As part of President Vladimir Putin's visit to China, the Chinese and Russian sides agreed to develop a project for a new expressway - the Europe-West China International Transport Corridor (ITC EZK). The route, with a length of more than 8.4 thousand km, will connect Europe with China by 2023, allowing cargo carriers to significantly save travel time. Russian regions, in turn, will receive a new powerful transport artery that will stimulate economic growth and development Russian territories. Details are in the joint project of Kommersant and the state company Avtodor.

Why new road important for Russia

The Europe-Western China transport corridor is one of the largest international infrastructure projects of our time, which should be implemented by 2023 in the territories of Russia, Kazakhstan and China. In terms of scale and influence on the development of the continent, it can be compared with the construction of the Suez Canal, the Trans-Siberian Railway and the Channel Tunnel.

The very idea of a single high-speed highway that would connect European countries with China was born in the mid-2000s. This was due to the rapid increase in trade volumes between the EU and China, the turnover of which reached €467 billion in 2014. According to the European Conference of Ministers of Transport, trade between European and Asian countries has grown sixfold over 20 years.

Today, the lion's share of cargo transportation between China and Europe is carried out by sea through the Suez Canal. The length of this route is approximately 24 thousand km, cargo delivery takes from 40 to 50 days. The new highway will provide a high level of safety and will reduce travel time to at least ten days. Already today, the bulk of cargo flows between China and the EU countries are goods with high added value, which objectively gravitate towards transportation by road.

The presidents of Russia and Kazakhstan signed a memorandum of cooperation involving the development of this corridor back in 2008. Later, China outlined global plans to revive the economic belt of the Great Silk Road, which should include not only transport networks, but also energy and industrial infrastructure. In May 2015, Russian President Vladimir Putin and Chinese President Xi Jinping signed a statement on cooperation between the two countries within the framework of the economic belt project. The Chinese authorities are already ready to invest more than $40 billion in its development; for this purpose, a special Silk Road Development Fund (Silk Road Fund Co Ltd) has been created, whose investors are the Export-Import Bank of China, the China Development Bank and the Sovereign Wealth Fund of China. It is assumed that Chinese investors interested in promoting this project will finance the construction of the ITC on Russian sections. During his visit to Beijing in September, Chairman of the Board of the State Company Avtodor Sergei Kelbakh held working meetings with major financial and construction companies- China Communication Construction Corporation, CECC, Shandong Roads, Silk Road Development Fund, China Development Bank, where the future of the project was discussed.

On September 3, 2015, a memorandum was signed between the state-owned company Avtodor and the China Development Bank.

Route of the new highway

Some sections of the EZK MTC have already been created, others are under implementation. Its Russian part (more than 2.3 thousand km long) consists of several sections, each of which is a separate important infrastructure project.

The first section - from St. Petersburg to Moscow - can be covered along the M-11 toll road. The cost of construction of the entire route is estimated at 373 billion rubles. Two of its seven sections have already been built and are operating: the head section at the exit from Moscow through Sheremetyevo Airport to Solnechnogorsk (concessionaire North-West Concession Company) and the Vyshny Volochok bypass (built by the Mostotrest company). All drivers have already felt the effect: the old Leningradka M-10 was unloaded, the city of Vyshny Volochyok stopped choking on trucks, and it became more convenient for cargo carriers to deliver goods. The remaining sections of M-11 have already been awarded in competitions, and their construction is now underway.

Construction of the M11 Moscow-Petersburg highway

Further, before reaching Moscow 30 km, from M-11 it will be necessary to turn onto the Central Ring Road (TsKAD) - a route that will become a powerful incentive for the development of the capital region. Construction of two sections (1st and 5th) of the Central Ring Road is already underway, the rest will be awarded in concession competitions in October. Thus, the northern part of the EZK MTC will be put into operation in the next three years.

