Chongqing making fast tracks to Europe

A new dimension to the burgeoning trade between China and Europe is the cargo now being carried overland through Central Asia to the world's second-largest economy.

At its fastest, the rail link between Chongqing and Duisburg, Germany, which opened in 2015, can transport goods along its 11,179 kilometers in 13 days. This is now a vital artery of the China-proposed Belt and Road Initiative.

Trade between China and Central and Eastern European countries increased by 15.9 percent last year to US$68 billion, according to the Ministry of Commerce.

Trade with Germany, China's biggest European economic partner, increased by 11 percent to US$168 billion.

At the center of some of this increased trade with Europe is Chongqing, a municipality with a population of more than 30 million.

Once viewed as being at the wrong end of the Yangtze River, which links the city with Shanghai, Chongqing is developing into one of China's most important trading hubs, which is having a regenerative effect on the entire western region. Last year, Chongqing's GDP grew by 9.3 percent, significantly higher than the 6.9 percent nationally.

Not only does Chongqing have road and rail links to Europe through Central Asia, it is also linked to Southeast Asia through the Southern Transport Corridor. This links Chongqing by rail to Qinzhou Port in the Guangxi Zhuang autonomous region, providing a gateway to such trade partners as Thailand, Vietnam, Malaysia and Singapore.

As a result, Europe also now has a land connection with Southeast Asia, with Chongqing the vital link.

At the center of all this activity is the Liangjiang New Area, which occupies 1,205 square kilometers in Chongqing.

It was the third State-level economic development zone of its kind when it was created in 2010.

In the meeting room at the Jinshan Building, which houses the headquarters of the new area on Jinyu Avenue, Li Guang, the 55-year-old vice-president of the Liangjiang New Area Investment Invitation Group, said: "The railway connection has been very important for development here. Goods can be transported in and out of Chongqing and we have become a logistics hub for goods from the rest of China and also from Southeast Asia to Europe.

"We are building a new transfer center here to facilitate this. It is all part of the opening up of the west of China as part of the country's Belt and Road Initiative."

Liangjiang New Area - its name means "two rivers" in Chinese, with the Yangtze and Jialing rivers converging in Chongqing - is home to 130 of Chongqing's 250 Fortune 500 companies and last year attracted one-third, or US$3.3 billion, of the city's US$10 billion of inbound investment.

Li is particularly keen to attract investment from across Europe, including Central and Eastern Europe.

"What we can offer European companies is the sort of market they might not be able to get at home, with the huge local population and also potentially the whole of China," he said.

"We are very open about companies coming in here wanting to form joint ventures or some form of cooperation arrangement. We want to attract top industry teams to Chongqing."

Jefferson Wang, head of the Greater China government and economic development practice for management consultants A.T. Kearney, said Chongqing, despite being one of the biggest cities in the world and China's wartime capital, is held back because it is not well-known internationally.

"It is certainly not as well-known as Guangzhou (the capital of Guangdong province) or a number of other Chinese cities and I think this holds it back a little. It is a major challenge for the local government to do more on promotion," he said.

"The Belt and Road, however, is a major opportunity since it (Chongqing) is the center of the west of China and can really open up the region as a logistics hub."

Wang said it is important not just to focus on railways, with aviation being equally essential. The third terminal of Chongqing Jiangbei Airport opened in August last year and the aim is for the facility to became a major international hub and the biggest airport in western China by 2030.

Wang said that of the 69 international routes operating from the airport, 44 are linked to countries taking part in the Belt and Road Initiative, adding, "There is huge potential here."

Logistics are vital for Chongqing, as it has emerged as a major manufacturing center.

A significant proportion of China's manufacturing has moved west from the east coast and southern China, where the country's economic transformation began 40 years ago after Deng Xiaoping's Reform and Opening-up Policy was launched.

Shi Rui, deputy director of the modern service industry department at Chongqing Liangjiang New Area Investment Invitation Group, said logistics have previously held the city back.

"It has always been very challenging for us. We have a local saying that it is easier to get to heaven than out of Chongqing because of the mountains. So, for the past 20 years, Chongqing has invested heavily in logistics infrastructure, developing the airport and establishing railway connections," she said.

This has enabled Chongqing to become the world's largest laptop producer in just over a decade.

One-third of the world's laptops are made in the municipality with Acer, Asus, Toshiba and Sony all establishing major operations in the city.

