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food / travel

New Rail 'Silk Road' Feeds China's Love For European Goods

China-to-Europe cargo train in Chengdu
China-to-Europe cargo train in Chengdu
Sébastien Falletti

CHONGQING — Every day since 2014, a train leaves from the western German city of Duisburg. It winds its way across Europe and Asia to finally reach Chongqing, a megalopolis of 28 million inhabitants in southwestern China. Huge cranes there extract gigantic matchbox-like containers from the train. BMW cars made in Germany are taken from the train while HP laptops and iPads produced in the Chinese Foxconn factory nearby make their way to Europe.

The Old Continent has now become a lot closer to this western Chinese enclave. Most of the products here have been brought from Europe by train. This railway line is one of the first tangible achievements of Chinese President Xi Jinping's ambitious new Silk Road strategy. Xi hopes to stretch the railway to the Belgian port city of Antwerp as early as this year.

The train journey across Eurasia, which includes passing Russia and Kazakhstan, is still chaotic and lasts between 12 and 15 days. But this path is still a lot faster than the 25 days the journey takes by ship, which is often further delayed by customs on the Chinese coast and travel into Chongqing. By road, it can take up to 60 days door-to-door from western Europe to the Sichuan megalopolis.

This railway line has enabled Olive Zhang to raise funds to build a "Euro Shopping Park," a 72,000 square-meter warehouse that uses a locomotive-shaped logo and is located in the outskirts of Chongqing. In a brick building constructed in a vaguely British style, Orange Le Creuset casseroles costing 1540 yuans ($220) take center stage on the immaculate shelves. Under the spotlights, Victorinox Swiss knives are displayed on shelves next to German UHT milk cartons and French Dodie baby bottles. Outside the window, a fog partially conceals the Sichuan mountains.

"Chinese mothers want the best brands for their children," explains a vendor at Euro Shopping Park. Chinese consumers want European products, which are seen as safer and healthier, and this warehouse helps meet that demand.

Zhang, Euro Shopping Park's chief executive, has also developed an e-commerce application on which shoppers can find more than 500 European brands, including 80 French ones. "70% of the transportation costs are covered by government subsidies. Without those, this business wouldn't be viable," says Zhang, who took over her father's old business to turn it into an international operation.

If the new railway line beats the sea route in terms of speed, it's nonetheless more expensive and less competitive. Still, the young woman, who opened a branch in Germany, sees the rail as a way to distribute European products directly to consumers.

She's sure of the New Silk Road's prospects and has traveled with Prime Minister Li Keqiang to Lithuania and Kazakhstan in November to persuade these countries to invest in the sprawling railway network.

But Beijing is having difficulties in convincing its partners to modernize their stretch of the railway, which has been affected by technical issues especially in central Asia, where refrigerated containers are threatened by power shortages and frequent delays.

"There are doubts about governments' political will to invest and bring the railway up to date," says Kevin Martin, a representative of the European Union Chamber of Commerce in China, which is based in Chongqing. Brussels, which fears that Xi's project might be a one-way road that benefits only Chinese exporters and infrastructure companies, has made its reluctance clear.

It's true that Chinese authorities, after having multiplied the number of highways and high-speed rails, are now looking for new prospects. Zhang, whose warehouse lies next to an amusement park that reproduces Europe's most famous monuments in miniature, hopes to convince Brussels that the Old Continent, and not just China, can benefit from the president's new Silk Road.

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Economy

Russian Diamonds Are Belgium's Best Friend — But For How Much Longer?

Belgium has lobbied hard for the past year to keep Russian diamonds off the list of sanctioned goods. Indeed, there would be a huge impact on the economy of the port city of Antwerp, if Europe finally joins with the U.S. and others in banning sale of so-called "blood diamonds" from Russia. But a 10th package of EU sanctions arriving this month may finally be the end of the road.

Photo of a technician examining the condition of a diamond in Antwerp, Belgium

A technician examining the condition of a diamond in Antwerp, Belgium

Wang Xiaojun / Xinhua via ZUMA Wire

Since Vladimir Putin's invasion of Ukraine, the European Union has agreed to nine different packages of sanctions against Russia. With the aim to punish Moscow's leadership and to cripple the war economy, European bans and limits have been placed on imports of a range of Russian products from coal, gas and steal to caviar and vodka — were successively banned over the past 11 months.

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Still, one notable Russian export is a shining exception to the rule, still imported into Europe as if nothing has changed: diamonds.

Russian state conglomerate Alrosa, which accounts for virtually all of the country's diamond production (95%) and deals with more than one-fourth of total global diamond imports, has been chugging along, business as usual.

But that may be about to change, ahead of an expected 10th package of sanctions slated to be finalized in the coming weeks. During recent negotiations, with 26 of the 27 EU members agreeing on the statement that ALSROA’s diamonds should no longer be imported, the one holdout was not surprisingly Belgium.

The Belgian opposition to the ban is explained by the port city of Antwerp, where 85% of the rough diamonds in the world pass through to get cut, polished, and marketed. There are estimates that 30,000 Belgians work for Alrosa.

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