In a bold new effort to shake up existing shipping and transport routes, Chinese leader Xi Jinping plans to set up a ‘Silk Road Fund’ that will finance the construction of infrastructure linking markets in Asia. Xi wishes to “break the connectivity bottleneck” with trade partners in the region in order to provide an alternative to the European and American dominated shipping lines of the Pacific ocean.
This replication of the historic Silk Road, which interlinked the East and West with series of well-established trade routes that stretched from China all the way to the shores of the Mediterranean Sea, will be a long and intensive task for the Chinese to undertake and complete. The country has already pledged to take more than $40 billion from the nation’s foreign exchange reserves to pay for this plan.
Luckily, regional cooperation has been high as Bangladesh, Cambodia, Laos, Mongolia, Myanmar, Pakistan, and Tajikistan have all expressed a keen interest in this fund during a meeting with Xi earlier this month. Kazakhstan, situated on China’s North-western border, has already made promises to spend $44 billion over the next five years on to further improve infrastructure for their railway systems that connect the oil rich country to Europe and Russia. Such support for this project is encouraging for China, as they hope to that the project will come into full form as an economic cooperation bloc between all participating nations.
While ambitious, the plan does in fact solve a few issues with supply chain efficiency. Suppliers in China’s interior provinces have always been a less attractive sourcing option due to their far distance from the shipping ports on the coast. For now, their inland position may make current logistics solutions a bit cumbersome, however with the infrastructure proposed by this plan, trains from central China could reach Germany in a mere 14 days.
Any effort to reduce shipping times is welcomed by those who trade and source from China. Futhermore, such an effort would surely make logistics services more cost competitive, thus providing increased TEU availability and lower prices for shipping customers. While Xi’s grand plan may still be in the distant future, our logistics department always stays on top of any kind of development that effect global trade routes in order to serve our clients best. For more information contact ET2C today and find out how we always finds the most optimal shipping solutions for our clients’ sourcing orders.
