Hub of transport and logistics for central European region with highlighted function

By Prof. Dr. László Palkovics
0 Comment(s)Print E-mail National Development and Reform Commission, July 7, 2021
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Hungary has always considered the People's Republic of China as an exceptional strategic partner and China has expressed its appreciation and interest in Hungary as the two sides have partnered and implemented a number of projects and initiatives that have been successfully launched and are operating in all areas of our relations and at all levels of our cooperation. The "Opening to the East" policy of the Hungarian Government since 2010, the "Belt and Road Initiative" of which Hungary was the first EU member to join in 2015, the Comprehensive Strategic Partnership between China and Hungary established in 2017 and the 17+1 cooperation mechanism platforms have long contributed to deepen relations in many fields of key importance.

Important milestones were achieved in the past years while China also became Hungary's largest trade and investment partner outside the EU. As a result of our countries long lasting partnership in the past decades, Hungary has become an important destination for many Chinese companies and has become an important transit and distribution point for accessing the European market.

China-Europe Railway Express Yields Remarkable Results

The new model of innovative cooperation on the "Silk Road Economic Belt" is a worthwhile project in the "Belt and Road" cooperation between China and Hungary. It creates the environment for Hungarian enterprises to provide modern and efficient logistic and trade services for Chinese enterprises, one-stop services for the whole chain of international warehousing, support the establishment of digital supply chains and the international marketing of new industries while also helping Hungary and China to further strengthen facility connectivity and trade flow.

Promoting comprehensive cooperation between the two countries in the fields of modern trade, logistics and e-commerce are major goals of the Hungarian Government to further emphasize the role of Hungary as a land transportation hub for China-Europe freight trains and European inland trains.

We are proud to say that by today, all major Chinese and European trains are concentrated in Hungary with dozens of European inland railroads crisscrossing the country, allowing goods to be delivered to all major European cities within a short period of time via a well-developed and continuously improving rail network.

Generally all freight trains in China enter Russia directly or indirectly (via Mongolia and Kazakhstan). Then 90% of the freight trains enter Belarus from Russia, and from Belarus to Poland. After another change of tracks at the Polish border, the goods enter the European Union.

However, in recent years, with the rapid increase in the number of trains, the operation and transhipment of China-Europe freight trains has faced a bottleneck at the Belarus-Poland border, as serious congestion has developed at the intersections of the broad-gauge and standard-gauge lines at the borders of the European Union. The current issue - that seriously affects train schedules and delivery time -, makes it clear that it is essential to build alternative lines to ensure that none of the lines would face overloading problems.

On April 21, 2017 the first China-European freight train from Xi'an successfully arrived at Budapest after 19 days and 9,300 kilometres carrying 41 carriages of various goods. The day marks the date when the first China-European Express line was established between our countries and Hungary has become the first Central and Eastern European country to be directly served by the China-European Express other than Poland.

Soon after, on May 27, 2017, the Hunan Changsha-Budapest China-European freight train led by CECZ (Central European Trade and Logistics Cooperation Zone) and jointly operated by Hunan-Europe Express, departed from Changsha Xialing Station breaking the traditional Russia-Belarus-Poland route into Europe and opening the southern route into Europe via the exit of Erenhot, through Mongolia-Russia-Ukraine and Hungary, where at the junction of Ukraine, Hungary and Slovakia, the wide tracks are replaced by narrow tracks. After the successful opening of Changsha-Budapest CEB train, it was immediately recognized by the national train market and became the first China-Hungary CEB train in regular operation.

In the same year, on November 28, 2017, the first Budapest-Changsha return train was officially launched, marking the official arrival of a round-trip China-European freight train from China to Hungary. Quickly following the trend, in January 2018, the first Xi'an-Budapest "Chang'an" China-European freight train arrived and has been running smoothly ever since, taking the lead in opening up the southern route to Europe via Alashankou/Khorgos, and crossing Kazakhstan-Russia-Ukraine and Hungary. In June 2019, the first Jiangxi Ganzhou-Budapest China-European freight train arrived, followed by the Jinan-Budapest "Qilu" Eurasian freight train, the first direct China-European freight train to Budapest from North China in August 2019.

