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The Silk Road Economic Belt’s Impacts on Central Asia

May 08 , 2015

Exemplifying the old Chinese proverb “A near neighbour is better than a distant cousin,” official Beijing is switching its main foreign policy focus from great power relations to neighbourhood diplomacy. The Silk Road Economic Belt and Maritime Silk Road initiatives demonstrate the willingness of the Chinese leadership to advance its vision of regional integration, which will have significant ramifications for the Chinese neighbours in general and Central Asia in particular.

Beijing has long been using the Silk Road discourse in the context of Central Asia. Yet, only recently this discourse emerged as an official Chinese policy. President of China Xi Jinping presented the Chinese vision of Silk Road Economic Belt in Kazakhstan in 2013. The seriousness of Beijing’s intentions to promote its economic programmes in Central Asia has been underpinned by a series of visits by Xi Jinping to each Central Asian state, where Xi Jinping restated his commitment to invest $40 billion into the region’s infrastructure. The recent unveiling of China-backed $50 billion Asian Infrastructure Investment Bank further confirmed the determination of China to expand its influence in Asia.

Nonetheless, even prior to these developments, economic engagement of China in Central Asia over the past years has been nothing but impressive. China emerged as the major economic player in Central Asia. If in the early 2000s the International Monetary Fund estimated the Chinese-Central Asian trade to hit $1billion bar, these numbers reached nearly $50 billion last year. During the period of the financial crisis China surpassed Russia as the region’s leading trading partner. For instance, China National Petroleum Corporation (CNPC) is nowadays one of the largest contributors to the budget of Turkmenistan. In fact, in addition to breaking Gazprom’s gas monopoly across the region, CNPC is currently well situated to act as a mediator in Central Asia – the China-Central Asia pipeline consists of three separate enterprises with 50% ownership between China and Kazakhstan, China and Uzbekistan and China and Turkmenistan. Moreover, China is continuing to invest significantly into transport and energy infrastructure in Central Asia such as Atyrau-Alashankou crude oil pipeline and Turkmenistan-China gas pipeline.

Furthermore, apart from being a key trading partner, China became de facto the region’s largest lender and source of development finance. Since independence, Kyrgyzstan received nearly 1.8 billion USD from China in the form of loans and grants, which stands for more than half of Kyrgyzstan’s external debt. The government-sponsored Export-Import Bank of China remains Tajikistan’s largest single creditor holding nearly 40% of Tajikistan’s external debt. In a similar vein, during the financial crisis China provided two loans to Turkmenistan for energy projects not only to secure its own gas deliveries, but also to prevent the Turkmenistan leadership from borrowing money from international financial institutions.

In light of these developments, the Silk Road Economic Belt appears to be a logical step for Beijing to implement. Poor infrastructure remains one of the greatest obstacles for the trade growth in Central Asia. Accordingly, Central Asian states are willing to accept Chinese investments into their Soviet-type infrastructure. Substantial investments into energy and transport infrastructure by China, Russia and other international partners have already significantly improved the logistics performance index of all five Central Asian states according to the World Bank.

Nevertheless, notwithstanding economic incentives the general perception of the Central Asian leadership towards China remains more of a caution and a fear. China’s economic goal in Central Asia is often regarded in the Central Asian public and political discourses as a gradual long-term attempt of Beijing to subdue Central Asia economically and then absorb the region into the Chinese empire. These fears are bolstered by the nescience and incomprehension of the Chinese foreign policy goals by the Central Asian ruling elites along with the historical legacy of confrontation between China and Central Asian nomadic tribes. In fact, sinophobia may emerge as one of the greatest obstacles for the Beijing-led regional integration. For instance, the land deals between China and Kyrgyzstan, China and Kazakhstan and China and Tajikistan sparked public outcry in Central Asia and were used by the local opposition leaders to rally against the ruling authorities.

Although Beijing’s longer-term goals are linked to the development and stabilisation of restive Xinjiang region, Central Asian elites perceive the Beijing-led regional architecture as one more tool of China to assert its regional hegemony. In fact, those views prevail in neighbouring Russia as well. The new role of Beijing as the main economic and development player in Central Asia is being unrecognised in public discourses due to the sensitivity of Moscow to such processes. The Kremlin always reacted sensitively to any developments in the region related to the engagement of other players and thus resisted the Chinese efforts to evolve the Shanghai Cooperation Organization (SCO) in a more economic and development direction. This phenomenon explains why the SCO with its potential is still regarded as a discussion forum with the budget of $4 million.

Yet, it is evident that Beijing wants Central Asian states to synchronise their individual economic development goals with the larger Silk Road vision, since economic ties between China and Central Asian states are stronger than political discourses prevailing in the region. However, the ruling regimes in Central Asia tend to prioritise their own security and shape foreign policies of their countries in accordance to their perceptions and home-generated threats. As a result, whilst the Central Asian elites may demonstrate commitment to regional integration initiatives, in reality they are still unwilling to be dependent upon any new “big brother.”

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