What does China-Central Asia Bonhomie Mean to the World?

When the G-7 leaders were meeting in Hiroshima with Japanese Prime Minister Fumio Kishida as the host, Chinese President Xi Jinping was hosting the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan in a two-day China-Central Asia Summit in the north-western Chinese city of Xianin in Shaanxi province. The significance of these two diplomatic initiatives that ran in parallel cannot be missed as Xi pre-empted that the gathering in Hiroshima was likely to discuss Beijing’s endorsement of Russian President Putin’s military operation in Ukraine and to take a tougher stance against Beijing. Regrettably, this important event in Xian was virtually blacked out by the Indian media and thus deserves analysis.

The G-7 countries see that Beijing’s efforts to strengthen economic ties with the Central Asia as having the hidden agenda of economic domination camouflaged by liberal loans and investments on terms favourable to it and therefore want to counter Beijing’s economic domination by appropriate measures.

The republics of Central Asia were earlier parts of the Soviet Union. Moscow had sway over the region since the mid-19th century but Russia's influence waned after its military operation in Ukraine. Beijing took advantage of the new situation and started courting Moscow's traditional allies in the region as energy procurement emerging as the main driver.

Beijing established diplomatic relations with the five newly independent countries in 1992 but this was the first two-day summit that ran parallel to G-7 summit in Hiroshima. When the Ukraine war started because of Russia’s incursions the strategic dynamics in the region assumed a new dimension. As Russia got bogged down in Ukraine and world opinion turned hostile, the five Central Asian countries looked for an alternative trade and security partner. Beijing happily stepped in to strengthen its existing engagement with the Central Asian countries further. Beijing seized the opportunity and hosted the summit where it unveiled its grandiose plan to develop the economies of the five republics by expanding infrastructure projects under its trillion-dollar Belt and Road Initiative (BRI), a defining geopolitical project for Xi Jinping. Thus the summit came as China faces growing decoupling pressure from the US-led West.

Being keen to bolster economic cooperation, Kyrgyzstan upgraded its diplomatic ties with China and speeded up its China-Kyrgyzstan-Uzbekistan railway, a landmark project under Beijing’s BRI.^[1] Beijing also looked at Kyrgyzstan as a major source of imports of agricultural products. Kyrgyz President Sadyr Japarov’s observation of relations between the two countries “at the highest level” pleased Xi Jinping.

In Tajikistan, Xi established a new bonhomie with President Emomali Rahmon and signed 13 documents. This included joint counter-terrorism exercises and made provisions for Chinese tech giant Huawei to build a data centre in Tajikistan. The common development strategies included Rahmon’s commitment to encourage building high quality BRI projects that included infrastructure and technological support initiatives.

With Kazakhstan, China entered into an agreement to build a third rail link between the two countries. This would facilitate stable gas supply through the Kazakhstan section of the China-Central Asia natural gas pipeline. China had proposed three global initiatives – the Global Development Initiative, Global Security Initiative and Global Civilization Initiative – floated as an alternative to the current global system. Kazakhstan became a willing partner in this Chinese initiative. Significant to note was that a total of 47 agreements worth more than $22 billion were signed between the two countries during the summit.

Indeed, trade between China and the five Central Asian countries grew significantly since Beijing launched its BRI in 2013, with combined value crossing $70 billion in 2022. Exports of coal, natural gas and crude oil to China from the region constitute major items in the export basket, accounting for 55 per cent of China’s total imports. Therefore, it transpires that China has a major interest in the energy sector and keen to secure those supplies by inking numerous agreements with the individual Central Asian nations.^[2] For the Central Asian nations, Beijing is seen as a reliable partner compared with Russia and the US. In 2022, two-thirds of China’s gas pipeline imports came from Central Asia, making the region as a major energy partner.^[3]

As the Chinese economy continues to grow, resource trade has emerged as a major driving factor for many trading nations. As a result, Beijing finds Central Asia as a prominent place in Chinese diplomacy as energy cooperation lays the platform for other areas of cooperation including security assumes importance in Chinese diplomacy. The region is traditionally considered as Russia’s backyard. The region stretches from China in the east to the Caspian Sea in the west and has abundant reserves of oil, gas and coal and this attracts China to engage with the region. According to the World Bank, there is huge untapped hydropower potential in Tajikistan and Kyrgyzstan and China has taken note of this. It is estimated that Central Asia also holds 38.6 per cent of global manganese ore reserves, 5.3 per cent of copper and 5.3 per cent of cobalt. This makes the region one of the top 20 global producers of critical materials.

