Why do so many Chinese containers empty into Europe?

The China Railway Corporation acknowledged the phenomenon of mixing too many empty containers in shipments from one country to Europe to en...


The China Railway Corporation acknowledged the phenomenon of mixing too many empty containers in shipments from one country to Europe to enlist state subsidies.
Public opinion is putting great doubts on waste and serious frauds related to the "Belt, Road" initiative after China National Railway Group. For a long time, it was a monopoly unit in this country railway industry, which was forced to admit that many containers carrying Chinese goods to Europe were actually empty.

This acknowledgment follows the evidence gathered from the Chinese Business Journal of the Chinese Academy of Social Sciences about the case of only one of 41 containers on a train. Really contains goods.



Chinese President initiated the initiative "Belt, Road". Photo: Kyodo.

Empty containers to support political policy
The "Belt, Road" initiative initiated by President Xi Jinping aims to link the economies of the world to the trade network taking China as the focal point.

Many localities rushed to open more train routes as a way of showing support for Beijing's geopolitical strategy. In addition to many exporters, they "transport" empty containers just to enlist government subsidies.

China Railway Group acknowledged these problems in an interview with the Global Times last week. But stressed that this phenomenon no longer existed in 2018. After the new rules limit the number of empty containers allowed to account for only 10% of each train.

The group also said that out of all containers shipped to Europe in 2018 only 6% were empty, compared with 29% of trains going east. In the first half of 2019, this rate fell to only 2% and 18%.

Jonathan Hillman, a senior expert who tracks the flow of goods between China and Europe at Washington-based Center for Strategic and International Studies (CSIS), says the issue of exporting empty containers "In parallel with the 'Belt, the Road' initiative in advocating for political interests in the immediate future and ignoring fundamental economic foundations."

“These routes are an effective advertising tool to sell premises around the 'Belt, Road' area, although it does indeed create 'fevers' but will not affect the dominant role. of maritime trade ”. He said.

"Generous subsidies from the government to encourage the development of freight routes, along with the rain of compliments from China's public media, contribute to boosting this trend."

Thousands of dollars subsidized per container
In 2018, the Ministry of Finance of China subsidized up to 50% of the cost of transporting goods by rail between China and Europe, then reduced to 40% in 2019. It is expected that after cutting to 30% on by 2020, subsidies will be abolished completely by 2022, although smaller subsidies have also begun to take effect.

In Heilongjiang, a province located on China's border with Russia, two west rail lines from the capital city of Harbin to Moscow (Russia) and Hamburg (Germany) were shut down last year due to a lack of funding. .

In addition, local authorities also have very generous incentives. Typically in Xi'an, in 2018, each container exported to Europe is financed 3,000 USD. In general, subsidies range from $ 1,000 to $ 5,000 per 40-foot container, according to CSIS's report last year.

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High Tech Brain: Why do so many Chinese containers empty into Europe?
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