China's Silk Road strategy takes shape in Khorgos

PUBLISHED : Sunday, 18 October, 2015, 10:02pm
UPDATED : Wednesday, 11 May, 2016, 11:30am

China is looking to increase investment in a new government-owned dry port in Kazakhstan as part of its Silk Road plan.

Khorgos Gateway,  built by Kazakhstan’s state railway company and located near the Kazakh-Chinese border,  started operation in July. A train station at Altynkol provided the only passage for cargo shipment at the border prior to Khorgos. The new project has turned this area into a logistics centre and an industrial production zone, attracting Chinese capital. 

"We are in close talks with Jiangsu province. We met Jiangsu officials and investors at Lianyungang port two weeks ago. They will visit us soon to find out how they can invest," Hicham Belmaachi, deputy chief executive, commercial, at Khorgos Gateway, told the South China Morning Post.

Jiangsu, especially its Lianyungang port, has a long history of links with Kazakhstan.

"The [Chinese] investment will focus on the logistics and industrial area, including building warehouses and factories," Belmaachi said.

Khorgos is viewed as a key transit hub carrying cargo between China and Europe under China's New Silk Road strategy, which aims to rebuild trade links across Eurasia and the Indian Ocean.

Jiangsu province last month signed an agreement to invest US$600 million over next five years in the Khorgos Eastern Gate special economic zone, which houses the dry port.

"All trains coming from China will stop here and do transshipment," said Belmaachi, adding that he believes the newly built dry port will boost trade from China.

"With the dry port, we have a container yard that can store boxes from different parts of China that can be moved to a single destination to improve efficiency," Belmaachi said, adding that when the logistics centre and the industrial zone are in place, a full supply chain can be established.

"I believe every province in China has received a message from the central government to study opportunities in Khorgos," he said.

Khorgos Gateway has handled 162 trains and 8,532 twenty-foot equivalent units (teu) of container throughput so far, and is getting busier by the day.

Darryl Hadaway, chief executive of Silk Route Rail, a start-up company focusing on the train business in Kazakhstan, said more and more mega brands such as DHL and HP are opting for the China-Europe rail network, which transits through Khorgos.

"Now it takes only 11.5 days from Chongqing in China to Duisburg in Germany by freight train and it is expected to shorten to 10 days in the future," said Hadaway. "Rather than ocean cargo, it is competing with air freight because it is so much cheaper."