Reduced subsidies won’t hurt China-EU trains

Traders and industry representatives said China-Europe freight train services will experience some manageable disruptions given its booming demand and mature service and facilities, in response to recent speculation about the possible abolition of government subsidies for cross-border cargo trains next year.

Speculation about the abolishment of subsidies was recently brought up at the European Silk Road Summit held in Amsterdam, the Netherlands, by several Chinese industry participants, according to media reports.

While several traders and industry representatives were not fully aware of the speculation when reached by the Global Times on Friday, they believe the actual impact on train services will be within expectation and manageable if subsidies are slashed in the future.

There is a possibility that train subsidies will end next year, given that they have been reduced year-onyear and cannot last forever, a senior industry insider told the Global Times on Friday.

In addition to market trends, the reduction in subsidies would be a signal for the changing trade focus toward Southeast Asian countries, which is expected to remain the number one trading partner with China this year, especially with the opening of the China-Laos railway, the person said.

From the current point of view, the abolition of subsidies for ChinaEurope express trains should have more advantages, as “after 10 years of development, China-Europe express trains have cultivated a relatively fixed group of customers,” the insider said.

The subsidies stand at around $1,000 per 40-feet container (depending on regions), while the Chinese government will phase out the subsidies by the end of 2023 – it was planned to be the end of 2022, but this was extended a year due to COVID-19, according to Jacky Yan, founder and CEO of New Silk Road Intermodal, cited by foreign industry service provider loadstart.com.

At their peak, the subsidies were $3,000-5,000 per container, but it has now come down to $1,000, according to media reports.

Even though the subsidies are being reduced year-by-year, train service demand has remained resilient despite logistics hurdles, the epidemic and other factors this year.

From January to November, about 14,000 China-Europe freight trains had been dispatched, a year-on-year increase of 20.3 percent, bucking the trend, the latest data from China Customs showed.