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HONG KONG: The China Railway Import & Export Company (China Railway) has agreed to integrate the Kerry Logistics' network throughout Southeast Asia.

The deal is a reflection of the China government's 'Going Out' development strategy for large-scale enterprises to take advantage of the new growth opportunities brought on by its One Belt One Road (OBOR) initiative.

OBOR, once realized at an estimated cost of US$1.6 trillion, is expected to include 65 countries and 4.4 billion people. The concept was first mooted by China premier Xi Jinping in September 2013 when he proposed that China and the Central Asian countries build an "economic belt along the Silk Road" - a trans-Eurasian project from the Pacific Ocean to the Baltic Sea. The following month he proposed a maritime equivalent.

china-silk-roadThis week China asked North Korea to join OBOR and offered the country a US$40 billion investment fund to develop an overland and maritime infrastructure. The news coincides with Iran's ambassador to China Ali Asghar Khaji saying his country would also participate by expanding its railways, roads, ports, telecoms sector and energy security under a five-year development plan that would include a gas pipeline through neighboring Pakistan.

Reflecting the new Kerry tie-up, China has also announced it is willing to invest US$3.8 billion in modernizing Pakistan's rail network while China Railway says it plans to increase its earnings from non-domestic operations to 10 percent by 2020.

China expects the OBOR rail infrastructure will eventually connect Central Asia, Russia and Europe with Myanmar, Laos, Thailand, Malaysia and Singapore.

General manager of China Railway Huo Hongguang and president of Kerry Logistics (China) Edwardo Erni said their agreement is "an important measure taken under the new national strategy for both companies to strengthen their capabilities and further developments".

China Railway was established as a state-owned foreign trade enterprise in 1988 to focus on foreign trade. Since then projects have included managing railway operations and maintenance in Saudi Arabia as well as the import of railroad parts to the U.S., Germany and France.

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