Is the China-Europe Express becoming a political weapon in the hands of China?
ANALYSIS – China could use the China-Europe train as a political pressure tool against Lithuania by suspending rail freight between the two countries. This was recently claimed by industry experts. How could the China-EU train become a political counter-weapon, and is it feasible to use it in this way?
China was about to suspend rail freight traffic to Lithuania starting in August. The decision derived from the political tension created after Lithuania and Taiwan announced their intention to strengthen their bonds by opening representing offices in each country. China was not pleased with the development and withdrew its ambassador from Lithuania while calling the Baltic state to do the same.
Later on, China Railways contradicted the news saying that there is no plan to suspend the China-Lithuania trains. However, before that development, Lithuanian Railways said that rail freight volumes between China and Lithuania were insignificant. Even if they were reduced, the impact would be small.
The New Silk Road as a diplomatic lever
China launched the Belt and Road initiative with the purpose to enhance Eurasian transport links. It includes Chinese cities, transit countries through Asia and European destinations. Understandably, such a vast investment from the Chinese side, including involvement in other countries’ economies, could constitute a political and economic hazard. Maja Bakran Marcich, the Deputy Director-General for Mobility and Transport at the European Commission, had warned some months ago that good synergies between Europe and China should be characterised by mutual respect and control over the power relations.
It seems that when Marcich was saying that, she had a similar situation in mind. The New Silk Road is a crucial and fast-developing part of the global supply chain, putting rail freight at the forefront of transportation. However, it looks like it has the possibility of becoming a dangerous card on the table of diplomatic and political games. Should China have the liberty of just cancelling Eurasian train services in the name of political disputes? And shouldn’t the New Silk Road focus only on transportation purposes?
This could be some food for thought for European policymakers. Maybe it’s time to address this issue more seriously and examine how Eurasian rail transport should stay out of such processes. After all, it does not make sense to promote rail freight as the future of transcontinental transportation and simultaneously cancelling trains so easy. In fact, this is the best way to lose the trust of the supply chain.
Impact assessment for Lithuania
For now, let’s take a look at the scenario of China suspending rail freight traffic to and from Lithuania. As mentioned before, Lithuanian Railways claimed that such a development is insignificant. Looking at the trade figures for 2020, the total value of China’s good exports to Lithuania was US dollars 180,782,000 (about 153,813,845 euros and the total value of China’s good imports from Lithuania was US dollars 487,539,000 (about 414,810,370 euros).
According to LTG Cargo, rail freight traffic between China and Lithuania in the first nine months of 2020 amounted to 1,980 TEUs, mainly westbound. In the same period, China-Europe trains carried 795,000 TEUs. Understandably, the China-Lithuania volumes are a drop in the bucket of the New Silk Road. A trade disruption with China cannot break its foundation, but the losses are not insignificant either.
China could have a bigger problem
The importance of Lithuania on the China-Europe express map comes mainly from its massive potential as a transit country. First of all, it is necessary to mention the Kaliningrad route, which has become very popular in the market in recent years, and on which Lithuania is a mandatory stop. The Kaliningrad route has the advantage of avoiding the congestion in Małaszewicze and the high timeliness guaranteed by the fact that there is no need to change the rail gauge. If the line to Lithuania were disrupted, the goods would have to be changed at the busy Polish/Belarusian border crossing to the EU standard gauge before reaching the Russian enclave.
In addition, Lithuania’s location on the Baltic Sea coast makes it an ideal transit point for connecting China with Western and Northern Europe. Goods transported by rail to Lithuania can be quickly distributed to countries such as Germany, the Netherlands, Denmark and Sweden via the extensive sea connections at its main port of Klaipeda. Kaspars Briškens, director of strategic development at the Baltic Railway Union, gave an example at the opening of the Xi’an-Vilnius line: “Many shipments from China to Stockholm, Sweden, now take the traditional route via Duisburg, which takes about two weeks, and from Duisburg to Sweden via Denmark, which is time-consuming and expensive. The sea-rail transit through the Baltic Sea region is much more reasonable and efficient.”
This article was written jointly with Huilin Shi, editor of our sister publication RailFreight.cn