Thanks to the existence of the China-Europe Express, the two-week transportation time from China to Germany and Europe has effectively broadened the channels for China-Europe trade and promoted the improvement of trade efficiency. Although the Russian-Ukrainian war 11 months ago cast a shadow on the route passing through Russia, data shows that the EU still imports key goods from China through the China-Europe Express and continues to pass through Russia.

The EU's imports of some raw materials are increasing - especially rare earths from China. The EU needs to apply them to the manufacture and production of weapons. Michael Wurmser, owner of Norge Mining Company, said: "Despite the various EU sanctions, the operation of this supply chain (the China-Europe Railway passing through Russia) is still very stable."

After the outbreak of the war, the total amount of rare earth metals imported by the EU from China by rail increased rapidly. In the first nine months of 2022, rail imports reached 36,100 tons, more than doubled year-on-year; imports reached 376.9 million euros, up more than 4/5 year-on-year (data source: EU data Source: Bloomberg)

A stable supply of metals needed for chips, electronics and ammunition used by Western weapons manufacturers in the production of modern weapons and equipment is arriving in Europe from China through Russia. Most rare earth metal minerals are mined in China.

This scene sounds a bit "funny" - on the one hand, Russia and Europe are fighting on multiple "fronts", and on the other hand, Russian Railways and other carriers are continuously transporting key metals needed by the European defense industry to the opponent's weapons supply rear by rail.

Michael Wurmser, owner of Norge Mining, met with industry executives trying to diversify strategic mineral supply chains in Davos, Switzerland. Norge Mining has large-scale vanadium and titanium deposits in Norway.

Currently, these two rare earth metals are mainly produced by China and Russia. More than 90% of the EU's rare earth elements come from China (94% according to the German Economic Research Institute DIW Berlin). The China-Europe Express is an important supply line for them.

Russian Railways' freight routes remain vital to European industry, and the EU issued guidance in July last year to clarify that goods transiting Russia are not subject to sanctions.

Rare earths mined in China (such as lanthanum) are widely used by Western weapons manufacturers to make armor-piercing shells. Tungsten, another rare earth metal, is a heavy metal required by Thales Air Defense Ltd. in Northern Ireland and Rheinmetall AG in Germany to produce anti-tank weapons, and most of its supply is also borne by my country.

Bloomberg reported that the EU's previous assessment report stated that the Ukrainian war exposed Europe's dependence on Russia's railways and transit corridors in trade with China. Although the China-Europe Express trade volume accounts for only 3% to 4% of the total trade in goods between China and Europe, which is only a small part of sea transportation, rail transportation can shorten delivery time. Freight trains departing from China can cross Russia and arrive in Duisburg, Germany in as little as 16 days. Ocean freight from Asia to Northern Europe can take twice as long.

The China-Europe express train departs from Wuhan and heads to Duisburg, Germany (Photo source: Xinhua News Agency)

Since 2016, China-Europe freight trains have seen a sharp increase in freight volume through the Northern Corridor (through Russia), reaching 692,500 TEUs in 2021. But that number has fallen since the Russo-Ukrainian war, with 187,000 TEUs carried between January and April 2022, according to EU analysis.

In addition to the Northern Corridor, the Middle and Southern Corridors still have capacity constraints and cannot absorb the volume lost in the Northern Corridor. An EU official said this is a problem that needs to be solved in the medium and long term, but not a short-term emergency, because the vast majority of critical goods are not sanctioned.

The supply chains of both sides on the battlefield are intertwined - this is actually not new. Rafael Loss, a military trade analyst at the European Council on Foreign Relations, said that during World War II, the Japanese navy used scrap metal supplies from the United States; during the Cold War, Soviet metal supplies also helped fill Western weapons reserves.

Initially, people were concerned about whether China-Europe trains passing through Russia would become the target of EU sanctions. But in fact, the EU itself seems to be more worried that this important supply line will one day become the lifeline of Russia's restriction on the EU. "Although the value of goods transported by rail accounts for only a small part of the entire EU-China trade relationship, if Moscow takes action to block this route, the costs and difficulties for European importers can be imagined."

The war has slowed down the growth of freight volume on China-Europe trains. The red bar shows the changes in the total value of freight transported by China-Europe trains from January to September in the past five years, which were 9 billion, 11 billion, 17 billion and 20 billion euros from 2018 to 2021, and 13 billion euros in 2022 (data source: EU data Source: Bloomberg)

Bloomberg said that China's tungsten mines, which account for more than 83% of the world's production, could make the European economy extremely vulnerable if supply is interrupted.

This metal is essential for many products - from batteries, magnets to chips, China and Russia have almost 2/3 of the confirmed reserves. And against the backdrop of the Russian-Ukrainian war, defense demand has been rapidly driven and defense spending has also risen sharply.

It is reported that British tungsten mining company Tungsten West Plc is restarting a world-class tungsten-tin deposit in South Devon. "Competition for resources is becoming more intense," said Rafael Loss, a military trade analyst at the European Council on Foreign Relations.

　So far, there are no rare earth mines being mined in Europe. 　　

Article source: Exploring the New Silk Road

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