Those who continue their journey towards the Chinese border will travel along the Central Ring Road for approximately 100 km and turn towards Kazan onto a new highway, which should pass between the existing federal roads M-7 Volga and M-5 Ural through Gus- Khrustalny, Murom, Ardatov, south of Nizhny Novgorod (working name - Eurasia highway). The construction of this new highway will cost about 400 billion rubles, which is significantly lower than the option for reconstructing the existing M-7 and M-5. In addition, most experts are unanimous in the opinion that the task of developing a transport corridor between Europe and China can be effectively implemented only by building a new modern highway that ensures high-speed traffic and meets all modern requirements and standards. At one time, it was precisely this approach that formed the basis for the decision to build a new Moscow-St. Petersburg expressway.

The creation of a route in a new direction will ensure an increase in the density of the federal road network and will give a tremendous impetus to the development of at least eight Russian regions through whose territory this section of the corridor will pass: Moscow, Vladimir, Nizhny Novgorod, Chuvash Republic, Republic of Mordovia, Ulyanovsk, Samara Region, Republic of Tatarstan. It's about on the formation of essentially a new belt of investment activity, within which a large number of industrial, logistics, and recreational facilities will appear and new jobs will be created.

Already, the project is showing great interest from investors, primarily Chinese companies, which confirm their readiness to invest up to a third of the total investment in it (about 150 billion rubles). This was discussed during negotiations held in Beijing with the largest financial and construction companies in China by the Chairman of the Board of Avtodor, Sergei Kelbakh.

1. M11 (669 km) launch in 2018
2. Section of the Central Ring Road (105 km), launch in 2018
3. Doublers M7 and M5 “Eurasia” (800 km), launch in 2024
4. Sections in Tatarstan, Bashkiria (1000 km), launch in 2016-2018
5. Section from the Russian border to Aktobe, (102 km)
6. Section of the Aktobe-Irgiz highway (273 km)
7. Section of the Almaty-Bishkek highway (205 km)

Next, the highway will go through the territory of Tatarstan: the 297-kilometer Shali-Bavly highway is currently under construction there (a section of about 40 km is already operational). This route also includes a new 14-kilometer bridge over the Kama River, which is vital for the development of the region. In addition, the section will connect the existing federal highways M-7 and M-5, thus increasing their connectivity.

In the Republic of Bashkortostan, the 282-kilometer section of the ITC will begin from the village of Bavly and will go to the city of Kumertau: projects are already being developed here (in particular, a bridge over the Ik River). The cost of the project is estimated at 156 billion rubles. In the Orenburg region, a 172-kilometer section of the route will bypass Orenburg, Saraktash and to the border with Kazakhstan. It is currently being designed; the required investment is estimated at 84 billion rubles.

Thus, the entire Russian section of the ITC from St. Petersburg to the borders with Kazakhstan should be ready by 2023, some of its sections will be launched by 2018. In addition, by 2020, the M-1 Belarus highway will be reconstructed, which should provide direct access for goods transported along the corridor to the Republic of Belarus and Western European countries. Almost a third of the population lives in the gravity zone of the emerging corridor and produces more than 40% of the Russian Federation’s GDP.

What is happening in other countries

On the territory of Kazakhstan, sections of the EZK MTC are already being formed. Here the advantage of the Customs Union becomes obvious: trucks crossing the border do not need to stand in queues. On the territory of Kazakhstan, the route will pass through the entire country from north to south to the large industrial center of Shymket and further east along the southern border to the People's Republic of China. The total length of the road will be 2.7 thousand km. The corridor will pass through the territory of five regions - Aktobe, Kyzylorda, South Kazakhstan, Zhambyl and Alma-Ata. As a result, transit transport from Kazakhstan will be able to go not only to Russia and China, but also to the countries of South Asia through Uzbekistan and Kyrgyzstan.

In the sections between the city of Aktobe and the village of Igriz (273 km), as well as between Almaty and Bishkek (205 km), the route has already been built. Under the guarantees of the government of Kazakhstan, more than $5 billion is involved in the project, allocated by the International and European Banks for Reconstruction and Development, the Asian Development Bank and other investors. For example, 25 billion tenge (more than $100 million) was allocated for a 102-kilometer section from the Russian border through the city of Martuk to the city of Aktobe (work began in July 2015). The 215-kilometer section from the city of Karabutak to the borders with the Kyzylorda region will be built for 21.5 billion tenge ($89 million).

