Russia and the "One Belt And One Road" initiative have co-existed in the interests of Russia and Russia

In recent years, the connection between the Eurasian economic union and the "One Belt And One Road" initiative has become one of the main topics of foreign economic exchanges between Russia and other countries in the Eurasian space, especially kazakhstan and belarus. One of the most successful implementation of the segment is the land transit transport.

The One Belt And One Road initiative put forward by President xi jinping in 2013 has come a long way in the past seven years. The tens of billions of dollars in investment chains are also included, becoming an integral part of this initiative. This initiative has contributed to the rapid and steady growth of trade. From the very beginning, Russia recognized the superiority of this ambitious initiative and actively supported China's initiative. This is directly consistent with Russia's foreign economic and political "look east" strategy.

But Russia's "look east" is often misinterpreted. The EU remains Russia's biggest partner in both trade and investment. With about 80 per cent of Russia's population living in the European part of the Ural Mountains west, close economic co-operation with Europe is both necessary and justified. But the problem is that Russia's economic links with its biggest eastern neighbour, China, were once remote. Figuratively speaking, Russia's economy was once "on one foot" rather than two, maintaining close and beneficial economic ties with both Europe and China. The rapid and successful development of economic cooperation between Russia and Russia under the framework of the One Belt And One Road initiative is a step in the right direction. The most dynamic part of this process is the overland transport between China and eu countries through Russia. This is the best teaching case study of the prospects for success on this given road, so I will focus on transit transport

Cross-border land transport between China, the Eurasian Economic Union and the European Union enjoys a good momentum of development and a promising future. The Eurasian Economic Union (EEU), a transit route between China and Europe, is developing rapidly. Cross-border traffic can still grow by a factor of four or four: it is necessary to achieve rapid development of precision investment and regulation in infrastructure. Structural problems in the Russian economy will be high on the agenda - unlocking the potential of an industrial and agricultural centre with no access to the sea.

Rail container traffic in the Eurasian Economic Union (specifically on the borders of Kazakhstan, Russia and Belarus) between China and Europe increased by 43% in 2015; Doubling in 2016; 70% year-on-year growth in 2017; By 30% in 2018; 30% in 2019. Growth in the first quarter of 2020 despite coVID-19 crisis! Of course, this growth is being achieved from a small base, but land transport now accounts for 1.5% of total freight traffic between China and Europe. This share is still likely to grow several times, thanks to improvements in "hard" and "soft" infrastructure. I think the largest share of freight transport in Central Europe can be as high as 6% by road. That number sounds small, but it's actually a huge task and a great business section. Rather than ignoring it because of its small share, it should be noted that it will involve a range of locally profitable products whose exports already generate nearly us $2 billion for rail transport in Russia, Kazakhstan and Belarus. I am referring to the transport of high-margin products, including electronics, auto parts, biopharmaceutical products, cosmetics and agro-food products. So overland transport is still profitable. In addition, it is possible to derive a new product transport section. Achieving 65-750,000 tonnes container capacity in the next five to eight years is a fully realistic target. And Europe is already exporting to China: BMW exports car parts through the Eurasian Economic Union. HP also exports notebook PC accessories in the same way.

Of course, as far as Russia is concerned, the One Belt And One Road initiative is not limited to land transport. The endless volume of freight trains passing through Russia between China and Europe applies only to headlines, but it is not a strong argument for greater Russian economic and political investment. What are the advantages of cross-border railway transportation for Russia? I would like to propose a few ideas in this regard.

1. First of all, cross-border transport itself is small but can bring benefits. The group's earnings approached $800m in 2018, according to Rosneft, but the sector is not highly profitable;

2. Improve the containerization level of The Russian economy. Russia's highly developed railway system, but the level of containerization is low, which hinders the efficiency of economic development and Russia's participation in the global added value chain. In The Russian railway transport system, the container transport schedule accounts for only 2%, and the revenue accounts for only 6%. That is two to three times lower than in developed economies.

3. It can build an institutional framework to attract Chinese investment. Chinese investment has not yet set foot in The Russian transport sector. But for Russia, the significance of the One Belt And One Road initiative goes far beyond transport, with Chinese investment in oil, gas and mining surging. We also expect growth in Chinese investment in real estate and agriculture.

4. In general, it can be used as a tool to enhance Russia's position in the world economic and political map. Russia is willing to participate in the implementation of the One Belt And One Road initiative, because this initiative can contribute to the formation of a multi-polar world.

5. Becoming part of the "Greater Eurasia" strategy is in line with Russia's foreign policy priorities. Much has been said about this in the current discussions on the Greater Eurasia strategy. At the same time, transit cargo transport is a practical part of the current EU-EEU - China relationship.

6. Invest heavily in central Asia within the framework of the implementation of the One Belt And One Road initiative. The prosperity of Central Asia is of strategic importance to Russia. Impoverished and unstable Central Asia poses many risks for Russia. And growing affluence in Central Asia could give Russia a market of 80 million people.

What are the problems and restrictions on the cross-border transport of goods in the future?

First, the current surge in container train shipments and container freight volumes on the China-EURASIA Economic Union-EU route is largely due to the Chinese government's subsidies for rail export transport since 2013. The "zeroing" of container freight within China has prompted many Chinese exporters to shift freight from sea to rail. The risk that subsidies will be withdrawn or substantially reduced continues to threaten the growth prospects of freight. Given that subsidies account for a small percentage of government spending (we estimate they typically account for 0.4 per cent of the value of goods transported) and the strategic and economic implications of cross-border land transport, we hope that the Chinese government will retain them. Once the subsidy is cancelled, the freight will increase from $5,500-6,000 to $8,000-8,500. That would give exporters an incentive to shift some goods currently transported by rail to sea. Of course, cross-boundary land transport is likely to be attractive in addition to the price factor, and there will be a positive adjustment in price as related costs are reduced.

