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Along the New Silk Road – Khorgos: Where East meets West

  • Written by  Charles Stevens
  • Published in Development
Along the New Silk Road – Khorgos: Where East meets West
25 Oct
2018
In this penultimate instalment of our monthly series of reports looking at the impact China’s BRI project is having on the local infrastructure situated along its route, explorer and China scholar Charles Stevens visits the Khorgos Gateway that bridges China and Kazakhstan

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THE NEW SILK ROAD PROJECT
Covering 10,000 miles and 18 countries The New Silk Road Project is an exploration of China’s emerging Belt and Road Initiative. Having departed from London in June 2018, it will travel along the full length of the world’s next great trade route – a nexus of power, culture and commerce that now sits at the heart of China’s foreign policy.

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Khorgos to China Map

The Khorgos development project sits at the epicentre of the Belt and Road Initiative. Sprawled across the eastern reaches of the Saryesik-Atyrau Desert, this emerging site extends across the border between Kazakhstan and China. It is formed of a cross-border free trade zone, a dry port, a 450-hectare special economic zone and a new city. In one of the most isolated and sparsely populated regions on the planet, this trade and logistics centre is an example of Sino-Kazakh ambition overcoming some of Earth’s most challenging environments. As Naziyam Ibragimova, PR manager at Khorgos Gateway says: ‘Five years ago there was nothing at all, just sand.’

Driving into the dry port, equipped with hardhats and orange safety jackets, Naziyam mentions her previous work on the recently completed Western Europe to Western China highway. This World Bank-funded project was the same road that we had travelled along to reach Khorgos from the major city of Almaty in Kazakhstan. It now forms a continuous high-speed transport corridor stretching from the Yellow Sea port city of Lianyungang in China through to Europe. Concerted efforts to forge such links are helping Khorgos become increasingly accessible and more widely known in business circles. Such work has contributed to the doubling of the dry port’s freightage volumes between 2016 and 2017. 

KG 6Bundles of steel coil await transportation at Khorgos dry port

Walls of containers line both sides of the six railway tracks that cut through the facility, all overshadowed by three gantry cranes standing ready. The sterile and regimented conformity of the place strikes a dissonant chord with the Dzungarian Alatau mountains in the background. In fact, the entire area seems to exist within a vacuum, one where only commerce survives, if the array of international brands on display is anything to go by: Woojin Global, Capital, China Shipping, K Line, Cronos, COSCO, TEX and KTS – to name but a few. Director of commercial development, Nurlan Toganbayev tells us that these containers are packed full of goods that will head west to Europe or Central Asia. On the Chinese side, a parallel station facilitates the eastward movement of cargo.

KG 3 view over maountainsThe Khorgos Gateway is overlooked by the Dzungarian Alatau mountains

Next, we are directed towards three gantry crane workers hooking up bundles of steel coil to be moved into wagons destined for Turkmenistan. It is not solely Chinese state-owned enterprises or BRI-associated businesses using these lines. Companies such as HP and Foxconn are taking advantage of this increasingly reliable and efficient method to transport their high-value products to Europe, using the multiple trains which now depart Khorgos daily.

It was little more than three years ago that Khorgos Gateway sent its first train away along the Ili River Valley, a natural land bridge which has seen people, commerce and ideas move along its course for millennia. Despite the dry port’s infancy, the ambition was clear and it is now on course to reach its 2020 target of handling 500,000 TEU (twenty-foot equivalent unit, an inexact measurement of cargo capacity) per year. Along with the organic growth Khorgos Gateway is likely to experience, Nurlan also believes that as this transit hub becomes better known, cargo will be diverted to Khorgos from Dostyk port which sits to the north in Kazakhstan. This is the more established route for Europe-China trains, but one which takes trains 20 hours longer to process.

Steel Coils to TurmenistanWorkers move steel coils headed for Turkmenistan

The improved efficiency will be achieved with the assistance of the Chinese state-owned company, COSCO Shipping and the Port of Lianyungang, an important node in the Belt and Road, which signed a 49 per cent stake in the project last May at the Belt and Road summit. While the role of this company in the project is inconspicuous, it highlights China’s ongoing commitment to the Silk Road Economic Belt, COSCO’s ever-expanding global footprint through a string of strategic investments and, according to Dennis Keen, TV host of Discovering Kazakhstan, ‘that Kazakhstan will be China’s biggest partner amongst the five stans.’

Some of the benefits of this project are already starting to be felt by people in the surrounding Panfilov District of Kazakhstan and its main town of Zharkent. Here, street lighting and pavements have been upgraded and, Naziyam tells us, ‘[the locals] believe this project is improving their lives. They have more chance to work and earn money.’ In a remote and underdeveloped region jobs are not easy to come by and this dry port, which already employs 250 people predominately from the surrounding area, is helping to boost employment. Back at Khorgos Gateway a factory and grain storage facility is being constructed in the special economic zone. Both sites are utilising local labour and, upon completion, will provide additional sources of employment. With the potential for this zone to expand to 4,500 hectares, it is likely to be the district’s most significant project for decades to come.

ICBC Kazakh sideThe shopping district, Khorgos ICBC, on the Kazakh side

In contrast to the international focus of the Kazakh dry port, most locals associate Khorgos with the cross border free-trade zone known as Khorgos ICBC. Obtaining a Chinese visa is very challenging for people in Kazakhstan but entry to this shopping district is easily achieved with just a passport at the point of entry. For many Kazakhs this will be their first window into the lives of Chinese people, and a chance to buy their affordable goods tax free. Yet, given Kazakhstan’s membership of the Eurasian Economic Union (launched in 2015 by founding members Russia, Kazakhstan, Belarus and Armenia), it is also a time when China’s increasing economic influence is rubbing against Russian soft power in the region. The union imposes strict limits on the quantity and value of goods that can be brought back into Kazakhstan, leaving some locals feeling that membership of the EEU is hampering the success of the zone.

MERICS Silk Road v8An overview of the full BRI plan (Image: MERICS - Click to enlarge)

The speed of development at Khorgos has been remarkable. It is because of this that some commentators have called it a ‘new Dubai’. Yet, for the most part it remains a quiet place. As Wade Shepard, the Forbes writer who spent three years travelling the New Silk Road tells us: ‘When I sat atop those massive cranes at Khorgos last May, it was immediately clear the investment required to ignite the Kazakh side of this project. China has special advantages to fill up its special economic zone that the Kazakhs just don’t have.’ While Khorgos is still in its infancy, it might ultimately require as much private investment as the Chinese side has received in state backing if it’s to completely transform from barren sand to steel, glass and cement.

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