In China, the road has already been practically built: from the border with Kazakhstan it passes through the cities of Urumqi, Lanzhou, Zhengzhou and arrives at the port of Lianyungang on the eastern coast of China: the total length of the route is 3.4 thousand km.

A freight train carrying dozens of carriages arrives at Alashankou Station in China's Xinjiang Uyghur region. Here the locomotive and cars will be removed from the rails and moved to a wider platform. A few hours later, the train with different wheels, but the same cargo, ends up in the village of Dostyk in the Alma-Ata region of Kazakhstan.

From here the train will have to travel west for more than a week: through all of Kazakhstan, Russia and Belarus, to eventually reach the European Union. This is what the New Silk Road looks like - a unique trade route that connected the western regions of China with Russia and Europe. The thousand-year trading history has received its technological continuation.

By sea - cheaper, by land - faster

Since the time of Marco Polo, the bulk of goods from China to Europe have been transported by ship. The route through the Yellow Sea, the Indian Ocean, the Suez Canal and the Mediterranean Sea has proven its reliability and accessibility: Chinese entrepreneurs are accustomed to loading everything into containers that arrive in Europe a month and a half later.

The 21st century has given the system a real test of strength. Fast Internet, development of aviation and other signs modern world turned the 50-day delivery time from “pretty good” to “too slow.” People in Asia and Europe began to search alternative ways sending goods.

The obvious solution was the Great Silk Road - the historical route along which China and Europe exchanged knowledge and goods even before our era. Now the western regions of China, Kazakhstan and Russia are located on the site of the traditional nomadic road. All these countries are desperate to establish cooperation, which is hampered by poor regional connectivity and a lack of transport infrastructure.

In such conditions, the creation of one of the most large-scale projects of the 21st century began - the New Silk Road. These are roads and railways that connect transport systems several states into a common network. It turned out that delivery by land from Chinese Lianyungang to German Duisburg or Dutch Rotterdam takes only two weeks - three times shorter than the sea route.

The idea turned out to be so attractive that at the “One Belt, One Road” international summit, more than 30 heads of state, including Vladimir Putin and Nursultan Nazarbayev, came to visit Chinese leader Xi Jinping. At this forum, politicians agreed to build a global transport corridor that would connect China with Western countries. By 2030, China will invest $3 trillion in this project. It is expected that in a few years almost 100 Eurasian states will join the construction of the New Silk Road.

All roads lead to Kazakhstan

In Soviet times, the key transport artery for the Asian part of the country was the Trans-Siberian Railway - perhaps the most famous and longest railway on the planet. Cargo continues to flow along this road, but the isolation of the Trans-Siberian Railway within Russia scares off Chinese partners. The main reason is the long length of the route. The Trans-Siberian Railway neatly skirts all border areas, which makes the journey along this route too long.

Calculations have shown that laying a route through Kazakhstan speeds up the delivery of goods by at least a third. In addition, China is actively developing its western provinces, which need new markets. The Trans-Siberian Railway is connected only to the eastern regions of China, which means that connecting the western regions to existing rails will still require a new road. And it also goes through Kazakhstan.

The strategic location of Kazakhstan between Europe and Asia predetermined the key role of this country in the New Silk Road project. Whatever route was discussed, Kazakhstan always remained in the spotlight - and as a result, it received two alternative roads through its territory. The distance of the international rally-raid “Silk Road” covers several options: participants in this race annually test different methods of transport communication between Russia and China.

The southern route takes trains to the Caspian Sea, from where cargo is delivered to Baku via Aktau (formerly Aktyubinsk). There, Chinese goods are again loaded onto the wagons, and the train continues its march west through Azerbaijan, Georgia and Turkey. This branch of the New Silk Road is good for the countries of Southern Europe. However, dependence on a sea crossing across the Caspian Sea makes the route vulnerable: too many transfers negatively affect the commercial attractiveness of the project.

