China Shippers Look Landward in Dry Port Investment With Kazakhstan

(Beijing) — Two Chinese companies have taken a 49% stake in a project on Kazakhstan’s border with China, as the world’s second-largest economy looks to increase its investment in countries involved in the Belt and Road initiative.

China COSCO Shipping Corp. Ltd. and Lianyungang Port Group Co. Ltd. signed agreements on Monday with Kazakhstan’s national railway company to acquire the stake in a dry port in the Khorgos-East Gate Special Economic Zone, which borders China’s northwestern Xinjiang region. The companies will each take 24.5% ownership.

The dry port is a transshipment hub — an intermediate destination for goods — directly connected by rail for shipping items from China to Europe. The hub is five days by train from the Lianyungang Port in eastern China and about 10 days’ rail travel to Europe.

The size of the deal has not been disclosed.

The project could serve as a model for China’s massive Belt and Road infrastructure initiative, as it connects the initiative’s Silk Road Economic Belt — a land area linking China with Europe through Central Asia — and an ocean-based 21st Century Maritime Silk Road, which links countries to the south of China and leads to Africa and southern Europe, according to a COSCO statement.

From 2013 to 2016, Chinese enterprises invested over $60 billion in countries participating in the Belt and Road initiative, according to Ning Jizhe, director of the National Bureau of Statistics. The catchall program, announced in 2013, covers infrastructure projects in at least 65 countries, which combined are home to 62% of the world’s population and contribute almost a third of global annual economic output.

The dry-port investment is the second Sino-Kazakh logistics project under the auspices of the Belt and Road initiative. In 2013, the city of Lianyungang, a coastal city in Jiangsu province, partnered with Kazakhstan’s national railway company to establish a logistics hub in the Lianyungang Port, which was put into use in 2014.

Contact reporter Coco Feng (renkefeng@caixin.com)