$242 Billion High-Speed Beijing-Moscow Rail Link Approved

$242 Billion High-Speed Beijing-Moscow Rail Link Approved

By Catherine Phillips 1/22/15 at 12:49 PM

Chinese President Xi Jinping (L) and his Russian counterpart Vladimir Putin attend the opening ceremony of the "Year of Chinese Tourism in Russia" at the State Kremlin Palace in Moscow. Sergei Ilnitsky/Pool/REUTERS

Filed Under: Business, China, Russia, Train

A social media post, published by Beijing’s municipal government yesterday, finally confirmed that China are to go ahead with plans to build a multi-billion dollar high-speed rail link between Beijing and Moscow.

The line aims will provide super fast transport across Central Asia and will compete with the Trans-Siberian Railway, cutting travel time between the two countries from six days to two, according to the government’s post on social media website Weibo.

However, critics of the 1.5 trillion yuan ($242 billion) project fear that the investment will have to be shouldered mostly by China. Russian economy has floundered over the last few months due to the sanctions imposed by Europe and the U.S. over Russia’s role in the Ukrainian crisis. The severe drop in crude oil prices has also had a devestating effect on the strength of the rouble.

A Chinese blog has claimed that the rail link will have multiple long term benefits, including improving the country’s food shortage problems as fertile soil can be easily imported from Russia. The site also said the link would provide an easy way for Chinese farmers to migrate to Russia where they would set up farms to supply food to both countries.

Russia has long had a strong relationship with China, which has only been strengthed by the recent souring in relations with Europe and U.S. As well as the finalisation of this new transport link, in May last year the two countries increased the transfer of energy resources between them, signing a gas supply deal worth $400 billion. The 30 year contract stipulates that 38 billion cubic meters of Russian gas will be supplied annually to China, according to Russian news agency Itar-Tass.

Trade between the two countries exceeded $95bn in 2014, according to the Chinese customs department, a 6.8% growth on the year before, with raw materials such as oil, ore and timber accounting for 80% of the trade.

This year, China overtook the U.S. in becoming the world’s largest economy, and the country approved billions of dollar of investments. The government’s economic planning agency, the National Development and Reform Commission (NDRC), approved $113 billion worth of infrastructure projects between the months of October and November alone.

Earlier this month there were reports that China is planning even more infrastructure projects valued at a stggering total of seven trillion yuan ($1.1 trillion).