Yiwu-Europe railway can help boost trade even at low end

Source:Global Times Published: 2015-6-24 20:03:01

Small commodities still play key economic role

Illustration: Peter C. Espina/GT

The Yiwu-Xinjiang-Europe (shortened as Yixin'ou) freight rail line, which runs from Yiwu in East China's Zhejiang Province through Xinjiang, Northwest China to Madrid, capital of Spain, went into operation in November 2014. An infrastructure project linking two prominent hubs for small commodities in China and Spain, the Yixin'ou is one of the best-known infrastructure projects under the "One Belt, One Road" initiative.

However, in China, there is some controversy over the rail line, with some people arguing that because small commodities are "low-end" products, the Yixin'ou is of limited importance for economic growth in China and abroad.

Infrastructure is a key component of China's "One Belt, One Road" initiative. The Economic Information newspaper reported on June 17 that China is likely to invest a total of $6 trillion in infrastructure construction under the initiative. But the Yixin'ou rail line has a special place among the infrastructure projects that have been completed so far. 

Yiwu has been known for a long time as China's biggest hub for small commodities. The other end of the line, Madrid, is also known in Europe for its small commodity market. So the 13,000-kilometer rail line, which passes through six other countries apart from China and Spain, is expected to open up an efficient channel for small commodity trade with all the countries along the route.

There are people, including researchers and policymakers in China and abroad, who say that the small commodities produced in Yiwu and other Chinese regions are low-end goods with little or no technological input, and that infrastructure projects to facilitate small commodity trade are of limited significance.

But this is a prejudiced perspective. First, many of China's domestic brands, whether in Yiwu or in other parts of the country, have made a lot of efforts to enrich their product lines by manufacturing high-end products. It might take some time for the domestic high-end manufacturing industry to take shape and win global recognition, but it's unfair to say that all the small commodities made in Yiwu or elsewhere in China are "low-end" products.

Second, in the global context, the consumption of the so-called "low-end" products always constitutes the largest share of the total market for manufactured goods. Mass production of these commodities also creates a lot of jobs. We should start to look at small commodities from a different perspective and understand their significance to the domestic employment situation and to overall economic growth.

Third, global economic growth has been slow in recent years. Normally, one of the side effects of relatively low economic as well as consumption growth is an increase in the proportion of low-end commodities in the overall consumption volume. Therefore, now is a good time for China to expand international trade by facilitating market access and cultivating consumer demand for low-end products.

The expansion of international trade calls for a number of measures to be taken by the government, including infrastructure construction and the promotion of healthy competition. In this sense, the Yixin'ou freight line, which will facilitate the trade of small commodities between China and other countries along the "One Belt, One Road" route, could have a positive impact on domestic as well as global economic growth.

The attitudes of Spain and other countries along the route toward the Yixin'ou rail line also confirm its significance. On November 18, 2014, a train carrying 82 containers loaded with stationery, craft items and Christmas products, set off from China and arrived in Madrid three weeks later. The train was welcomed by local Spanish people and the Spanish media covered it. On February 22, the train returned to Yiwu after a 24-day journey from Spain carrying more than 60 containers packed with Spanish products such as olive oil and wine. Now, the services on the new rail line have been standardized, and the service frequency will be increased to meet the trading requirements between China and other countries along the Yixin'ou route in the second half of 2015.

It can't be denied that the Yixin'ou rail line has some shortcomings. For example, the train running from Yiwu to other countries is filled with commodities, but many of the containers are empty on the return trip. Therefore, the governments of countries along the route should come up with solutions to increase the efficiency of the rail line, particularly by increasing China's imports of commodities from these countries. The Chinese government should also take measures to improve the cargo line, such as lowering transport costs and establishing a Yixin'ou railway logistics center.

The article was compiled by Global Times reporter Xie Jun based on speeches at a forum in Yiwu by Mei Xinyu, senior research fellow at the China Academy of International Trade and Economic Cooperation; Zhu Guojian, deputy director of the management committee of Lugang New Area, Yiwu; and Slawomir Majman, president of the Polish Information and Foreign Investment Agency. bizopinion@globaltimes.com.cn

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