"Traditionally, Chongqing has been based on heavy industry, but the gradual switch to light industry, such as laptop production, has been built on developing the city as a logistical hub," said Li, the Liangjiang New Area Investment Invitation Group's vice-president.

"The railway connection to Europe has made it easier to transport laptops there and also easier to establish supply chains."

Edward Tse, founder and chief executive officer of management consultancy Gao Feng Advisory, believes Chongqing is representative of a major global shift as the Belt and Road Initiative evolves.

"We are moving away from the world which was dominated by the maritime powers in the 19th century such as Britain, and then after World War II by the United States, to one where landlocked countries are emerging," he said.

"Chongqing is almost a starting point for this change, linking China through Central Asia to Europe. It is a very natural revival of this axis of the world that once formed the old silk routes."

One of Chongqing's impressive logistics facilities is Guoyan Port, the largest inland river port of its kind in China, which handles 30 million metric tons of freight a year.

The port was opened in 2008 and now has 16 shipping berths, which can each handle 5,000 tons. On a visit to the port in 2016, President Xi Jinping said it was "full of promise for the future".

The port handles cars - Chongqing is a major car production center with Changan Ford having a key manufacturing base in the Liangjiang New Area - as well as coal, ores and mining products.

Containers can be offloaded at the port and transported by rail to Europe. The port is one of the most important in the Yangtze River Economic Belt with goods making the 2,000 km journey upstream to Shanghai.

It takes between 10 and 17 days to transport goods from Chongqing to Shanghai at a cost of 4,000 yuan (US$603) per standard container. This is considerably cheaper than the 16,000 yuan by road, which takes 24 hours, and the 8,000 yuan by rail, which takes three to four days.

"We are very well connected to railways, roads and waterways. It is important to have a multichannel logistics network," said Fang Liang, manager of the port's commercial department.

Liu Wanhong, a director of Minsheng Shipping, one of the biggest users of the port, and accounting for 30 percent of its container volume, says the port has encouraged many companies to move into the area.

"One of the most important considerations these companies have is about getting goods in and out," he said.

Another logistics facility is the Chongqing Lianglu-Cuntan Free Trade Port Area, the only bonded port area in West China.

It has been operating since 2008 and is one of only 14 such areas in the country.

Goods entering the bonded port are considered not to have entered China until they leave, when they are subject to normal customs clearance. Both Chongqing Liangbei Airport and Cuntan Port are within the bonded zone, home to six of the top 10 logistics companies in the world.

"It is very important for Chongqing to have its own bonded zone. We produce a lot of cars and laptops here and if all these have to go through Shanghai or Shenzhen it becomes very expensive for manufacturers," said Qu Huang, deputy general manager of the free trade port area.

One of the exciting aspects of Chongqing's new connectivity is being able to link Europe to Southeast Asia by rail.

One of the key organizations is the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity, also known as the Chongqing Connectivity Initiative.

It is the third major intergovernmental initiative formed between China and Singapore. The other two are the China-Singapore Suzhou Industrial Park, which was launched in 1994 and seen as vital in China's early industrial development, and the Sino-Singapore Tianjin Ecocity.

The Chongqing Connectivity Initiative was launched in November 2015 by President Xi and Singapore's Prime Minister Lee Hsien Loong. The aim is to develop cooperation in financial services, aviation logistics, transportation and communications, and information technology.

Speaking at his offices in Chongqing's Jiangbeizui financial district, Han Baochang, the initiative's director-general, believes there is a real opportunity to build connections between Europe and Singapore.

"Chongqing has a real opportunity to elevate its status into a hub for international and logistics," he said.

He cites the example of Vietnam, a manufacturer of high-end sport shoes, which could acquire high-quality plastics from Europe.

"The raw materials can come by rail from Europe to Chongqing and then go through the Southern Transport Corridor to Vietnam. The end product can then be sold across ASEAN (Association of Southeast Asian Nations) countries, or Europe, going back by the same route."

Tse, at Gao Feng Advisory, believes there is a bigger picture to forming greater links between Europe and China.

"There is a danger of seeing this just in terms of rail links. It all becomes a little bit technical if that is the case. It ignores the fact that China now has this overarching view emboldened by Xi Jinping's concept of building a "community of common destiny for mankind". This is not just Europe and China working together, but also countries in Africa, Central Asia, Southeast Asia and elsewhere, too."