However, energy cooperation between China and the Central Asian nations is not recent, though there is a renewed push in response to Ukraine crisis and West’s critical view of China’s policies in the region, which is not inclusive. Chinese enterprises started investing in the region way back in the 1990s when economic activities had picked up with demand for overseas resources. With surplus funds available, Chinese enterprises started to look for overseas supply sources and investment increased with state support. Thus when in 1997 state-owned China National Petroleum Corporation’s (CNPC) acquired 60 per cent stake in Aktobemunaigas, an oil and gas company in Kazakhstan’s north-western Aktobe province, it was hailed as “a model of cooperation”. The deal led to the construction of 2,200 km (1,360 mile) pipeline to deliver gas to China’s north-western Xinjiang, a frontier region of China.

China was encouraged by the success of this project and explored more such mutually beneficial projects. This led to then-Chinese President Hu Jintao to launch in 2009 with his counterparts from Turkmenistan, Uzbekistan and Kazakhstan the Central Asia-China gas pipeline, the first cross-border gas project. The success of this project led to the operation of two other pipelines. The Central Asian countries started seeing China as a stable and reliable energy partner. China is the world’s second largest energy consumer and understandably invested billions of dollars to tap natural gas reserves in the region.

What are the factors that made China as an attractive energy partner? Firstly, despite the strategic consideration, the US sources its petroleum imports from Canada, Mexico and Saudi Arabia and therefore Central Asia is not a priority source of imports. Secondly, Russia which is traditionally a major importer of energy sources from Central Asia has issues on prices, which affected energy trade. The issue got more complicated when Russia came under sanctions after its military operations in Ukraine and the Central Asian countries were careful and started not to see Russia in its export basket any more. Thirdly, as regards the possibility of exploring Europe as an export destination, inadequate infrastructure came on the way to this possibility. Fourthly, the risk factor to sell to China was virtually nil and the Central Asian region also enjoyed advantages compared with those transported by ship or rail. Fifthly, the war in Ukraine did not affect Central Asia’s energy trade with China.

In 2022, the Central Asian region accounted for two-thirds of China’s pipeline gas imports. The bulk of this originated from Turkmenistan, which has the world’s fourth-largest gas reserves after Qatar, Iran and Russia. China’s imports of natural gas from Central Asia were also two and half times more than from Russia. Thus it transpires that sourcing energy by diversifying sources of supplies is a priority in China’s energy security policy. China has learnt a lesson from the Ukraine war and securing that its economic development would not be affected from possible supply disruption by not putting all eggs in one basket. China has added responsibility to see that production is augmented in Central Asia and thus greater cooperation in the energy sector assumes significance.

From China’s perspective, it seems to be aiming to kill two birds with one stone: fill the void left by Russia after Western sanctions following its involvement in Ukraine and countering pressure from the US.^[4] Historically, Central Asia has played an important role in connecting China and Europe. After Europe imposed restrictions on Russia’s transport of goods following the Ukraine war, China’s engagement with Central Asia received further impetus. When the planned China-Kyrgyzstan-Uzbekistan railway project is completed, it would offer an alternative land route. Chinese goods can reach the Middle East and Europe much faster.

It is not that the US does not have a counter strategy to arrest China’s increasing footprint in Central Asia. In March 2023, US Secretary of State Antony Blinken visited Kazakhstan and Uzbekistan expressing support and to balance relations. The truism in the present situation is that while the US is considered as a strategic partner of the Central Asian counties, China has worked hard to be seen as a comprehensive strategic partner by its extensive economic engagements in various projects and by pouring a lot of money. China has invested some $970 million in Central Asian countries so far. Since there are substantial mineral reserves in Central Asian countries, China’s technological capabilities and their application provides an additional heft to China-Central Asian engagement through various projects and as part of the BRI. China’s experience with digital technology such as block chains, computing and artificial intelligence in building smart cities and digitalised transport are useful for the Central Asian countries.