Russia closes the northern version of the New Silk Road: here cargo goes through Yekaterinburg, Moscow and further to the west. The system has been developed and is functioning successfully - cargo transportation turnover amounts to tens of thousands of tons. The main obstacle is the different train gauges in China and the CIS. The parties did not agree on the creation of identical rails for freight trains, and therefore, every time the border between China and Kazakhstan is crossed, the locomotive has to be moved from a narrow platform to a wide one.

However, there is another option for the overland route - along a regular asphalt road. The Russian part of such a route occupies 3.8 thousand km: especially for the New Silk Road in Tatarstan, Bashkortostan and other regions through which the route passes, new road surface, resistant to regular heavy cargo flights.

Super-fast camels

The existing versions of the New Silk Road are far from the final point in the revival of the historical route. Right now, working groups in China, Kazakhstan and Russia are creating a project for high-speed communication between the three countries. Superfast trains already operate in all three countries, but for now they only operate on domestic passenger routes. For example, in China you can take an ultra-high-speed train from Beijing to Tianjin, and in Russia from Moscow to Nizhny Novgorod.

Such trains do not yet travel across the border - this requires large investments in the construction of new infrastructure. Perhaps this is the main difficulty that still helps sea transportation to maintain its dominance over land delivery methods. Ships from China are still going around Arabian Peninsula and moor to European ports. To defeat such a competitor, the New Silk Road will take time. The time it already saves at every stage of cargo transportation.

The idea of creating a new Silk Road sounded promising: investing trillions of dollars in infrastructure projects in the barren desert that most of Central Asia, and trade will begin to flourish, the economy will grow, and peace will reign. However, most experts believe that problems in the real world will ensure that this idea remains a pipe dream.

This concept is called “One Belt, One Road” and was put forward by Chinese leader Xi Jinping in March 2015. It has two elements: one is the land route from China to Europe through Asia - the Silk Road Economic Belt, and the other is the sea route going from China to Europe through India and Africa, called the Maritime Silk Road.

While estimates vary, China has called for up to $5 trillion in infrastructure investment over the next five years in 65 countries along these routes. Ports in Sri Lanka, railways in Thailand and roads and power plants in Pakistan are just a few examples of planned investments.

Speaking at a forum in Beijing in May this year, Xi said: “Under the Belt and Road Initiative, we must focus on the fundamental issue of development, develop growth potential various countries and achieve economic integration, interconnected development and benefits for all.”

He talks about the desired results, but the details are extremely vague. The project is intended to improve intergovernmental communication, coordinate plans, develop soft infrastructure and strengthen tourism and trade, but details are being glossed over.

“There are no concrete actions in the Chinese government's plan, which has become one of Xi's most visible policy initiatives. The document contains a number of general proposals interspersed with platitudes about cooperation and mutual understanding,” the research firm Geopolitical Futures said in a July report.

But despite the lack of specific programs, the huge sums show that the Silk Road has received the support of many countries. The Asian Infrastructure and Investment Bank has pledged $269 billion for the project. Even Japanese Prime Minister Shinzo Abe expressed support at the recent G20 meeting in Hamburg, Germany.

Goals don't match reality

China's goals, explicit and implicit, must be weighed against reality. Based on this, most experts consider the project to be economically infeasible. But it will allow China to gain political influence.

Context

The Great Silk Road and the Great Game

EurasiaNet 07.27.2017

India is creating its own Silk Road

Forbes 07/01/2017

US attempts to interfere with the Silk Road project

Star gazete 06.06.2017

Will the Silk Road be smooth?

Latvijas Avize 05/22/2017
Economically, it mainly concerns investment and exports. “China has excess capital and excess manufacturing capacity, which is motivating this set of initiatives. Given China's high savings rate and slowing industrial investment, they are looking for overseas projects to finance and a new outlet for Chinese exports,” says James Nolt, professor international relations at New York University.

The result is this project, which will see China team up with countries along the routes to raise money to build the infrastructure needed to facilitate trade. And everything will be built by Chinese companies.

