Page 44 - bneMag April 2022 Russia living with sanctions

44 I Eurasia bne April 2022
A Chinese train waits at the Kazakh border.
Russian invasion dealing China a Silk Road economic setback
Nathan Hutson for Eurasianet
Sanctions on Russia are sidetracking China’s Silk Road Rail Corridor – disrupting freight traffic and creating losses for China – while forcing Beijing to rethink regional trade, development and security strategies. But the most severe long-term consequences may be felt in Kazakhstan.
Boosting rail traffic running from China to the European Union via a web of routes through Kazakhstan, Russia and Belarus is a key element in the Belt and Road Initiative (BRI), a $1 trillion vision unveiled by Chinese leader Xi Jinping in 2013 to project Beijing’s economic and political influence around the world. Rail traffic through Russian territory ran on schedule during the first few weeks after Russia’s invasion of Ukraine, as orders initiated prior to the war completed their transcontinental journeys. But
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while transit via the sanctioned Russian Railways is still technically possible, a growing number of logistics companies have effectively halted BRI-related operations through Russia.
On March 10, for example, DB Schenker, a prominent German third- party logistics provider announced
it was temporarily suspending “land, air and ocean transport” to and from Russia. A day earlier, another logistics giant, Hapag-Lloyd, confirmed it is no longer accepting bookings involving Russia, Belarus and Ukraine. Also on March 9, a statement issued by the inland Port of Duisburg in Germany,
a key hub for BRI shipments, noted that international insurers are likely to stop offering coverage for shipments transiting Russia and Belarus.
The financial fallout from the Silk
Road rail breakdown is affecting China in a variety of ways. Not only is the
war starting to cost Beijing lost trade revenue, it is also turning infrastructure investments into white elephants.
One such project is the Great Stone Industrial Park situated about 15 miles outside the Belarusian capital, Minsk. The $2 billion, Chinese-financed complex was billed as a trade and IT hub but was mostly a goodwill gesture to induce BRI cooperation from Belarus. This investment may now prove a total loss for China.
The economic hit is relatively minor when compared to the social, economic and geopolitical headache that Russia’s attack on Ukraine is creating for Xi’s government. China’s “no limits” strategic partnership with Russia has turned into a liability for Beijing. Russian leader Vladimir Putin’s