I also want to point out that Russia also plans to support cross-border transport through subsidies. The authorities are now discussing a $900 per container subsidy in Russia.

Second, the future growth of transit transport across Eurasia will be limited by infrastructure. That is, the lack of capacity to pass the Border crossings between Belarus and Poland, the technical defects of the Polish railway system, etc. Brest (Belarus) - The Container train at the Marasevich (Poland) border crossing is under the greatest pressure. Almost all train lines connecting Central Europe pass through this port. Current investment in the development of Polish railways is far from sufficient.

Third, the most serious administrative regulatory barrier to increasing the volume of cargo between EEU, China and the EU is differences in traffic scheduling systems and documentation. Since May 1, 2017, the National Railway Administration of China has decided to adopt the international freight contract and Freight Association waybill in a unified format for all cross-border freight container trains. This is an important measure to further implement the alignment between the Eurasian Economic Union and the Silk Road Economic Belt in the future. For container trains departing from China to European countries and returning directions via Alashankou, Manzhouli, Erlian, Suifenhe and Horgos railway ports, the goods can be transported by means of the INTERNATIONAL Freight Contract/International Freight Association waybill. This "soft" infrastructure development will enable trains to run 10,000 kilometers across multinational borders in 15-16 days. But this is only the beginning of the road. In the future, efforts need to be made on the unified standards and technical specifications of the Eurasian continent (various commodity transport regulations, transport vehicle specifications, environmental protection standards, etc.).

Fourth, the structural problems in the development of container exports in THE EEU countries, namely the local inability to supply goods to meet the demand of the Chinese market, could have created new space for freight growth between EEU and China. At present, almost all the commodities exported to China by Eurasian Union countries are raw materials. Energy (65%), timber (15%), mineral raw materials (9%) and mineral fertilizers (4%-5%) account for the majority of the commodity mix exported to China by the EEU countries. It can be seen that the Eurasian Economic Union exports to China are basically filled liquid goods and bulk goods. Only 1 per cent of railway exports to China are shipped in containers, mainly pulp and paper products, converted timber and chemical raw materials. The eeU imports from China are more diversified: machinery, equipment, manufactured goods (25-30 per cent), metal products (about 15 per cent), chemical finished goods, building materials, agricultural and food raw materials (about 10 per cent each), mineral and chemical raw materials, clothing, shoes and textiles (6-8 per cent each). Such an asymmetric trade structure will cause problems. Rail carriers can only alleviate the problem to a limited extent (for example, by loading pulp and lumber into empty containers from Russia to China). But solving the efficiency problem in the long run still depends on improving Russia's trade mix with China -- that is, increasing the proportion of industrial and agro-industrial complex products.

Therefore, the first critical task facing the EEU countries and Russia is to stimulate the cross-border transportation of goods from sea to land through the development of transportation and logistics infrastructure, so as to make goods from China to Europe (or Europe to China) transit through the EEU countries. This is a good business opportunity for logistics companies and railway groups. Nor are there any insurmountable difficulties. The railway network can absorb several times the current volume of container traffic, especially if the existing "bottleneck" is solved by building more transport and logistics centres and improving the logistics system so that containers from China do not have to be forwarded to the Volga River via Moscow. We have made enough progress so far in this regard, and we see good prospects.

But the other, less clear but more strategic task is more complex. That is, how to use the development of cross-border transportation and the growth of transportation infrastructure investment to promote the solution of structural problems in the economy, especially the solution of the inherent shortage of inland regions in developing external markets. This is of practical significance for the development of countries and regions without access to the sea, including the Ural Region, Siberia, Kazakhstan and other Central Asian countries. The "One Belt And One Road" transport corridor weaves together the Eurasian region (read as the Eurasian continent in a broader sense), ensuring tight links between resources, producers and sales markets. The development of transport corridors and infrastructure is essential, not only to develop cross-border transport, but also to strengthen economic and social ties between neighbouring countries and regions, and to improve the efficiency of industrial centres. The Belt and Road initiative should promote the development of inland industrial centers and the integration of local industrial and agricultural industrial clusters into the world economy. Existing industries will benefit from this increase in profits. In addition, it could spawn entirely new export projects. That is to say, the goods that cannot be exported due to price, delivery time, logistics chaos and other factors will probably be exported. We should devote a lot of energy (easier said than done) to developing The export potential of Russia and Kazakhstan. For example, China has a huge market potential, and one of the important sectors is grain import. But many kinds of food commodities need to be transported as quickly as possible under certain temperature conditions. This provides a new idea for the development of specialized freight train transportation (such as refrigerated containers).

Therefore, in order to fully tap the potential of land transport, we need to systematically focus on the development of container transport network, including addressing the weaknesses and problems existing in the infrastructure of the EEU countries. At the same time, we should focus on shoring up weak links rather than on large-scale construction projects. Precision investment in hardware infrastructure, coupled with the improvement of technical regulations, will ultimately contribute to the success of cross-border land transport, making it a historical landmark. Next we need to discuss how cross-border transport can contribute to solving structural problems in the Russian economy.

When I stated this thesis, I saw that the strategic and practical interests of Russia and Russia perfectly match each other in enriching the content of the One Belt And One Road initiative in the field of transportation. Cross-boundary transport by land and rail - a successful example of the implementation of the One Belt And One Road initiative in both its west and north west directions. Russia welcomes the further deepening of the "One Belt And One Road" initiative, is willing to attract more Chinese investment (including direct investment and securities investment), increase bilateral trade volume, promote the rapid development of e-commerce, build more infrastructure projects and successfully realize its business operation.