Holding company China Overseas Ports has expanded the Gwadar port in Pakistan and leased it until 2059. This is just the first small step to connect the Silk Road Economic Belt with the Maritime Silk Road. Roads, pipelines, power plants, optical fiber connections and railways are planned for the China-Pakistan Economic Corridor with a total investment of $62 billion.

Of course, local and international companies are going to bid on these projects, but if China provides most of the funds, then Chinese state-owned enterprises will get most of the contracts.

Unable to finance

Then the question arises of financing these investments. The countries where the investment will take place, such as Pakistan and Cambodia, are not rich enough to spend trillions. This forces China to come up with a way to obtain hard currency financing to achieve its economic goals.

When the project was launched, China had almost $4 trillion in foreign exchange reserves, and it wanted to invest them. Reserves fell to $3 trillion in 2017, a threshold that central planners in Beijing have signaled they will not cross.

“They have to tap international bond markets or deplete their foreign exchange reserves and then borrow. Even by global bond market standards, a $5 trillion bond program over several years is a huge undertaking. They're not going to take on that kind of repayment risk and they're not going to deplete their reserves,” Balding said.

A study by investment bank Natixis found that such borrowing would increase China's external debt from 12% to 50% of GDP. This would expose the country to exchange rate risks and put it in the same vulnerable position as the Four Asian Tigers ( South Korea, Singapore, Hong Kong and Taiwan) during the 1998 financial crisis.

Loans from China in RMB are not good option for two reasons. This “creates risks for Chinese banks' overextended balance sheets. In fact, their bad loans have only increased over the past few years, making it difficult to continue lending,” especially for risky projects, Natixis chief Asia-Pacific economist Alicia Garcia-Herrero wrote in a blog post.

In addition, recipient countries could only repay the loan in yuan by selling goods and services to China, thereby purchasing Chinese currency. This was counterproductive to facilitating Chinese exports and ultimately to trade infrastructure.

“How will Pakistan repay the yuan loan? They are going to create a trade surplus in yuan. Thus, China has to face trade deficits in all the countries to which it lends. Pakistan will have to generate some trade surplus with another country to have enough capital to pay China,” Balding said.

Given that much of the infrastructure will be built to facilitate trade with China, this is unlikely. So, in the end, China will finance the supplier for these projects. The only way for China to achieve its economic goals is through hard currency loans that are fully repaid and will generate a profit, but China does not currently have the means to do this.

Bad risks

All economic indicators of the most famous Silk Road projects point to this repayment scenario.

There are reasons why countries like Cambodia, Laos, Thailand, Pakistan and Mongolia do not have good infrastructure. They have generally poor macroeconomic frameworks, underdeveloped institutions, and high levels of corruption. Building roads and railways will not change this.

Moreover, “Central Asia, a patchwork of states whose borders were drawn to make them easier to rule from Moscow during the Soviet era, is unlikely to be a promising market for Chinese goods", says the Geopolitical Futures report.

“People say China is giving away money. In almost every case, a Chinese lending company provides a loan to an oppressive dictator, such as in Sri Lanka or Venezuela. None of this ended well,” Balding said.

Economically stable countries such as Malaysia and Vietnam require less investment than troubled states such as the Kyrgyz Republic and Ukraine, which is torn apart civil war. These countries have economic stability ratings of 44 and 38.2 respectively, compared with Malaysia's 66.8, according to Oxford Economics.

“Where countries' financial development is relatively weak and governments are highly indebted, financing will be critical,” the Oxford Economics report said. These are the countries that have the lowest chance of repayment.

“While a new airport or railway can be built in just a few years, building the human and institutional capital necessary to operate it effectively and promote economic and social progress, it is a slower process,” says a report from research firm TS Lombard.

Small coverage

Given the limitations in viable economic projects and financing, the scale of the Belt and Road project is likely to be small, while China can still focus on its political goals to exert greater influence over participating countries.

“What remains is a much more modest program of $15 to $30 billion a year,” Balding said. “This is comparable to the $269 billion already promised by Chinese banks. I don't want to say it doesn't matter, but it doesn't really matter. The United States spends $300 billion annually on foreign direct investment."

