Silk Road Headlines_30th August, 2019

Chinese media have reported that trains running between China and Europe frequently carry empty containers. As the South China Morning Post explains, the Chinese government has been subsidizing up to half of the cost of container transport between China and Europe by rail. This amounts to $1000-$4000 per container. This year the subsidy was lowered to 40% of the cost, next year the rate will be 30% and in 2022 the subsidy will be completely abolished [China’s belt and road cargo to Europe under scrutiny as operator admits to moving empty containers]. According to the SCMP, many exporters have been transporting empty containers in order to benefit from these subsidies. China Railway Corporation confirms that this has been a problem but it also says that it has been taking measures to counter this practice. For instance, for outbound trips, a maximum of 10% of the containers are currently allowed to be empty.

Asia Times published - interestingly not as a regular article but as ‘sponsored content’ - an article that discusses how the Belt and Road Initiative should move forward [Challenges in Belt and Road Construction]. The author is Zhou Taidong, presumably (as the article mentions his name but not his job title) the head of the global development division at the Center for International Knowledge on Development (CIKD), a think tank that was launched by the Chinese State Council in 2017. CIKD was announced by Xi Jinping himself during the 2015 UN Sustainable Development Summit. Zhou’s article suggests that criticism and countermeasures against BRI from developing countries are a major driver for tighter supervision by the Chinese government with regard to the quality of BRI projects. The author makes clear that improved government policies and the further development of international standards are important but that Chinese companies also need to adjust their approach. Zhou identifies six areas in which Chinese enterprises should improve their performance: strategic planning, compliance, risk response, stakeholder relations, feasibility assessment and emergency planning, and corporate social responsibility.

By Clingendael