On Track or at Sea? Beijing Reopens Old Land Routes

On Track or at Sea? Beijing Reopens Old Land Routes

Insecurity About Shipping Routes Drives Xi’s Rail Expansion

By Andrew Browne in the Wall Street Journal

YIWU, China—The wholesale markets for cheap knickknacks in this trading hub a few hours from Shanghai have prospered by sending their goods across the oceans.

Arab and African traders mix with buyers from Europe to pick out gaudy plastic flowers, hairpins and bracelets, Day-Glo sticks and flashlights that are trucked to nearby ports for loading onto container ships.

In November, however, some of the city’s wares went the other way: A freight train rumbled out of Yiwu bound for Madrid. It inaugurated the world’s longest rail link, an 8,000-mile journey along the ancient Silk Road through Central Asia. It is part of one of the most ambitious transport and infrastructure projects in history as China under President Xi Jinping chases new continental dreams.

Mr. Xi is driven by insecurity. China may be projecting an image of swaggering self-confidence by grabbing reefs and constructing artificial islands in the South China Sea, but the reality is very different. Beijing is looking westward precisely because the view out toward the Pacific is filled with peril.

China feels strangled by a chain of American military alliances that extends from South Korea and Japan through the Philippines and all the way to Australia. And even though China is rapidly building up its military strength, the U.S. Navy still rules the waves. In any conflict, American warships and submarines could choke China’s economy with a naval blockade.

Beijing also sees risk in a new regional trading order taking shape. U.S. President Barack Obama is putting fresh energy into finalizing the Trans-Pacific Partnership, a giant free-trade agreement that would link 12 countries and cover 40% of global GDP, but exclude China. The arrangement is the economic centerpiece of Mr. Obama’s “pivot” to Asia, which Beijing interprets as a Cold War-style plot to block a rising global challenger.

So Mr. Xi is swiveling toward the Eurasian land mass. His goal, as he puts it, is to “break the connectivity bottleneck.”

The improbable plan to reopen a back door to Europe through Central Asia—what China calls a “Silk Road Economic Belt”—is turning into an epic struggle against vast distances and brutal geography. The Yiwu-Madrid line snakes through Kazakhstan, Russia, Belarus, Poland, Germany and France on its way to Spain. It sets out in a subtropical climate before traversing high desert and steppe, where temperatures can plunge to minus 40 degrees in winter.

Logistics are immensely complex. Because of different rail gauges along the way, the containers have to be transferred by crane three times onto new bogies at border crossings—once entering Kazakhstan, again coming into Poland and a third time arriving in Spain.

Already, there’s a freight train service between the southwestern Chinese city of Chongqing and Duisburg in Germany. From central China, Zhengzhou is paired with Hamburg. But locomotives will never replace ships: At most, they can pull a few hundred containers while the biggest container vessels can carry up to 18,000. Shipping is still far cheaper, although train is faster. The trade-off between cost and speed makes train freight worthwhile mainly for higher-value goods that China exports to Europe, like laptops, and for products it imports, such as car parts.

Plans for several additional ultralong rail routes are on the drawing boards. Some seem feasible, like a high-speed train between Beijing and Moscow. Others are purely fanciful, including a line that burrows under the Arctic and ends up in New York via Canada.

All this is just part of Mr. Xi’s grand vision: Train tracks are meant to bind China’s economy to its neighbors with ribbons of steel.

That’s why Mr. Xi has poured an initial $40 billion into a Silk Road Fund to upgrade existing rail lines, build new spurs and install energy pipelines and industrial infrastructure through countries along the way.

The massive undertaking, now a national priority, plays to some of China’s strengths. Unlike the Western Pacific, where America is likely to remain the dominant power for many years, Central Asia is up for grabs.

A power vacuum has existed in the neighborhood since the breakup of the Soviet Union in 1991 created autonomous states. The ruling elites of Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan still lean toward the Kremlin politically. Yet their economic future is with China. By and large, these countries are receptive to the Chinese way of doing business in the developing world: State-led, big on investments in energy, mining and heavy industry and with a weighty environmental impact.

In sharp contrast, the Trans-Pacific Partnership focuses on trade in services, and imposes high standards for labor and environmental practices.

Turning the clock back to the age of camels and horses is another bold gambit for a president determined to reorder China’s interactions with the world.

The long caravans of the Silk Road were killed off 400 years ago by competition from European sailing ships, as well as military and political turmoil in an unstable region. Mr. Xi faces a similar set of challenges, and there’s no guarantee of success. The journey from Yiwu to Madrid is an arduous one.