One initiative that makes sense but needs little infrastructure and investment is protecting ships from pirates. “Collaboration with Singapore to secure maritime routes is promising and should be pursued anyway,” Nolt said.

Advances in shipping technology have made it much easier and cheaper to transport goods by ship rather than by land. This is why the majority of Chinese and world trade (80%) is carried out by sea.

After all, defending against pirates and building a few ports in Pakistan and East Africa is a worthwhile task, but it is a far cry from building landlocked infrastructure worth trillions.

“The Silk Road was an ever-evolving market that moved goods across a vast continent where they could be exchanged for other goods. And unlike today, Eurasia was the center of world civilization, home to the most important economies,” says the Geopolitical Futures report.

Today, the most important economy, and for China too, is the United States, and it is best reached by sea through the Pacific Ocean, which is far from the Maritime Silk Road and the Silk Road Economic Belt.

Chinese infrastructure projects in Asia

The Chinese company China Overseas Ports Holding will lease the port of Gwadar in Pakistan until 2059 and has already begun to expand it. China seeks to secure maritime trade routes along the so-called Maritime Silk Road, and the Pakistani port is an important element of infrastructure.

Thailand will borrow a total of $69.5 billion to finance high-speed rail and other major megatransport projects, with most of the money coming from China and Chinese companies providing construction. Thailand Railways will become part of the Kunming-Singapore railway system. However, Thailand will repay the loans by exporting rice and rubber, thus taking advantage of its trade surplus with China.

The $3.6 billion Myitsone Dam project in Burma, although not officially part of the Belt and Road Initiative, is an example of a Chinese infrastructure project in a very poor country that did not go as planned. Construction was suspended for six years because the two countries could not agree on how to proceed.

InoSMI materials contain assessments exclusively of foreign media and do not reflect the position of the InoSMI editorial staff.

The topic of the New Silk Road from the Middle Kingdom to Asia, Africa and Western Europe is now probably more of concern not to journalists, but to economists. Although for Russia and a number of other countries the idea of becoming a global Chinese transit country warms the ears, it burns the pocket. The intercontinental superconstruction so far only promises boundless prospects, but it already requires almost astronomical expenses. At the same time, the project has quite enough risks. First of all, these are the risks of globalization and the question of whether China will remain the same “world factory” after a decade or whether production will be distributed in some other way, which, for example, is already observed in America, when Trump demands the return of jobs, technology and power back to their homeland. That is, it may turn out that there will suddenly be nothing special to transport along this “road”. Dmitry Lagun, General Director of the AsstrA-Associated Traffic AG holding, analyzed the financial and economic aspects of this project especially for FederalPress:

“The cost of Russian capital investments, as well as a forecast of their return, is currently impossible due to the fact that information on the volume of investments in this project by the Russian Federation is not published in the media. The main initiator and investor of the New Silk Road project is China. Some publications mention information that by 2030 three trillion US dollars will be invested in the project. The Silk Road Fund is the main financing platform, with investments estimated at US$40 billion, focusing on infrastructure investments. The fund operates in accordance with Chinese law, and foreign investors can participate in its projects. The capital of the Asian Bank and the BRICS Bank can also be attracted to finance projects; the infrastructure investments of each of them will potentially amount to $100 billion.

Beijing says the project will build or network roads, railways, ports, oil and gas pipelines and power plants along routes that will link China with countries in the Asia-Pacific region. Persian Gulf, Central Asia, Africa and Europe. Along with the creation of a railway connection between China and Russia, an expressway project connecting Europe and Western China is being planned and is currently being implemented.

Infographics from the Kommersant newspaper

In Russia, the project is being implemented by Rosavtodor. The section from St. Petersburg to Moscow (M-11 road) is estimated at 373 billion rubles. The section of the highway from M-11 to the Central Ring Road (TsKAD). Construction of two sections (1st and 5th) of the Central Ring Road is already underway, the rest will be awarded in concession competitions in October 2017. The expressway, which should run between the existing federal roads M-7 Volga and M-5 Ural through Gus-Khrustalny, Murom, Ardatov, south of Nizhny Novgorod, will cost about 400 billion rubles. A 297-kilometer Shali-Bavly highway is already being built on the territory of Tatarstan, and the section is about 40 km long. is already operational. The highway will connect the existing federal highways M-7 and M-5, thus increasing their connectivity. The cost of this project has not been announced.

