China Railway Group to Build $2.5 Billion High-Speed Railway in Central Russia
On June 19, the China Railway Group signed a $2.5 billion Memorandum of Understanding with the Russian government to build a high-speed railway from Yekaterinburg to Chelyabinsk in central Russia. The deal was signed during the Fourth China Russia Exposition, held in the city of Harbin in northeastern China.
The deal is the latest significant project announcement by China Railway Group, which signed overseas contracts worth $15 billion last year. The railway will reportedly enhance connectivity between China and Russia, supporting their plans for greater regional integration (including with regard to creating new links between One Belt One, Road and the Eurasian Economic Union).
Where a number of rail deals announced over the past few years have been of minor significance, with little meaningful reduction in transit time, the Yekaterinburg – Chelyabinsk railway appears to be a genuine high-speed railway, with the China Daily reporting a reduction in travel time from 5 hours to just over 1 hour.
It is worth noting, however, that other high-speed rail deals have foundered after the initial MoU signing. For example, in 2014, China signed a $2.89 billion MoU to build a high-speed railway between Budapest and Belgrade. Three years later, work still has not begun due to Serbian efforts to lower costs by opting for a non-high speed line, as well as EU concerns regarding the unfair tendering process. It remains to be seen whether cost issues could also scupper the planned Yekaterinburg-Chelyabinsk line.