Expanding trade between Russia and China is reshaping logistics in Eurasia

Based on the results of the first ten months of 2023, the trade turnover of the Eurasian region with China increased by 16%, to $277 billion, according to a new EDB review. The organization’s report records a significant expansion of trade with China for virtually all EAEU countries – and primarily for Russia. The increase in supplies has already had a noticeable impact on the structure of freight traffic in the region. However, the restructuring of routes is apparently just beginning: there are more and more initiatives around new logistics solutions, and investments in expanding trade and transport corridors are growing. Kazakhstan can benefit from a situation in which the existing infrastructure for stable supplies is no longer enough – transit through the country continues to increase.

In 2023, the Eurasian region (EAEU countries, Tajikistan and Uzbekistan) again significantly increased trade with China, as recorded by the new EDB review “Eurasian Infrastructure: Short- and Medium-Term Trends” (available from Kommersant). It follows from the report that in the first ten months of the year, the foreign trade turnover of the Eurasian region with China increased by 16%, to $277 billion. For comparison: for the entire 2022 it amounted to $267 billion. The main increase, as expected, was provided by the Russian Federation, replacing the lost losses with supplies from China. for sanctions European shipments. Let us remind you that, according to Chinese customs data, the country’s trade turnover with the Russian Federation in 2023 increased by 26%, to $240 billion ($190 billion in 2022).

The rapid expansion of trade with China has become a driver for the restructuring of transport and logistics routes in the region, the EDB notes. Thus, the increase in the flow of foreign trade cargo of the Russian Federation through the Eastern range (combines the Trans-Siberian Railway and the BAM) and the Far Eastern ports of the Russian Federation has led to high load not only on them, but also on the railway approaches to the ports, as well as land railway checkpoints. The need to modernize the section became obvious precisely against the background of the reorientation of Russian supplies to China – it is assumed that its throughput capacity will be significantly expanded by 2035 (see, for example, Kommersant on February 15).

Overall, the report records a sharp increase in the number of initiatives to develop Eurasian transport corridors in 2023. We are talking, in particular, about the Central Eurasian Corridor and the Trans-Caspian International Transport Route. “All key players are showing interest in their development: Russia, China, Iran, India, Turkey, Pakistan, European countries and the United States,” the report notes. The growth of investments in the development of routes is also recorded by analysts of the IMF and the World Bank (see “Kommersant” dated June 9 and November 28, 2023).

The beneficiary of the increase in the region’s trade turnover with China remains Kazakhstan, transit transportation through which over the 11 months of 2023 increased by 19%, to 24.8 million tons, the EDB estimates. Increasing the capacity of Kazakhstan’s infrastructure in the coming years will remain an important “point of attraction” for investments: strengthening transit potential involves, among other things, the construction of new railway lines. One of the most ambitious projects is the launch of the Bakhty-Ayagoz railway line; implementation of the project, into which a little more than 320 billion tenge (62 billion rubles) was invested, began at the end of last year. The EDB suggests that the opening of a third railway crossing on the border with China will increase capacity by another 20 million tons – the route is expected to be actively used, including for the transportation of goods from China to the Russian Federation.

Kristina Borovikova