In the Republic of Bashkortostan they are going to build a 282-kilometer section of the international transport corridor (ITC) from the village of Bavly to the city of Kumertau, its cost is estimated at 156 billion rubles. In the Orenburg region, it is planned to build a 172-kilometer section bypassing Orenburg, Saraktash and to the border with Kazakhstan - 84 billion rubles. Thus, the entire Russian section of the ITC from St. Petersburg to the borders with Kazakhstan should be ready by 2023, some of its sections will be launched by 2018. In addition, by 2020, the M-1 Belarus highway will be reconstructed, which should provide direct access for goods transported along the corridor to the Republic of Belarus and Western European countries.

Impact of the path on the regional economy

International transport corridors should serve not only the purposes of organizing transit and export transportation, but also become the basis for closer economic consolidation and economic development surrounding regions. Most of the areas through which the route runs are united, first of all, by such a common feature as their inland macro-position in the depths of the Eurasian continent at a great distance from sea and ocean routes. By optimizing economic relations, it is possible to reduce the average transportation distance and thereby reduce transport costs. Consequently, cross-border economic interaction based on a common transport and communication infrastructure can bring very great results.

The direct effects of the implementation of the international transport corridors under consideration include a sharp reduction in railway tariffs, to the level of sea transport freight rates and, possibly, lower. This will lead to a reduction in transport costs and transportation costs, and ultimately to the economic “approachment” of inland regions (Siberia and the Urals of Russia, Xinjiang, Gansu, Ningxia, Qinghai and Shaanxi of China), as well as the countries of Central Asia and Kazakhstan to leading centers world, sea and ocean ports and thereby eliminating one of the main obstacles to development. There will be a significant increase in the capacity of highways, accompanied by an increase in traffic volumes, freight and passenger turnover, which is necessary for closer economic consolidation and economic recovery of the surrounding territories. Russia, China, Kazakhstan and other countries will be guaranteed to receive significant income from performing the functions of a transport bridge between Western Europe and East Asia.

The indirect effect of the implementation of these megaprojects is expected to be even more significant, which consists in the strongest multiplicative general economic and social impact international corridors to the vast adjacent strips. Thus, within the influence zone of the Trans-Siberian Railway are located the most developed, inhabited and populated areas of Siberia, the conditions and capabilities of which are not fundamentally different from the average Russian ones. The construction of the superhighway will secure the southern part of Siberia, which has relatively comfortable natural and climatic conditions, as a territory of priority for powerful integrated development. The creation of the Great Silk Road on a modern railway basis will be an effective option for including the hitherto lagging deep northwestern and central parts of China into the advanced development zone. The formation of the Northern Silk Road Corridor can bring a particularly noticeable effect to Kazakhstan, since rich resource areas and large urban agglomerations (Astana and Karaganda) in the east and north of the country fall within its stimulating influence.

The creation of a highway in a new direction will ensure an increase in the density of the federal road network and will give a tremendous impetus to the development of at least eight Russian regions through whose territory this section of the corridor will pass: Moscow, Vladimir, Nizhny Novgorod, Chuvash Republic, Republic of Mordovia, Ulyanovsk, Samara Region, Republic of Tatarstan . We are talking about the formation of essentially a new belt of investment activity, within which a large number of industrial, logistics, and recreational facilities will appear and new jobs will be created.

Project difficulties

The main complaint about the project is the vagueness of the initiative. It is still unknown how many countries will become participants in the New Silk Road, and what targeted projects should be implemented within the framework of the initiative. Even the geographical scope of the Belt and Road project is not fully defined - all existing maps of transport corridors are unofficial. The project does not specify KPIs (key performance indicators), that is, it is not clear how many roads should be built, how many containers should be shipped, and so on.

