Tuesday, August 20, 2019

"China’s belt and road cargo to Europe under scrutiny as operator admits to moving empty containers"

This is a universal problem, not unique to China. When you do thing for show or for politics you tend to let the economics fend for themselves.
From the South China Morning Post:
  • China Railway admits the existence of the problem in an interview with the state-run Global Times but insists it has improved recently
  • Cities and provinces were looking to benefit from subsidies offered by both the local and national government as part of Xi Jinping’s plan to boost global trade
Widespread waste and fraud associated with China’s Belt and Road Initiative has been unearthed after the country’s state railway group was forced to admit this month that a significant amount of cargo containers shuttling between Chinese factories and European cities were empty.

The admission by the state-run China Railway – the sole operator of the lines – followed an investigation by the Chinese Business Journal, a newspaper supervised by the Chinese Academy of Social Sciences, which found that in one extreme case only one of 41 containers on a particular train actually carried goods.

The belt and road plan, masterminded by President Xi Jinping, is the central government’s initiative to link economies into a China-centred trading network to grow global trade.

This led to many local governments rushing to open train services through the vast central Asian territory between China and Europe to show their support for Beijing’s geopolitical strategy, but many exporters actually transported empty containers in order to receive  government subsidies.
China Railway admitted the existence of the problem in an interview with the state-run Global Times last week, but insisted it had largely been eradicated in 2018 after new rules were introduced limiting the number of empty containers allowed to just 10 per cent per train.

The company said that of all containers heading to Europe in 2018, only 6 per cent were empty, compared to 29 per cent for eastbound trains. In the first half of 2019, they said, the ratios had fallen to 2 per cent and 18 per cent, respectively.

Jonathan Hillman, a senior fellow at the Centre for Strategic and International Studies (CSIS), a Washington-based think tank, said the problem of empty containers “is consistent with the belt and road’s emphasis on short-term political gains at the expense of longer-term economic fundamentals”....