China is proposing a direct high-speed rail link to Iran, which could also take goods to the Turkish border and through to Europe via Kazakhstan, Uzbekistan and Turkmenistan. In other transport news, the ADB has allocated $220 million to Uzbekistan for the construction of the national highway, whilst also suspending its financial support for the construction of the Turkmenistan-Afghanistan-Tajikistan railway due to security instability. Meanwhile, Kazakhstan plans to attract $2 billion in funds from the World Bank for boosting agricultural development, according to the chairman of KazAgro.

China proposes direct high-speed rail link to Iran

The proposal was put forward by He Huawu, the chief engineer at China’s national rail operator China Railway, during a forum held last week on China’s “One Belt, One Road” programme. In his opinion, this link will boost annual trade turnover by more than $2.5 trillion.

The new route would run from Urumqi, in the western Chinese Xinjiang region, to Almaty, the commercial capital of Kazakhstan. It would then continue on to Tashkent and Samarkand in Uzbekistan, Ashgabat in Turkmenistan and finally to Iran’s capital, Tehran.

The most important feature of the project is the extension of the rail network linking China to the Middle East and Turkey through the construction of new lines with the same gauge tracks. This means that Chinese trains could move from any Chinese city to the Turkish borders and on to Europe.

ADB allocates $220 million to Uzbekistan for highway construction

Uzbekistan and the Asian Development Bank (ADB) have signed a loan agreement worth $220 million to provide for the construction of the national highway in Uzbekistan.

This is the second tranche allocated under the multi-tranche financing programme worth $500 million for the construction of national highways, which was approved by the bank in August 2011 as part of the Central Asia Regional Economic Cooperation (CAREC) programme entitled “Regional Roads Development II”.

The loan is granted out of the bank’s ordinary resources for 25 years, including a five-year grace period at a standard preferential bank rate based on LIBOR.

Kazakhstan plans to attract $2 billion from World Bank for agriculture development

The Kazakh National Holding KazAgro plans to attract $2 billion in funds from the World Bank for 35 years for lending to the agro-industrial complex, according to the Chairman of the National Holding Nurlybek Malelov.

According to the chairman, the loan will provide a twofold increase in lending to the agricultural sector, without attracting funds from the budget.

China pledges $2 billion for a “capacity cooperation” fund with Kazakhstan

The $40 billion “Silk Road” fund, set up last year to boost connectivity across Asia, has agreed to contribute $2 billion to a new investment fund to support “capacity cooperation” with Kazakhstan.

China has been trying to promote similar cooperation with other countries, under which local firms export some of their huge production capacity as they build infrastructure and factories overseas.

Chinese Premier Li Keqiang held talks with his Kazakh counterpart Karim Massimov in Beijing on Monday, vowing to step up bilateral cooperation in industrial capacity, agricultural products, energy and regional connectivity.

ADB cuts support for construction of Afghan railway

The Asian Development Bank (ADB) has announced that it has suspended its financial support for the construction of the Turkmenistan-Afghanistan-Tajikistan (TAT) railway for an unknown term due to security risks in Afghanistan.

“Although Turkmenistan has completed the construction of its section of the railway, we do not intend to finance the construction of a railway in a country (Afghanistan) where security is not guaranteed,” Si Si Yu, ADB’s country director for Tajikistan, told reporters.

The TAT Railway, which has a projected length of 400 kilometres, has an estimated cost of $2 billion.

China and Tajikistan launch currency swap deal

A ceremony marking the start of a currency swap deal between China’s yuan and Tajikistan’s somoni was held on Sunday in Urumqi, the capital of northwest China’s Xinjiang Uygur autonomous region.

In September, the central banks of China and Tajikistan signed the currency swap agreement, which allowed the two sides to exchange payments in one currency for equivalent amounts in another to facilitate bilateral trade settlements and provide liquidity support to financial markets.

The deal, worth 3 billion yuan ($470 million), will last for three years and may be extended if both sides agree.

Uzbekistan not ready for SCO free trade zone

Uzbekistan is not ready to consider proposals for the creation of a free trade zone within the Shanghai Cooperation Organization (SCO), according to the First Deputy Prime Minister of Uzbekistan Rustam Azimov speaking at the SCO prime ministers meeting in China’s Zhengzhou on 15 December.

The meeting brought together the heads of the governments of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan.

Azimov continued, “Moreover, this cooperation trend (the creation of a free trade zone) is not provided by the SCO Development Strategy until 2025, which was approved by the [SCO] Heads of State at the Ufa summit in July 2015.”

China to provide insurance coverage for joint contracts with Kazakhstan

The Development Bank of Kazakhstan JSC and China Export & Credit Insurance Corporation have concluded a framework agreement for insurance coverage of up to $400 million within the framework of Kazakh-Chinese projects.

The document envisages the provision of insurance coverage by Sinosure under the supply contracts related to engineering products, electrical products and hardware made in China.

The insurance limit from Sinosure will focus primarily on projects in infrastructure (energy, transport, telecommunications), industry, agriculture, and services (tourism, environment, public health, education and sport).

China Export & Credit Insurance Corporation (SINOSURE) is a state-funded policy-oriented insurance company with the independent status of legal person, and was established to promote China’s foreign trade and economic cooperation, beginning its operations on 18 December 2001.

Tajik aluminium smelter to double production within two years

The Tajik Aluminium Company (TALCO), the country’s largest state-owned enterprise, met its semi-annual output target and plans to double production within the next two years. During the first 6 months of 2015, Tajikistan exported 61,200 tonnes of aluminium, up 3.6% on last year’s figures.

Over the next 2 years TALCO will attempt to increase its annual production capacity up to 270,000 tonnes in anticipation of a moderate increase in global aluminium prices

TALCO is one of the 10 largest aluminium smelters in the world and provides up to 70% of the country’s foreign currency earnings, whilst also consuming 40% of the country’s electrical power. The company is wholly owned by the Tajik government. Tajikistan does not mine alumina, but rather imports the raw material through tolling arrangements.