China in Central Asia


OVER the last two decades, China’s economic and political rise has made it a key player in global politics, particularly for neighbouring Central Asia. China’s desire for active economic cooperation with the region, as well as its willingness to invest large sums in the implementation of projects that Central Asian countries require, are encouraging the region’s elites to collaborate even more closely with their large neighbour.

In relations between China and the countries of Central Asia the just ended year 2022 saw them commemorating the 30th anniversary of the establishment of diplomatic relations. On January 26, 2022, the parties adopted a joint statement by the heads of state stressing their readiness to expand cooperation between China and the Central Asian republics in the fields of politics, security, mutual interest in increasing investment and trade, and implementing priority joint projects. China announced its intention to increase trade with Central Asian countries to $70 billion by 2030 and its willingness to provide $500 million in interest-free loans to countries in the region by 2025. China, which already wields significant economic influence in Central Asia, is increasing its influence in the region, acting not only as the largest source of foreign direct investment but also as a financier of new technologies.

As per regional media reports, the existing trade and investment cooperation between China and Central Asia will further strengthen in 2023. The joint use of the logistics route to Europe via the Trans-Caspian International Transport Route, in particular, will increase.

Despite the positive momentum, some external analysts have noted a cautious attitude among the people in the region toward cooperation with China. According to studies conducted in Kazakhstan and Kyrgyzstan in 2020, only 7 per cent and 9 per cent of citizens in those countries supported Chinese infrastructure projects, respectively, and support for China in general dropped from 65 per cent in 2019 to 48 per cent in 2020 in Uzbekistan. China is paying close attention to this trend, and additional efforts are being made to develop a strategy to improve China’s image in Central Asian countries.

This factor has become particularly important in recent years, when the post-Soviet republics of Central Asia became a theatre of fierce economic disputes between China and Turkey and China and the United States. At this point, it is worth recalling that Turkey was the first country in the world to recognise the independence of the Central Asian countries and has been trying to play the role of leader of the Turkic community since the early 1900s. However, interaction within the framework of the Turkic Council, established by Turkey in 2009 and to which most Central Asian countries belong, is still largely cultural and humanitarian in nature. However, this does not preclude expanding this interaction to other areas, especially given Ankara’s growing interest in building greater trade and economic cooperation with countries in the region and its attempts to expand military-technical cooperation there. Recently, it became known that the Turkish company Rönesans Holding intends to invest almost $8 billion in projects in Uzbekistan (part of the funds will be invested in Uzmetkombinat, $4.1 billion — in the development of the Almalyk mining and metallurgical plant, and $3 billion — in the social sphere, especially in the construction of hospitals and shopping centres). Thus, Turkey is now trying to demonstrate its ‘second coming’ in post-Soviet Central Asia. The first one, in the 1990s, as you know, was based mainly on cultural identity with the peoples living here, which resulted in good education. Now Turkey is trying to focus on economic cooperation to strengthen its position here, although there are no particularly large investment projects that would change the fate of the region. Nevertheless, all this is leading to growing interest not only from China but also from Turkey in new regional logistics routes.

The Central Asian countries’ location at the crossroads of trade routes connecting Asia, the Middle East, and Europe makes this regional ‘five’ appealing not only for transit investment, but also for industrial and commercial investment. However, the region’s investment potential in this sector has not been fully realised due to its remoteness from maritime trade routes and the poor development of the transportation and logistics system. A particular source of concern for external investors was the region’s consistent high outflow of labour.

The increased anti-Chinese policies of the United States and its Western allies in recent years have been a significant impediment to strengthening China’s position in the region. With Washington’s investment and economic interests recently centred in Kazakhstan, where US private companies own a significant share of oil production, the US has expressed interest in using the region primarily as a tool of influence over its main adversaries — Russia and China. This is also confirmed by the recently released United States strategy for the region for 2019–2025, which anticipates spending approximately $9 billion on ‘supporting democratic reforms and humanitarian initiatives.’

In addition to the former post-Soviet republics, China has also recently shown increased interest in Afghanistan. Concrete evidence of this came when the Taliban signed on January 5, 2023 the first international contract in the country’s history to extract oil from the northern basin of the Amu Darya, with China’s Xinjiang Central Asia Petroleum and Gas Co. Specifically, the agreement calls for the Chinese company to extract oil from a total area of 4,500 square kilometres in the northern provinces of Sar-e Pol, Jowzjan, and Faryab, which contain more than 80 million barrels of crude oil, according to preliminary estimates. At the same time, according to Western analysts, China is clearly counting on a privileged position during tenders for gas production in the same region, and is reportedly already negotiating for copper and lithium deposits estimated to be worth more than $1 trillion. Of course, it does not forget that rare earths, cobalt, bauxite, mercury, uranium and chromium are also in the exploration phase here.

In expanding cooperation with this country, China is deftly exploiting the Taliban’s keen interest in reviving the Afghan economy and attracting foreign investment. As a result, such significant economic contracts could pave the way for Afghan authorities, who are currently operating in a vacuum, to gain international recognition. By assisting in the economic stabilisation of Afghanistan, China is undoubtedly assisting in the military-political stabilisation of the country’s north, which is critical for the Central Asian republics and Russia.

Source New Age