Only Connect

Today new networks are growing and the ancient institution of the Silk Road is undergoing a thoroughly modern makeover. China’s booming economy is making a new overland transit corridor a viable alternative to the sea routes that eclipsed the old Silk Road trade with the rise of modern maritime trade. Kazakhstan is aware of its geostrategic positioning, and the government is playing its hand and raising the stakes. Air freight is expensive and of limited capacity, while marine trade often is too slow to accommodate time-sensitive supply chains. Kazakhstan is looking to overland transit as an alternative means, while also bolstering its economic position.

Currently, four international transport corridors pass through Kazakhstan that connect Chinese and European markets, including the TRACECA (Transport Corridor Europe-Caucasus-Asia). Today, China’s growth, particularly in its western regions, is contingent on delivery of its output to world markets. In the near future, many of these goods are expected to trave along the new international highway, the Western Europe — Western China corridor. The total length of the road will be 8,445km, of which 2,787km will be in Kazakhstan. This transit corridor will reduce transportation times between China to Europe by at least 350%. Maritime shipping takes around 40 days, whereas overland only takes 10. The new road system will increase the volume of cargo transported through the country by 250%, from 13 million to 33 million tons per year by 2020.

The corridor, being the shortest overland transportation route between the Central Asian nations and Europe, will serve overland trade through three strategic axes: China-Kazakhstan, China-Central Asia, and China-Kazakhstan-Russia-Western Europe. In this regard, the first major breakthrough in the field of logistics development is the establishment of the Khorgos-East Gate special economic zone (SEZ) on the border with China, which will operate as a “dry port” in the international transport and logistics sector.

The transport corridor runs from the Chinese border in southeast Kazakhstan through Almaty, Taraz, Shymkent, Kyzylorda and Aktobe and to the north-western border with Russia. Leading international financial institutions, such as the European Bank for Reconstruction and Development (EBRD), the World Bank, the Asian Development Bank (ADB) and the Islamic Development Bank (IDB) are co-financing the project along with the Kazakhstan government.

In order to support the development of the Western Europe-to-Western China international transport corridor, the EBRD approved a loan of $196.5 million to Kazakhstan to rebuild and expand the road connecting Shymkent City to the Uzbek border on January 2013. The Kazakh government will direct the project, and it is scheduled for completion by the end of 2016.

The strategic road linking Shymkent City to the border with Uzbekistan is 99km long. The EBRD will finance reconstruction of the 62-kilometer southern section to the border and the ADB will finance the remaining 37-kilometer section to Shymkent.

The expanded road will spur trade within the region as well, facilitating the transit of goods and passengers from Uzbekistan and Tajikistan to Kazakhstan, the Russian Federation, and Western Europe. Moreover, the project will also stimulate growth of private sector companies that carrying out related engineering and maintenance contracts. The EBRD has also provided another loan to upgrade Kazakhstan’s regional connectivity by developing the road between Almaty and the Kyrgyz capital Bishkek. With a loan of $28.5 million, the Almaty to Bishkek road enables traffic to flow smoothly between the two cities. In 2000, the traffic intensity for the EBRD-financed section of the road was between 3,500 and 4,000 vehicles per day. Today, following the rehabilitation, daily traffic volumes have grown to 25,000 to 30,000 vehicles.