Xinjiang's south transformed by reforms into dynamic trade gateway to Central Asia, Europe

Xinjiang Uygur autonomous region's southern area is becoming a new frontier for China's opening-up, with land ports seeing a surge in cross-border cargo traffic, foreign trade companies enjoying booming business and government reforms energizing development of the local economy.

As the Belt and Road Initiative has deepened cooperation with Central Asia, more trade potential is arising in southern Xinjiang.

On Nov 1, the China (Xinjiang) Pilot Free Trade Zone was established, covering 179.66 square kilometers and comprising three subzones in Kashgar prefecture, Urumqi and Horgos.

The new FTZ has further enhanced business confidence on top of the impressive performance of imports and exports this year, ushering in a new period of high-level opening-up.

On Nov 11, the Kashgar area of the FTZ, covering 28.48 sq km, was launched.

In Kashgar prefecture, trade has been growing rapidly this year. From January to November, imports and exports surged 80.8 percent year-on-year to reach 77.15 billion yuan ($10.87 billion), data from Kashgar Customs showed. The prefecture contributed 24.1 percent to Xinjiang's total foreign trade. Kashgar has trade links with 128 countries and regions, 90 percent of which are involved in the BRI.

Kashgar, meaning "a gathering place for jade and gemstones", has been welcoming traders from across the world for over 1,000 years. Nowadays, it still functions as an international trade and logistics hub.

It has three ports — the Khunjerab Pass to Pakistan, the Karasu Port to Tajikistan and the Kashgar Airport with six international freight flights. Neighboring Kezilesu Kirgiz autonomous prefecture has two land ports to Kyrgyzstan.

"Kashgar has strong economic complementarity with neighboring countries in terms of trade, industrial structure and resource utilization. It serves as a crucial gateway for China's western opening-up, and an international golden corridor for China to access Central Asia, South Asia, West Asia and Europe," said Wang Chuanjie, Party secretary and chief of Kashgar Customs.

Booming foreign trade

In late December, at the warehouse of Cathay Prosperity E-commerce (Xinjiang) in Kashgar, workers were busy packing products for export.

As the New Year approaches, Chinese products such as cellphone accessories, balloons, pajamas and kitchen utensils are in great demand from clients in European countries, said Zhang Qi, general manager of the company.

Since its establishment in 2020, the company has bought goods — mainly consumer electronics, clothes and shoes — from the Yangtze and Pearl river delta areas through e-commerce operators and then shipped them to Central Asia, Europe and other regions by air and road transportation.

Zhang said that thanks to Kashgar's unique geographical advantages as one of the best western channels for Chinese goods, the company's business is growing rapidly. Trade volume hit 280 million yuan last year, and is expected to reach 1 billion yuan this year.

"Our development is closely related to the prefecture's development and benefits from the many good policies and services to promote foreign trade," he said.

At the Kashgar Comprehensive Bonded Zone, trucks loaded with engineering machinery, electronic equipment, new energy vehicles, and daily necessities are lined up for customs clearance.

Wei Gongzhe, who is in charge of Kashgar Hongyu Hengtong International Freight Forwarding, said since March the company's exports of secondhand NEVs have surged.

From January to October, the company exported about 1,500 cars with a turnover of $30 million. The vehicles were mainly sent through Irkeshtam and Turgart, two land ports between China and Kyrgyzstan.

"It takes about five days for our vehicles to reach Bishkek, capital of Kyrgyzstan, and they will be sold out in three days, so cash flows quickly and we can purchase new vehicles soon," he said.

The company's cars are sent to a car wholesaler in Bishkek where clients from neighboring countries such as Tajikistan and Uzbekistan can purchase them directly.

The company mainly exports secondhand NEVs made in China such as Geely and Chang'an. The most popular ones sell for 150,000 to 300,000 yuan, according to Wei.

"The BRI has helped Chinese brands go global. More foreign customers favor Chinese brands that have a high performance-price ratio compared with Japanese, South Korean or other brands. They also look good and are well-appointed," he said.

As part of preferential policies for foreign trade enterprises in the bonded zone, the company doesn't need to pay for storing or parking cars at its warehouse, which reduces costs.

To take advantage of the new FTZ, Wei said he plans to open an exhibition hall in the bonded zone so foreign clients can choose from a wider range of vehicles. To control costs, the type and number of vehicles at its warehouse in Bishkek are limited, he said.

Bonded zones are special customs regulatory areas where goods can be stored, processed or traded without being subject to customs duties or other imposts, as a way to boost international trade.

Imports and exports via the bonded zone grew 98.1 percent year-on-year to reach 45.66 billion yuan for the period from January to November, contributing 14.2 percent to Xinjiang's trade, data from Kashgar Customs showed.