Addressing the leaders at the summit, Xi spoke about strengthening security, independence and territorial integrity of the region. Stressing the need for a harmonious Central Asia, he called upon the Central Asian brethren to unite against attempts to divide them in the face of unprecedented turmoil and build themselves as the bridge connecting Asia and Europe as the region enjoys unique geographical advantage. Xi announced to provide $3.7 billion in financial support for the development of Central Asian nations.^[5] This aid would help the governments in the region to set up shops and create jobs. The leaders agreed to set up a formal mechanism to hold a China-Central Asia meeting every two years. It was agreed that the second summit would be hosted by Kazakhstan in 2025.

Notwithstanding the recent forays of China into the Central Asian countries, Beijing may not be expected to have smooth ride always. China’s inroads into Central Asia have not always been popular. For example, in 2019, protests had broken out in Kazakhstan as the BRI was perceived as Chinese expansionism in the country. Such feelings could be dormant now but could erupt again, which Beijing needs to worry. In 2010, because of local protests Chinese investors had to cancel a $300 million in a trade and logistics centre.

Chinese projects under the BRI are often criticised as opaque, luring lower-income countries into debt trap by offering huge, unaffordable loans. China is often criticised that its system of bailouts on the Belt and Road helps recipient countries to avoid default and continues servicing their BRI debts, at least in the short run. Beijing’s approach is seen as fundamentally extractive and also influences domestic politics of the partner countries to strengthen its hold in those countries. China is also accused of persecuting the Uyghurs and others from mostly-Muslim ethnic minority groups, ignoring the fact that Uyghurs’ ties with Central Asia is deep and their plight has provoked widespread sympathy in the region and fuelled anti-China sentiment. The region is not a monolith and Beijing is not always sensitive to the deep differences between nations in Central Asia.

It is to be noted that China signed a comprehensive strategic partnership with neighbouring Kyrgyzstan, which in turn promised to support Beijing in maintaining security and stability in Xinjiang. Over 11 million Muslim Uyghurs live under increasingly oppressive Chinese control through detection in “re-educations” camps, torture and forced labour.

Human rights groups and Uyhgur advocates accused the five Central Asian nations of turning a blind eye to China’s repression of the Uyghurs living in the north-west Xinjiang region, despite sharing similar religious and cultural values.^[6] Even the World Uyghur Congress (WUC) condemned the prioritising of economic and trade relations and overlooking ongoing atrocities being committed against Uyghurs. China cannot take the Central Asian republics for granted on its initiatives and ought to take into consideration and respect the sensibilities of the partner countries on how they view the Chinese-initiated projects.

References

^[1]Kawala Xie, “China seeks to cement ties with Central Asia as G7 discusses plans to counter Beijing’s ‘economic coercion’”, 18 May 2023, https://www.scmp.com/news/china/diplomacy/article/3221060/china-seeks-cement-ties-central-asia-g7-discusses-plans-counter-beijings-economic-coercion?module=top_picks&pgtype=a [3]
^[2]Ibid^[3]Laura Zhou, “How energy is powering China’s relationships with Central Asia”, 17 May 2023, https://www.scmp.com/news/china/diplomacy/article/3220788/how-energy-powering-chinas-relationships-central-asia?module=hard_link&pgtype=article [4] ^[4]Kandy Wong, “How China’s inroads into Central Asia could fill an economic void left by Russia, counter US pressure”, 22 April 2023, https://www.scmp.com/economy/china-economy/article/3217904/how-chinas-inroads-central-asia-could-fill-economic-void-left-russia-counter-us-pressure?module=hard_link&pgtype=art [5] ^[5]Dewey Sim and Laura Zhou, “China can help Central Asian ‘brethren’ to unite, Xi Jinping tells Xian summit”, 19 May, 2023, https://www.scmp.com/news/china/diplomacy/article/3221093/china-can-help-central-asian-brethren-unite-xi-jinping-tells-xian-summit?utm_medium=email&utm_source=cm&utm_camp [6] ^[6] “At Central Asia Summit, Beijing seals trade and investment deals with 5 nations”, 19 May 2023, https://www.globalsecurity.org/wmd/library/news/china/2023/05/china-230519-rfa03.htm?_m=3n.002a.3624.on0ao069c5.3d6t# [7]
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