Why does Central Asia Still Matter? Because It Matters to China.

Leaders of the Shanghai Cooperation Organization walk in the Urals city of Yekaterinburg (2009)

by Noah Tucker on 6/19/2013 · 9 comments

This is a guest post by Kendrick Kuo, a grad student at Johns Hopkins and China specialist with a wealth of field experience in China and the Middle East. You can check out more of his work at his own blog, http://asiancrescent.com.

Chinese foreign policy toward Central Asia and the Muslim world at large remains a niche subject that only concerns a subset of researchers. In the popular imagination, China is solely an East Asian power. But as the Sino-American relationship continues to evolve, through both frictions and convergence of interests, Central Asia promises to be an important area of cooperation. My point is not that China is the primary reason the U.S. should remain interested in Central Asian states, but consideration of Sino-American relations should play a role in shaping continued U.S. engagement in the broader region.

China’s pivot to Central Asia

Any consideration of Beijing’s policies toward Central Asia must examine the Shanghai Cooperation Organization (SCO). There are signs that China’s military cooperation with Central Asian countries is waning. Last week, the SCO held its annual military exercises in Kazakhstan. Over at Eurasia.net, Joshua Kucera observes several aspects of the exercise that indicate diminished emphasis placed on the SCO’s military initiatives. Only three states participated and the number of troops involved seems to be significantly reduced.

China’s primary instrument in Central Asia at this point is economic ties. Beijing’s influence on Central Asian states’ foreign policies persists due to its economic clout. In 2010, Chinese foreign direct investment (FDI) stock in Kazakhstan reached $1.59 billion, ranking fourteenth among top outbound destinations. The United States receives about $4.9 billion in FDI stock, ranking eighth. Turkmenistan also receives considerable FDI flows, adding up to $450.51 million, ranking fifteenth in top FDI flow destinations, compared to the United States’ $1.3 billion. Recently, in May 2013, Tajikistan President Emomalii Rahmon met with Chinese President Xi Jinping and Chinese state-owned enterprise (SOE) heads on an official state visit. He left Beijing with multi-million dollar investment projects in sectors such as infrastructure, banking, and energy. They also agreed on technical cooperation to the tune of $200 million.

Perhaps the most discussed Chinese investments in Central Asia are the pipelines. China has a long history of funding pipelines that would bring oil and gas overland from the west, as opposed to seafaring tankers that must pass through the U.S.-controlled Straits of Malacca. The agreement between Kazakhstan and China to build a pipeline importing oil from the Caspian shore to Xinjiang was penned as far back as 1997. Completion is scheduled for 2014, when it is expected to have a capacity of 20 million tons per year. The Turkmenistan-China gas pipeline (also referred to as the Central Asia-China gas pipeline), which runs through Turkmenistan, Uzbekistan, and Kazakhstan, currently brings natural gas into Xinjiang. These pipeline investments are avenues for economic flourishing in the participating countries.

The Central Asian element to China’s strategic calculations will remain indefinitely as the civil unrest in Xinjiang does not look like it will be abating any time soon. Just this year in April, violence right outside Kashgar left 21 dead–the most deadly incident since the 2009 Urumqi riots. Beijing’s relations with Central Asia is as much about border security as it is about economic expansion, if not moreso.

We also must take into account the Sino-Pakistani relationship, which Beijing touts as an “all-weather” relationship. Chinese outbound FDI stock in 2010 equaled $1.8 billion. In 2012, China purchased a Pakistani port. Two years earlier, China announced that it intended to sell two heavy water nuclear reactors to Pakistan, which could produce plutonium. China has sold military aircraft and weapons to Pakistan, including an AWACS aircraft, surface-to-surface missiles, and J-10 fighters.

Potentially more important for the United States, China is interested in stabilizing Afghanistan. With a drawn out withdrawal of U.S. forces from Afghanistan, Beijing has had time to prepare itself. Beijing is not comfortable with a failing state on its borders. Uyghurs have crossed the border to train for jihad against the Chinese government in Xinjiang. The United States detained Uyghurs at Guantanamo Bay for a period of time after capturing them during military operations in Afghanistan. These fears of Uyghur jihad are often framed in the narrative of the East Turkistan Islamic Movement (ETIM). What’s Beijing’s game plan? Economic engagement.