The main difficulty of this project is its cost. The full implementation of the New Silk Road will require enormous costs, which can only be covered by investments from all countries whose interests are affected by this project.

Along with the large financial costs, the difficulty of implementation also lies in the long period of implementation of the project. Thus, the media mentions that the project completion date is 2030.

One more question - economic feasibility. Transporting goods by sea is much cheaper than by rail. In addition, according to the European Chamber of Commerce in China, only 20% of trains from the EU to China are filled with goods, the rest return home empty. This is explained by the fact that one of the main items of Chinese imports from the EU country is mechanical engineering products. The Indian authorities criticize the Chinese project because with its loans China is dragging the countries participating in the Silk Road Economic Belt (SREB) into debts that they cannot repay. The Chinese themselves have recently begun to invest less in countries where the implementation of the “One Belt, One Road” project has already begun. In 2016, the volume of foreign direct investment in these 53 countries decreased by 2%. Chinese bankers admit that many of the projects in which the state has asked them to invest are not profitable.

Infographics ria.ru

What will change

Freight flows are gradually changing. The main mode of transport in transit between East Asia and Western Europe, both previously and currently, is sea transport, providing more than 90% of the corresponding cargo transportation. However, recently, the share of rail transportation is gradually increasing. Using railways, the delivery time of goods from China to Europe is significantly reduced. If the project continues to be implemented at a good pace, then cargo flows may shift towards Central Asia. The transport and logistics network of Central Asia will expand and become more attractive.”

Photo: Evgeny Odinokov, RIA Novosti

According to Putin, work on the Russian section of the Europe-Western China road route is planned to be completed in 2019. Thus, a new “Silk Road” - a road one - will appear on the transport map of the world. It should become a joint transport project between Moscow and Beijing, for all participants of which this road is of strategic importance. The Chinese authorities hope to use new land transport corridors to unlock the potential western regions countries that are too far from the transport hubs of the eastern coast of China. As a result, the population of these regions found themselves on the margins of the country's economic boom. Given that these territories are inhabited by Muslim minorities, economic inequality is transformed into political discontent and separatism. The investment priorities of Chinese investors are aligned in accordance with political interests. They are ready to finance part of the costs of construction of the Moscow – Sagarchin (Kazakhstan) section. The cost of the work is tentatively estimated at 783 billion rubles, half of which the budget is ready to cover. Construction costs must be offset by tariff revenues.

Gazprom is of particular interest in this project. At the end of June, the head of the corporation, Alexey Miller, announced his readiness, together with Chinese partners, to use LNG (liquefied natural gas) as a vehicle fuel. This project is supposed to be implemented in the process of “gasification” of the automobile corridor.

The route “Europe - Western China” promises to become a real automobile “Silk Road 2.0” - the world’s longest economic corridor, covering countries with a total population of more than 3 billion people. Unlike the railway analogue, which is being created in parallel, the automobile version may turn out to be a more powerful integrator of economic and cultural ties between Europe and Asia due to the active involvement of small and medium-sized businesses in this network. It may also be faster. It is expected that the delivery time for goods from China to the EU by road will be 10 days. This is almost two times faster than by rail and four times faster than by traditional sea route. The total length of the route will be more than 8 thousand km, of which 2.3 thousand km will pass through the territory of the Russian Federation.

The regions of Kazakhstan bordering Russia are also showing keen interest in the project. The country's authorities plan to complete the repair of their section of the Europe - Western China road by the end of this year.

The project is also being completed in China itself. Through the cities of Khorgos, Urumqi and Wuhan, the highway should reach the coast of the Yellow Sea in the city of Lianyungang.

The transport route “Europe – Western China” is a key component of the overall project of the Silk Road Economic Belt, which is promoted by Chinese President Xi Jinping and supported by Russian President Vladimir Putin.

Its implementation will inevitably increase the status of Eurasia as a world economic center and reduce the role of the Atlantic, which could become the most important geopolitical event since the 16th century, when they discovered sea routes to America and Asia.