Uzbekistan and Kyrgyzstan. Starting in the 1990s, the project was long delayed due to logistical and security issues. Despite this, the participating states remain interested in carrying it out, now more than ever.
The main achievements of the Middle Corridor so far include the Trans-Kazakhstan railway and the Baku-Tbilisi-Kars (BTK) railway, which came into operation in 2017. In March this year, KTZ sent the first China-Europe Trans-Caspian train from Jiaozhou in eastern China to the port of Koper in Slovenia. The train was loaded with new electric vehicles and covered the 13,000 km route in 45 days. This was the first time this route had been tried. on a trip from rail-sea-rail, the train left Jiaozhou and crossed north China entering Kazakhstan through the Khorgos border crossing and then arriving at Altynkol. The cargo was unloaded and transshipped from the Aktau port in Kazakhstan to the Alat seaport in Azerbaijan. The seaport of Alat was Opened for traffic in 2018 with an annual capacity of 15 million tons. Once in Azerbaijan, the cargo was transported across the Georgian border by rail along the Beyuk‐Kesik line to the port of Poti on the Black Sea. From there, the cargo was transported by rail to the Slovenian port of Koper via Turkey.
This first trip can be considered a test to find new routes that avoid crossing the Black Sea. Despite being a shorter route, traveling across the Black Sea allows for much less capacity. Physical bottlenecks are also prevalent on this path. To begin with, the development of the physical infrastructure of the ailing Turkish rail system is needed if this corridor hopes to increase its freight volume and become a viable alternative.
Why is the Trans-Caspian route important for China?
For China, economic development is a key priority and the EU is a major export market. Providing more links between the two is planned in Beijing’s Belt and Road Initiative (BRI). The BRI was first proposed by President Xi Jinping in 2013 and is a huge infrastructure project that aims to connect China with the rest of the world. On land, China aims to connect the country with Europe via an extensive network of rail tracks running through Central Asia. For Xi, Central Asia plays an important role in China’s reach into European markets. The China-Central Asia Summit to be held in May of this year it is also indicative of growing ties, where railways will no doubt be high on the agenda.
As part of the BRI, three transportation Corridors have been launched between China and Europe. These corridors are called the east corridor, the central corridor and the west corridor. The Eastern and Central corridors run through Russia and join the Trans-Siberian railway network. The western corridor has multiple lines and runs through Kazakhstan and extends to Europe through Central Asia, with weapons to Iran and Turkey. This western corridor bypasses Russia and is therefore more attractive at the moment for Europe. However, some sections of this corridor are still not well developed and require major infrastructure improvements.
Moving rail cargo from China through Central Asia, then to Russia and out of the EU had been a key route under the BRI, but Russia’s invasion of Ukraine and waves of US and EU sanctions have forced China to look for alternatives. During the pandemic, the northern rail network through Russia was the main route for freight forwarders and cargo companies as an alternative to shipping by sea. The reason for this was that ports closed or limited their operations globally in an attempt to limit the spread of the COVID-19 virus. Since the conflict between Russia and Ukraine, carriers have been unable or unwilling to transport through Russia and the Black Sea.
Why is it important for Kazakhstan?
For Kazakhstan, there are obvious advantages. The most notable is the modernization of its railways and the connection with European markets. A major bottleneck to Kazakhstan’s economic development is the state of its transportation systems. By virtue of its geography and Soviet heritage, Kazakhstan has traditionally relied on the northern rail route through Russia to export its products to world markets. Connecting with the Chinese railway network and also integrating with the railway line in the Middle Corridor can help Kazakhstan enjoy faster growing export volumes, sell its products to European markets and avoid dependence on a single route.
This rail push to Europe has also included efforts to harmonize logistics bottlenecks. In March, a memorandum was signed between Kazpost (Kazakhstan’s national postal service involved in tracking deliveries), WEA-Transport GmbH (of Germany, an authorized EU rail operator) and China’s Huapengfei Company (an authorized Chinese national logistics operator). This agreement is designed to facilitate cross-border trade in the Eurasian space and organize an international logistics corridor for electronic commerce. This is the first trilateral cooperation memorandum between the national logistics operators of Kazakhstan, China and the EU.
Before this meeting, in February 2023, the heads of the Chinese and Kazakh railways signed a supplementary agreement on the exchange of freight transport data. They also discussed railway port cooperation, strengthening infrastructure connectivity and promoting the development of high-quality China-Europe cross-border rail and transportation, and promoting international intermodal cargo paperless transportation.
From a geopolitical perspective, the implementation of rail corridors can boost Kazakhstan’s multi-vector strategy. Kazakhstan can use its relationship with China to balance Russia and the West, without becoming a client state for either. From this, Kazakhstan can emerge as a key East-West transit hub. But caution is warranted regarding the prevalence of Chinese infrastructure. In many cases, China’s railways have dual-use potential, and their development could be about more than just railways. Such investments provide ways for China to establish new institutions and connections that reflect and support Chinese interests.
Equally important is who will benefit most from this deal. In case of high congestion, Chinese goods bound for Europe would have priority over local deliveries. This can result in a serious backlog of stranded goods and can reduce local competition and loss of business for Kazakh traders. There is a compendium of past examples where delays in transporting goods at the Dostyk and Altynkol and Nur Zholy-Khorgos checkpoints between China and Kazakhstan have increased the costs of doing business. This has also been compounded by corruption at Chinese and Kazakhstan customs, despite Kazakhstan’s efforts to implement a new IT system
Conclusion
For the China-Kazakhstan railway network to be effective and work smoothly with other regional railway routes, technical modernization, better interaction between countries, better electronic data exchanges and customs harmonization must first be achieved. For example, cargo crosses various customs zones on the way to Europe, such as the China customs zone, the Eurasian Customs Union, and the European Union Customs Union (EUCU). The Middle Corridor test is promising, but is still far from becoming a viable trade route to match the capacity and volumes being carried along the transit corridor through Russia. While a complete change of corridors is not realistic at this time, both parties, including Europe, must recognize that the logistical challenges and the skills required to operate this line will take time to develop. However, the evidence and the renewed optimism are a start in the right direction.