Alexandros Petersen describes China’s strategy as making a shift in 2011, from leaving Afghanistan as Washington’s problem to fix to a proactive plan to inject investment into the Afghan economy in order to ensure the national government is not toppled after U.S. withdrawal. Chinese SOEs are visible throughout Afghanistan, whether it be in the extractive sector in the form of the Metallurgical Company of China, the Jiangxi Copper Corporation, and the China National Petroleum Corporation, or in the telecommunication sector as Huawei and ZTE dominate wireless sector infrastructure projects. Security concerns are real for these Chinese companies, but centrally-directed investments are marked by a higher tolerance for risk than western corporation.

China as a partner along the New Silk Road

Central Asia may prove to be an important area of Sino-U.S. cooperation on issues important to both countries. Most important is stability in Afghanistan and monitoring terrorist activities generally, but another issue that comes to mind is widespread economic development. The State Department unveiled the New Silk Road Initiative back in October 2011 in preparation for a post-2014 Afghanistan, but since then the political will to make this vision into concrete reality has been questionable. The New Silk Road was designed to link South Asia and Central Asia through international investment that bolsters regional trade. The strategy is described as comprised of both “hardware” and “software.” The hardware is infrastructure development, such as electricity from Uzbekistan and Turkmenistan powering buildings in Afghanistan, Kazakhstan-Turkmenistan-Afghanistan rail connections, and the famous TAPI gas pipeline. The software refers to trade, the private sector, and other economic links.

Beijing could be a critical partner in the New Silk Road strategy. Surprisingly, this option does not grace the ongoing discussions about the strategy. The New Silk Road is conceived (and perceived by China and Russia) as an attempt to tie Central Asia to South Asia, pushing out Russia and bringing India into the mix. Russia, in some ways, is in competition with the U.S. strategy, but China does not have to be. Though Russia has historically been the overshadowing trading partner in the region, Beijing’s push westward, as described above, is challenging Moscow’s political and economic clout in Central Asia.

China is well-situated to play the role of U.S. partner for three key reasons: 1) the Sino-Russia dynamic in the region, 2) its influence on important players in the New Silk Road strategy, and 3) the de facto impact China is already making on Central Asian economies.

First, many analysts have observed the balancing act being carried out by Central Asian states. The CSTO and SCO are in passive-aggressive competition in the region, leading countries such as Uzbekistan to play them off one another. China is already checking Russian encroachment.

Second, China’s friendship with Pakistan is a valuable asset. U.S.-Pakistani relations have been turbulent, to say the least, and having Beijing weigh and apply pressure on Islamabad to support Afghanistan’s stability would be in the Washington’s interest. Some have noted the unfortunate absence of Iran from the New Silk Road strategy. China’s relationship with Iran, which has proven to hold up even under international pressure, has bequeathed Beijing with a good amount of political capital. This could prove useful if Iran is ever to be drawn into plans for regional economic development.

Finally, China is already making the New Silk Road. Of course, many of China’s major investments link the former Soviet Union republics to Xinjiang in hopes of stabilizing China’s restive northwest, but at least Beijing is getting things done. Yesterday, NATO officially transferred security over to the national army in Afghanistan. As the U.S. draws down troops, commitments will inevitably fall as well. Beijing, on the other hand, looks like it is ratcheting up its commitments. In establishing a Sino-U.S. partnership, Washington should be ready to broaden the geographic focus of the New Silk Road to encompass China in an informal, tri-regional (Central Asia, South Asia, China) economic zone.

Christopher Schwartz mentioned several days ago that the fiscal worries in the United States should not be overplayed in Central Asia. To add to this line of thinking, Beijing could be the perfect partner, bringing large bags of money to the table. Admittedly, there will be at times a conflict of interest, especially involving questions of civil society, democracy promotion, rule of law, and the like. Yet these are issues that trouble many Sino-U.S. interactions. Frequency breeds familiarity, which in turn can encourage diplomatic habits of understanding. China the game-changer is here to stay, and there is opportunity to make Central Asia an area of cooperation that supports the overall health of the Sino-U.S. relationship.

Kendrick Kuo is pursuing graduate studies at John Hopkins University’s School of Advanced International Studies in the China Studies program. He received his undergraduate degree from The George Washington University where he specialized in Middle East and Islamic Studies. Kendrick has lived in China and Jordan and currently resides in Washington, DC. He blogs at The Asian Crescent (http://www.asiancrescent.com).

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– author of 54 posts on 17_PersonNotFound.

