New Chinese Train to Europe Opens up 21st Century Silk Road

28.12.2016 • Emerging Markets

Selva Freigedo – Port Phillip Insider Extra (AUS)

Christmas is all around.

There is festive music playing alongside piles of fake Christmas trees, ornaments and flashing lights. The horizon is a blur of wreaths, artificial snow and red felt.

I’m not describing Lapland — or my own personal Christmas nightmare.

This is Yiwu Christmas market, in China. Yiwu is the world’s supplier of Christmas decorations. It is where factories make 60% of the world’s Christmas decorations, and then ship them all over the world. The city, located around 300kms from Shanghai, is home to 600 factories.

The United Nations has declared Yiwu the largest wholesaler market in the world. Its market has around 62,000 booths of varied products in an area of four million square metres. Just to give you an idea, Chadstone, the largest shopping mall in Australia, is around 221,000 square metres.

Christmas decorations are not the only products Yiwu’s market sells. Each booth represents the items produced by individual factories. Retailers flock here from China and the rest of the world to choose samples, and to stock their shelves.

Yet Yiwu has another claim to fame. It is the beginning of the longest rail route in the world: the Yiwu-Madrid railway line. The line has been operational since the end of 2014, and can cover the 10,000km journey in just 19 days. Compare that to the six weeks it usually takes by sea.

The train leaves Yiwu filled with Chinese products and passes through Kazakhstan, Russia, Belarus, Poland, Germany and France. Since its start, the train has transported 6,000 containers.

The Chinese were hoping that it would make the return journey full of Spanish wine, hams and olive oil. Yet, even though the project has potential, Spanish entrepreneurs have not taken to it. Only 400 out of the 6,000 containers transported were Spanish.

The problem is costs; on top of this, many Spanish retailers don’t know about the railway line…yet. But giants like Zara and other major retailers are starting to consider using the line. After all, China is Spain’s biggest trading partner after the EU.

The Yiwu-Madrid railway line is part of China’s plan to revive the old Silk Road, an ancient network of trade routes that used to connect China to the Mediterranean. The ambitious new project is called ‘One Belt, One Road’ (OBOR).

OBOR is a chance for China to expand its economic and political influence across Eurasia. And if China can pull it off, it could be the biggest geopolitical game changer since the Cold War era.

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