Russia and China are in talks to build a high-speed rail link between Harbin, in Heilongjiang province, and the Russian port of Vladivostok, at an estimated cost of US$19 billion.

The project was recently discussed in Beijing by the Russian Minister for Development of the Far East, Alexander Galushka, and China Railway Dongfang Group Director General Cai Zemin, who was representing the interests of the China Railway Group Limited.

The planned 380 kilometer route would go through 12 stations, with trains traveling at 250 kilometers per hour. Laying of track on the Chinese side, from Mudanjiang to Harbin, is already underway.

“Initially this was considered as a passenger route. But after assessing the project’s economics, it was decided to […] also take into consideration the transportation of goods,” Cai Zemin told media.

Cai noted that more than 65 million people live in the border area on the Chinese side, which indicates there will be passenger demand. An integrated entertainment resort in Primorsky Krai, of which Vladivostok is the capital, is likely to be an attraction, he added. In 2016, 420,000 Chinese citizens visited the region.

Galushka’s ministry said the new Harbin-Vladivostok route would help to connect the Eurasian Economic Union “with the economic belt of the Silk Road.”

Alexander Krutikov, Galushka’s deputy minister, told Asia Times that a feasibility study for the project was underway with a view to plans being in place  September 2018.

Maxim Krivelevich, from the Far Eastern Federal University’s School of Economics and Management, told Asia Times the project could have positive macroeconomic and microeconomic benefits. He warned, however, that Western sanctions could impede its implementation.

“Serious investments are needed to implement the project,” Krivelevich said. “However, in February of the coming year, a new round of financial sanctions against Russia is expected. Major projects that require serious financing from international lenders and financial organizations could fall under these sanctions.”

“The better the transport corridor, the more goods volumes will rise. But the financial side determines everything”

If there is a tightening of sanctions against Russia, he believes Chinese banks that are actively involved with American and European clients would be unlikely to co-operate.

“Political will, availability of labor and land is important, but the main thing in any project is capital,” he said. “If it can enter Russia without fear of sanctions, the project will be implemented. Because the demand is huge. The large volume of cargo that can move from Asia to Europe is endless. The better the transport corridor, the more goods volumes will rise. But the financial side determines everything.”

In 2014, Russia’s Ministry of Transport, the State Committee of China, Russian Railways and China Railway signed a memorandum on high-speed rail cooperation. It was decided that a high-speed Moscow-Kazan link, spanning 760 km, would use Chinese technology. It is expected that services along the route will begin in 2023.

Russia also plans to modernize the Trans-Siberian Railway, which runs 9,288 km from Moscow to Vladivostok and is an important part of the transport corridor between Europe and the Asia-Pacific region. President Vladimir Putin has allocated US$2.5 billion for the modernization of the Baikal-Amur Mainline (BAM) and the Trans-Siberian Railway in 2017 and 2018.

China Railway Group, a state-owned enterprise, has projects around the world. In China alone, the company has laid more than 90,000 kilometers of railway lines, and more than 100,000 kilometers of roads.