Noah Tucker is managing editor at Registan.net and an associate at George Washington University's Elliot School of International Affairs Central Asia Program. Noah is a researcher and consultant for NGO, academic and government clients on Central Asian society and culture. He has worked on Central Asian issues since 2002--specializing in religion, national identity, ethnic conflict and social media--and received an MA from Harvard in Russian, E. European and Central Asian Studies in 2008. He has spent four and half years in the region, primarily in Uzbekistan, and returned most recently for fieldwork in Southern Kyrgyzstan in the summers of 2011 and 2012.

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Chris Rickleton June 19, 2013 at 8:12 pm

Thanks for this. An informative post that hooked in some new angles I hadn’t fully considered, namely China and America’s disagreement over Indian access to Central Asian markets.

if China is going to be a force for stability and progress in Central Asia rather than just a force for its own mercantile interests it will have to refine its approach of simply targeting key power-brokers in Central Asian states with wads of cash. This approach only pleases the power-brokers, who are entering a phase of uncertainty in all three of the post-Soviet Central Asian countries

Most obviously in Kyrgyzstan, but also in Kazakhstan and Tajikistan, too, socioeconomic inequality between the political elite and the poorest parts of the population is emerging as the greatest threat to political stability. China’s current statist approach exacerbates this situation rather than remedying it.

Chris Rickleton June 19, 2013 at 9:52 pm

On another note, curious about the photo. Where was it taken? SCO? What’s with the tie-less dress code? Nazarbayev, looking across China to Russia, appears to have been photoshopped in. Bakiyev and Rahmon, clearly disinterested are bringing up the rear. Karzai always something of a separate spirit in this type of group pic.

Martin Doyle June 20, 2013 at 4:55 am

Interesting posts by Kuo and Rickleton! Absent from both are discussion of dynamics of internal issues to the ‘stans’ as they relate to the macro picture. Now that Bakiyev is no longer part of the picture one wonders about the rapid changes in Kyrgyzstan related to the importance of rural clans countering the elite klans in Bishkek. Similar behaviors are observed in the other ‘stans’, Turkmenistan being the notable exception. With regional focus shifting back to the Genghiz exchange, the U.S. may need to modify its stand on the New Silk Road Initiative.

hamdard June 20, 2013 at 8:00 am

Thanks, Kendrick, for this! You definitely touched on some of the important issues here.

When discussing Chinese’s interest in Central Asia, many mention New Silk Road. Although there are lots of analysis why this route could be important geo-politically, I yet to read about financial advantages of ground logistics. Can you suggest any good analysis on this topic? I would love to read why would building better roads, paying customs fees, etc., would be more advantageous than just shipping via sea? Especially considering the location of Central Asian countries (altitude, security concerns, etc.,). Why would China risk all that and pour millions of dollars to build a route in the age when over 90% of all international trade is done via commericial/merchant ships?

Kendrick June 21, 2013 at 6:31 am

Hamdard, the reason, and I believe most experts would agree with me on this, is that China’s interests are not primarily economic. In the case of PRC-CA economic relations, the ultimate goal is political stability in the Xinjiang region. Beijing is convinced that by developing this northwest province it will increase its political legitimacy among the potentially restive population. This “economic development leads to stability and legitimacy” strategy is the same one applied to the whole of China since Deng’s 1980s opening and its re-ignition with Deng’s 1992 Southern Tour in a post-Tiananmen crisis.

Naturally, this can be nuanced, but that’s a snapshot of the situation.

hamdard June 20, 2013 at 8:17 am

just to clarify, I am referring to Chinese investments into expressways going to from Pamirs to Central Asian countries; plus the Silk Track rail plans that have been around for a while.

Kendrick June 22, 2013 at 6:13 am

I think my initial answer is still applicable. The motivation is not just trade with China in general, but to develop trade ties between Xinjiang, which is landlocked, and bordering states. I guess it would make little sense to use maritime trade to grow economic ties between Xinjiang and Central Asian states if they’re neighbors and do not share any body of water.

Another consideration (specifically for transportation investments not linked to Chinese territory), is the fact that Chinese investments in Central Asia that do not directly benefit China usually are tied to key investments that do. An example would of course be the Aynak copper mine in Afghanistan. Not only did China outbit other competitors for the mining rights monetarily, it also promised to build a railway and other infrastructure to benefit the country. We see the same thing going on in Chinese investments in Africa.

Justin Dunnicliff June 21, 2013 at 2:39 pm

Excellent article, Kendrick! I’d be very interested to hear about the rail issue that Hamdard brings up as well.

hamdard June 24, 2013 at 2:28 pm

Thanks, Kendrick! The point you made about Chinese investments elsewhere makes perfect sense.

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