The railway corridor that crosses Eurasia has become an essential branch of the Belt and Road Initiative. It runs through Kazakhstan, Russia, and Belarus. Almost half of those routes pass through Russia. So, European sanctions following Russia’s invasion of Ukraine might impact them.
The Shanghai Observer reported a decline in those China-Europe freight trains starting from Shanghai. Initially, four China-Europe freight trains departed from the city each month. However, some companies recently canceled orders, forcing a schedule change.
The market demand for trains in Shanghai has fallen by 40%, and as a consequence, the frequency of trains was reduced by 50%.
Recently, the Global Times interviewed Feng Xubin, vice chairman of the China-Europe Railway Express Transportation Coordination Committee. He said that many exporters stopped shipments to Russia, Ukraine, and other countries from Europe and Central Asia.
A veteran merchant based in East China’s Zhejiang Province said that European freight forwarders want to avoid the Russian railway.
Amid the declining volume of the China-Europe Railway Express, China had actions to assist the market. Han Jie, director of the commerce bureau of Zhejiang, met international traders. He said that the government would ensure the operation of the China-Europe freight train. Besides, it would support manufacturers and merchants in managing risks proactively.
But those promises seem useless for Western companies.
Impact on Russian Railways
RailFreight.com held a webinar about the impact of the Ukraine war on March 1. The webinar concluded that logistics companies could use Russian railway services despite the EU and the United States imposing financial sanctions on Russian Railways.
However, Western companies still refuse to use services through Russia.
RailBridgeCargo, a Dutch logistics firm, said that they stopped using services through Russia due to ethics. Although the sanctions on Russia and Belarus are currently not impacting rail business through Russia and Belarus.
He added the company decided not to use the service as long as the aggression and invasion continued.
A large customer of those rails is networking gear maker Zyxel Communications Corp. As a result, it has stopped shipping from China to Europe by rail. Other laptop manufacturers made the same decision.
Similarly, large logistics companies deny any bookings to Russian destinations for rail. They include CMA CGM, Maersk, and MSC.
China-Pakistan economic corridor
The south of the Belt and Road is the China-Pakistan Economic Corridor. It is the flagship project of China’s multi-billion-dollar Belt and Road Initiative. It was initially valued at US 46 billion dollars in 2013. Then the projects’ worth rose to US 62 billion dollars as of 2017.
The China-Pakistan Economic Corridor includes infrastructure and other projects under construction throughout Pakistan since 2013.
But now, it faces many challenges in finishing the projects.
The Economic Times reported that many Chinese workers in Pakistan contemplate moving back home. Chinese workers are increasingly feeling insecure in Pakistan. They are afraid that the Pakistani security systems cannot protect them.
Insurgent groups repeatedly attack Chinese citizens
Three Chinese teachers were killed in a suicide bombing in April. It happened at the Chinese language learning center in Karachi.
According to Reuters, a separatist group, the Baloch Liberation Army, claimed responsibility for the blast.
In August 2021, nine Chinese were killed in a bomb attack on a bus. At that time, the bus was carrying Chinese engineers to the Dasu. A Chinese company is building a 4,300-megawatt hydropower project on the Indus River.
Earlier, three militants assaulted the Chinese Consulate in the southern port city of Karachi in November 2018. They killed two police officers and two civilians.
A spokesman of the Balochistan Liberation Army told Reuters that it made the attack. The spokesman also said that China is exploiting its resources.
China and Pakistan in dispute over payments
Besides, the rift between Pakistan and China is widening every day, causing pressure on the projects.
According to the Economic Times, nearly 25 Chinese firms said they would stop their operations this month. They will not generate electricity until Pakistan pays 300 billion Pakistani rupees or 16 billion dollars.
China has also stopped paying for the final stages of major projects, putting pressure on Pakistan.
Meanwhile, Pakistan is considering abandoning the projects altogether. They will do that if the US provides similar financial assistance.
Pakistan’s response has indicated that it doesn’t want China’s influence in Pakistan to continue. Pakistan has spent a significant portion of its revenue to repay project debts. However, many projects have been suspended or failed.
Ahsan Iqbal, the Federal Minister of Planning and Development, recently expressed his dissatisfaction with the delayed progress of major projects.
Many Pakistani politicians and experts were concerned about the project’s strict loan terms.