WEEK

When will Poland export more to China?

China

In 2013 China’s President Xi Jinping introduced a concept of New Silk Road.
The goal is to establish transport links i.a. rail links that would enable broad economic relations between China and Eurasia.

At the moment sea route still remains the major transport network. Time is its weakness – delivery needs approximately 40 days to come to Europe. As the rail link run, the time required has been reduced to about two weeks. The first link between Spain and China (via Poland)has been launched last year.
The New Silk Road concept (also known as One Belt, One Road) is not merely a rail link. It is intended that One Belt, One Road will encompass a whole land transport chain, including road transport as well.

China is going to use railroads to reach to European countries. One option is Poland as a destination within EU. Goods would arrive at Łódź and after reloading could be transported to other members of the EU. However, since the September 2013 a freight train has been shuttling between Łódź and Chengdu, capital of Sichuan Province. Transportation link with China poses a huge opportunity for Polish TSL sector, which performs very well already today. The development of the New Silk Road will considerably accelerate progress, placing Poland in the central point on the European shipping routes map.

Even though an idea of One Belt, One Road was introduced barely 3 years ago, today it gains a concrete dimension. Soon after announcing the initiative, The Silk Road Fund was established with committed funds of 40 billion dollars.

In the January 2015 The Asian Infrastructure Investment Bank (AIIB) was set up. Its main aims are to foster economic integration in region and develop cooperation between existing development banks in the field of implementing specific projects. In practice, the AIIB joins initiatives aimed at making railway and road transport more efficient. It refers to projects involving countries participated in the One Belt, One Road concept, for instance Kazakhstan or Pakistan.
It may come as a surprise that Poland is also among Prospective Founding Members of the AIIB. By signing the agreement in the October 2015, Poland became a part of the group of 57 countries such as Germany, France or Great Britain. Talks about the final form of the institutions are now in progress and the first annual meeting of the member states will be held in June in Beijing.

The China willingly invests in Europe. Over the last years the Western Europe was of great interest for China but today the Middle Kingdom increases its presence in Poland as well. In 2012, a Bank of China branch has been opened. That was the third office of this institution in Europe, after The Netherlands and Belgium. ICBC has its own branch in Poland as well. CEE Equity Partners is a Chinese fund that seeks investments opportunities in the Central Europe and operates also at the Vistula.

Currently Polish-Chinese economic relations post a big trade deficit. Poland imports 10 times more goods than exports. The China still remains distant target, but trade opportunities increase year on year. How fast the situation is changing can be depicted by railway link from Łódź. In the first year of running, products were being carried to Poland, but the train was returning empty-loaded. Currently goods are shipped to China on a regular basis. Train is filled with groceries such as juice, water, beer, yogurt and sweets.
Maybe it doesn’t appear to be a breakthrough, but trade imbalance with China poses a problem for most EU members as well. Although export grows year after year, import still remains at a much higher level.

Why it is so important to get involved with initiatives based on cooperation with China?

Despite economic downturn the China is still one of the fastest-growing economies in the world. Even if one take into account that what drives China today is export, it’s evident that domestic market becomes the target for Chinese companies. Chinese government pays closer attention to its emerging middle class. It is worth considering hundreds of millions potential clients, eager for goods shipped from Poland as well.