Historic Asia trade route to be rebuilt

FE Team | Published: September 20, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Raphael Minder in Manila and Isabel Gorst in Moscow
FT Syndication Service
China and seven countries in and around central Asia have reached a preliminary agreement to build a $19.2bn (Â£9.6bn) modern-day equivalent to the historic "Silk Road" trade route between China and Europe.
The plan was agreed by senior officials in Manila this month and is expected to receive formal endorsement at a November ministerial meeting in Tajikistan. It is backed by the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the Islamic Development Bank (IDB), the International Monetary Fund (IMF), the United Nations Development Programme (UNDP) and the World Bank (WB).
The ADB says less than 1 per cent of the more than $1,000bn (euro 721bn, Â£500bn) of trade between Europe and Asia is now transported through central Asia, a region that used to be at the heart of the trade route .
"This is a region that is at the geographic centre but has been totally overlooked as a viable overland route by some of the new powerhouses of world trade," said Xianbin Yao, deputy director-general of the ADB's central and west Asia department.
The road and rail investments agreed to by Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan and Uzbekistan are to begin next year, for completion in 2018.
The plan is not to follow the exact routes taken by the Silk Road, which was a series of roads and trails.
Instead, the hope is to develop six corridors combining rail and road services from China to Europe, as well as from Russia to southern Asia and the Middle East. On the European side, the corridors will end in Turkey in the south and in Russia in the north. Russia has been invited to join the project but has yet to do so.
Almost a third of the investment is expected to take place on Chinese soil and is therefore likely to involve funding from Beijing, which has been allocating growing resources to its remote western regions.
Kazakhstan, central Asia's fastest-growing economy, is also expected to be an active participant as it tries to become a hub for container traffic between China, Asia, the Gulf states and Europe. Kazakhstan already has plans to spend $26bn on transport infrastructure by 2015 as it tries to modernise its 14,000km railway network and expand the Caspian port of Aktau.