Khorgos: The New Silk Road's Central Station Comes To Life
An improbable Silk Road hub rising out of the desert.
The first time I was in the Khorgos / Horgos region -- a massive new development area that extends across the border between China and Kazakhstan -- was in May of 2015. The Khorgos Gateway dry port had yet to receive its first trains, its giant 41 ton gantry cranes were still six months away from being erected, the broader SEZ that would contain warehousing and manufacturing operations wouldn't be commissioned for another year and a half, the China / Kazakhstan cross-border free trade zone was little more than a stale Chinese "cheap stuff" market flung out on the Eurasian steppes, and the new city of Horgos on the Chinese side perhaps defined the term "nascent."
The Khorgos Gateway dry port in February 2017. Image: Wade Shepard.
Khorgos began with skepticism and doubt.
“In the beginning nobody believed it,” Karl Gheysen, the first CEO of the Khorgos Gateway dry port, lamented.
But to the credit of Khorgos's detractors, the place truly is unbelievable. It's a colossal development zone that contains a conurbation of national-level projects that are rising up on both sides of the China / Kazakhstan border — the proverbial middle of nowhere. The Khorgos area is nothing if not remote. It is situated a tick from the Eurasian Pole of Inaccessibility, the farthest point on earth from an ocean. Radiating out from all sides of this place is little more than sand dunes and mountains. This is a region that’s so far flung that Herodotus posited that it as the origin of the North Wind — a mythical land inhabited by creatures with the bodies of lions and the heads and wings of eagles.
The thinking here is that the middle of nowhere could also be the center of the world -- a great crossroads between east and west, north and south.
“Kazakhstan is coming from a landlocked country and is becoming the most linked-in country on the whole continent.” Gheysen proclaimed. “If you take Russia, the largest country; China, the largest economy; India, one of the largest populations, and you put these three together, right in the middle is Kazakhstan. It's this place.”
This is the magnitude of undertaking that Khorgos is meant to be. We're not talking about just a train station and some warehouses flung out on the Chinese border, but the creation of an entirely new city -- an entirely new economy that is made up of a plethora of different projects that all have synergy with each other, which is ultimately part of a larger network of similar development areas that stretch from China to Europe along the New Silk Road.
What Khorgos looked like in 2010. Image courtesy of Jonathan Hillman of the Center for Strategic International Studies (CSIS).
“I know it doesn’t look like much now, but we’re building a new Dubai,” Gheysen told me in 2015.
In 2010 there was nothing in Khorgos. The place didn’t even exist — literally, it was nothing but an expanse of sand dunes running up to the bases of snowcapped mountains.
“It’s not even on the map yet! I tell people that if they look on Google Maps they won't find it. That's how new it is,” Hicham Belmaachi, who is now the chief operating officer of the Khorgos Eastern Gate Management Company, told me during one of my early visits.
At that time, the management there would point out into the distance and tell me about all the buildings, factories, and houses that would soon be there as we rumbled along unfinished dirt roads in large 4X4s. Even though I’d been visiting and researching new cities for years by that point and understood how entirely new urban entities can grow up out of nothing, it was difficult for me to check a “yeah right” kind of response when it came to Khorgos.
But in February 2017, the scene at Khorgos is a little different.
The Khorgos Gateway dry port. Image: Wade Shepard.
The dry port
Hardly a year ago, the filmmaker Lorenz Knaur had to wait two days to film a China-Europe train coming into the dry port in Khorgos. Today, Khorgos Gateway is handling these trans-Eurasian trains throughout the day and night. As I sat with an operator high up in a crane, learning a little about her work, there was a set of trains on the tracks below us having their containers transferred over from one to the other, as another train that was stocked with the innovative Unit 45 climate controlled reefer containers departed for Europe.
Khorgos Gateway has now become one of Kazakhstan's primary dry ports for handling trans-Eurasian trains, which travel more than 9,000 kilometers between cities in China like Chongqing, Chengdu, and Yiwu and cities in Europe like Barking, the London borough, Duisburg in Germany, and Lodz in Poland. There are currently 39 such China-Europe routes in operation -- an emerging network that is revolutionizing the rail industry across Eurasia.
Approximately 65 trains, amounting to 6,200 TEU, per month are currently being transshipped through Khorgos Gateway. While this is still a long shot from the goal of half a million TEU per year, it is still a clear sign of growth. However, even though there is growth at Khorgos Gateway, the dry port is still running at under-capacity, and this isn't fully due to market forces alone. Most cargo volume that passes from China to Kazakhstan goes through the 50% Russian-owned Dostyk port to the north, where Astana has a preexisting deal that doesn't permit them to transfer shipments from there to other terminals.
"They have this state of the art, $250 million terminal at Khorgos but they're shipping 80% of the volume through Dostyk," a long-term Kazakhstan-based logistics manager exclaimed.
Trains in the Khorgos Gateway dry port. Image: Wade Shepard.
The broader SEZ
Surrounding the Khorgos Gateway dry port is the broader Khorgos Eastern Gate SEZ -- an absolutely massive area that has been cleared and prepped for large-scale manufacturing and warehousing operations. This area officially commenced operations in December 2016. China’s Jiangsu province has signed an MOU with the Kazakhstan government to invest $600 million into this SEZ, the details of which are currently being worked out.
During my previous visits to Khorgos I was told about the new city for 30,000 workers and their families that would soon rise up from the barren dirt out in the distance. At that time, this “new city” amounted to a string of three or four sad shacks that some customs officials were apparently living in. Today, that empty space is a place called Nurkent, and is occupied by row upon row of various styles of housing, with two large yellow apartment complexes rising in the background. Two thousand people now live there full time; there are shops; there is a school.
Nurkent in February 2017. This is the residential area that was built in the Khorgos Eastern Gate SEZ. Image: Wade Shepard.
While on the Chinese side of the border is the new city of Horgos. This is a new urban undertaking that began in 2014 with the ambition of building a 200,000-person-city that could serve as a manufacturing, shipping, and commercial epicenter at China's primary New Silk Road gateway. The place is a national-level project, being developed by Beijing directly, which means that funding and political will are no obstacles. Horgos is now growing fast, with seas of new high-rises sprouting up from the sand dunes as a small remote village is turned into a city by all-out fiat. The industrial zone is starting to open, bringing in high-tech manufacturing operations from booming eastern cities like Shenzhen. Horgos now has a skyline -- something that's never existed in this region before -- which can now be seen towering above the China / Kazakhstan ICBC “Khorgos” free trade zone.
Construction on the Kazakhstan side of the ICBC cross-border free trade zone. Image: Wade Shepard.
The free trade zone
The ICBC "Khorgos" cross-border free trade zone itself is turning a corner. Although it’s hardly five years old and is still at an early point in its development, its trajectory has not always been very smooth. Political and economic difficulties plagued the Kazakhstan side, while the Chinese side kind of wallowed as a mere wholesale market for generic utilitarian goods. But the place is now starting to show slight glimmers of becoming the multi-faceted tourist destination it was initially positioned to be. Not only are three more duty free shopping centers being built on the Chinese side, but more hotels and tourists attractions are rising up as well — such as a prominently positioned museum and a 300-meter-tall observation tower. While the Kazakhstan side of this free trade zone had nothing but a makeshift tent and a burning pile of garbage during my last visit in May of 2015, it now has an open and functioning shopping center, an operating distribution hub, and many construction projects for hotels and more trade centers that are currently in progress.
I must admit that the Khorgos vision is a little easier to see now. Really, all you need to do now is go there and look. It will be right in front of you, no imagination required.
The Khorgos Gateway dry port in February 2017. Image: Wade Shepard.