As of today, 7 cities and regions (Changsha, Xi'an, Chengdu, Chongqing, Jinan, Ganzhou, Jinhua (Yiwu)) are connected and moving their products through Hungary with the established, scheduled China-European freight trains.

Support to the Development of China-Europe Railway Express

The Hungarian Government considers the implementation of a modern, competitive railway transport to be a priority. We believe that the backbone of every domestic transport is the railway, which must be secure, reliable, innovative, sustainable and flexible. The basic condition for this is the joint and continuous modernization of the railway infrastructure and rolling stock. One of the main benchmark projects of the Sino-Hungarian cooperation is the modernization of the Budapest-Belgrade railway line within the framework of the BRI. With the renovation of the railway line, Hungary will offer the fastest transport route for Chinese goods between Greek ports and Western Europe. In the recent period, the traffic in the port of Piraeus in Greece has increased almost tenfold and therefore it is in Hungary's interest for Chinese goods to reach Western Europe the fastest through Hungary. According to our soon to be implemented goals, the duration of railway cargo transport between East Asia and Europe will be reduced from 24 to 14 days.

As China-Europe freight trains has been running between Hungary and China on a regular basis for years, further developments for railroad infrastructure were taken by the Hungarian Government to emphasize the country's role as a Central European logistics hub.

In 2019, Hungary invested in the development of the Ukrainian-Hungarian railroad corridor at Záhony as part of the Belt and Road Initiative, a route providing a solid guarantee for the future passage of China-Hungary freight trains. With the development additionally to the southern Budapest-Belgrade path, as well as with the establishment of industrial parks at the eastern borders of Hungary and the European Union, we seek to play a central role in regional logistics, maximizing the favorable conditions and regional endowments of our country. Transforming the mentioned eastern region into a major transportation hub, trains will be able to reach 13 major cities in 10 different countries along the different railway lines, with all running through Záhony.

At Záhony, the Central European Trade and Logistics Zone (CELIZ) project also secures a great platform for Chinese companies to establish their plants, factories, affiliates in the territory of the European Union. It provides them with a site and also supports them in all administrative and legal matters in order to put their production units into operation in Hungary as soon as possible. This cooperation is also mutually beneficial for both the Hungarian and the Chinese sides, as it will significantly contribute to the improvement of the performance of the Hungarian economy and will create many new jobs.

We also envisage that by 2030, the capital cities of the Visegrad Group (V4) countries Warsaw, Prague, Bratislava and Budapest will also be accessible on high-speed railway lines from Budapest but besides rail and road connectivity, Chinese logistics companies are also constantly looking for solutions and cooperation opportunities in Europe in the field of air cargo handling for the huge, ever-increasing export-import air cargo volumes. Therefore, Hungary participates actively in the Air Silk Road freight hub projects, and has also reached important milestones in the past years.

The Deepening of Bilateral Cooperation on Multiple Fronts

As part of the Belt and Road Initiative, these projects link the Central European region to one of the most important trade routes in the world through Hungary. Mutually benefiting successful initiatives around the various fields of cooperation do not only bring more job opportunities, but also increase the confidence of Chinese companies in Hungary. Due to the continuous support from the Governments and the comprehensive strategic partnership, by today, Hungary has turned to be an important transit and distribution centre for entering the European market while also becoming a key destination for many Chinese companies.

Over the past year, we could witness the transformations the epidemic (COVID-19) has brought to the world, but despite the heavily disrupted global supply chains during these extraordinary times, China-Europe Express trains managed to keep the Eurasian supply chains running seamlessly. As the demand continuously grows for inland transport opportunities, Hungary is devoted to further increase its role in connecting regions with advanced and safe logistics with the help of our Chinese friends and partners, within various frameworks of cooperation.

We support free and fair global trade, which is even more important than ever before: the fewer the obstacles, the faster the recovery.

Prof. Dr. László Palkovics is minister for Innovation and Technology of Hungary.

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