The 3.56-sq-km bonded zone, the only one of its kind in southern Xinjiang, was also included in the FTZ.

Inside the zone, there is a cross-border e-commerce exhibition and trading center covering an area of 15,000 square meters. The center has more than 3,000 zero-tariff commodities such as high-end cosmetics, wine and food from Central Asia, Europe, Southeast Asia, the United States, Japan and South Korea.

Wang Nana, an operations manager with the Cosmos Group, operator of the center, said after making an order on a cellphone customers wait about 30 minutes then they can fetch the products. "Compared with cosmetics counters, the price here is about 30 percent lower," she said.

Busy land ports

In Kezilesu Kirgiz autonomous prefecture, Irkeshtam Port is doing a vibrant trade.

The most western port in China, it is only about 210 km from Osh, Kyrgyzstan. The port is also an important part of the China-Kyrgyzstan-Uzbekistan highway, which makes it easier for China to trade with these countries as well as Europe.

Every day, about 450 trucks loaded with clothes, shoes, textiles, automobile parts, mechanical equipment and home appliances, as well as imported dried fruit and coal, wait in line to pass through the port.

On Oct 4, a total of 1,200 metric tons of coal from Kyrgyzstan entered China through the port and was unloaded at the public bonded warehouse of Xinjiang Zhongyuan Nanjiang Coal Storage and Distribution.

This marked the official start of operations of the first coal storage and distribution bonded warehouse in southern Xinjiang, which has a storage capacity of 400,000 tons.

Xinjiang has abundant coal resources, but their distribution is uneven. The southern Xinjiang regions of Hotan, Kashgar, Kezilesu Kirgiz and Aksu have a relatively low share of the coal resources in Xinjiang, and local coal production cannot fully meet demand, which in turn limits economic development.

With the deepening of the BRI, the company has invested in the construction of six large and medium-sized coal mines in Kyrgyzstan and Tajikistan. Three of the coal mines are located less than 200 km from Turgart and Irkeshtam ports.

"By utilizing our own coal resources in the mining areas and investing in the construction of a coal storage and distribution bonded warehouse base in Kezilesu Kirgiz, we can effectively alleviate the coal supply-demand imbalance in southern Xinjiang," said Li Minglin, chairman of the company.

The company imports about 200 tons of coal daily from Kyrgyzstan to be delivered to cement plants, steel mills, power stations, coal trading centers, and other locations, said Zheng Yingfa, its general manager.

The busy cross-border trade also brings more income for logistics workers. Gao Zhangong, a truck driver from Henan province, said he can earn around 4,000 to 5,000 yuan per trip, and he can make two to three trips a month.

Cargo growth

Irkeshtam Customs data showed that cargo passing through the port grew 101 percent year-on-year to reach 1.16 million tons from January to November. It is the first time imports and exports have surpassed 1 million tons since the port was established in 2002.

In November 2011, some of the port's functions were moved 145 km to Wuqia county to improve efficiency as the volume of cargo and passengers increased. Now, trucks entering China complete inspection at the original location, while those leaving China use the new location.

The older port added a new lane in September and adopted intelligent equipment for inspections. It now takes only 3 minutes to inspect a truck, compared with 15 to 20 minutes when done by inspection officers, said Zhang Zhixin, director of the management and service center of the port's management committee.

The port has also extended the number and length of working days and established an industrial park to develop industries based on the port's economy. A total of 59 foreign trade companies have settled in the park, and are involved in sectors such as automobile assembly, processing of agricultural products, logistics and storage as well as cross-border e-commerce.

Xinjiang Congling International Trade has 100,000 square meters of warehouse space at the park to store daily goods, building materials and machinery. After moving from the original port location, the amount of goods it stores has increased tenfold to reach 25,000 tons a month, said General Manager Zhao Yi.

Compared with 10 years ago, there has been a significant improvement in the infrastructure and business environment, he said.

"Previously, the space was small and the volume was limited. Government departments also provided nanny-like services. Now many domestic companies have settled in the park and foreign companies come to purchase goods and export them. So the number of our customers has increased too," he said.

An electronic logistics system is used by customs to process the goods when they arrive. The agent makes a declaration to customs, which will automatically do a selective examination. When cleared, the goods can be shipped the next day.

"Customers demand fast delivery. If goods cannot be shipped quickly, businesses lose confidence. As the business environment keeps improving and many preferential policies have been introduced, it will greatly enhance future trade, and we are confident about this," he said.

Imports and exports of Kezilesu Kirgiz grew 29.9 percent to reach 4.669 billion yuan in the first 11 months of this year, data from Urumqi Customs showed.