China's investment in Central Asian infrastructure projects
For centuries, it was the ancient ‘Silk Road’ which linked the economy and culture of the east and west civilization via central Asia. A wide array of goods was passed, connecting China and Europe through the effective functioning of the Silk Road. Central Asia, which was less known, though an emerging landmass, has acted as an important destination for Chinese goods and its trading partner since the ancient times. Despite being strategically located, Central Asia was not able to take much advantage of its geographic location. Moreover, the decay of silk road was seen as worsening the situation. In the contemporary period this old silk road has gained its resurgence with the economic, political, and military power of China.
Since the outbreak of the Soviet-Union these infant states of Central Asia found themselves in utter chaos and pandemonium. While these states were struggling with political, economic and social disorder, China, on the other hand was strengthening its position through the impressive economic program. Though flying high with an estimated Gross Domestic Product (GDP) of 16.3 trillion-dollar, China is well aware of its growing population and scarce resources. Central Asia, on the other hand, is blessed with abundant natural resources and minerals. As a result, in order to offset its domestic deficit and reap significant economic benefits, China has begun to invest heavily in this area and has expanded its economic orbit to the west. All these investments naturally have a geopolitical and economic factor. Within a short span of time, China has invested a huge amount of money in infrastructure projects, considering the oil and gas pipeline, transport and logistic center, railways, roads, bridges and many more. The significance of Chinese infrastructure projects and its growing investment are now in a position to pose a threat to Russia’s preeminence in Central Asia. The influence of China in the economy and developmental projects of Central Asia became especially noticeable during the 2008 crisis when the decade-long sponsor of the region, Russia, faced its own budget problems.
The creation of the Shanghai cooperation organization in 2001 has bought favorable conditions for the investments in central Asia and hence turned it into a “hot” region for Chinese investment. SCO is used as a tool by the Chinese government to protect its interest in the field of energy and security. Further, the Chinese government marked its milestone in 2013 with the launch of its belt and road initiative in Nazarbaev University in Astana. This initiative, which is also known as the Silk Road Economic Belt and the 21st Century Maritime Silk Road, has revived the historical Silk Road by improving Eurasian trade and building connectivity projects. The project is expected to build big networks of railways, roadways, maritime ports, oil and gas pipelines and other infrastructure projects. Basically, the projects incorporate land-based and sea-based projects to connect China with central Asia, Europe, Mediterranean, Africa and South-East Asia. The Kazgog dry port which is also touted as “New Dubai” will connect Kazakhstan with China by being the world’s biggest dry port. It is also seen as the most ambitious and important in terms of an economical project of the belt and road initiative as it crosses the central Asia-China natural gas pipeline from Turkmenistan. Uzbekistan is also taking advantage with the construction of 169- kilometer Angren-Pap railway, which passes through the Qurama Mountains, Central Asia's longest mountain range, in Tajikistan and Uzbekistan. With the aim to cut trade costs and benefit foreign investments, the BRI is investing a huge amount on transport infrastructure projects. Observers have acknowledged the improving living standards, ethnic unity, and other developmental aspects with the railway tunnel built by China’s assistance. Such voluminous initiative by China is not only challenging Russia’s sphere but it is also an attempt to limit the influence of United States in Central Asia and subsequent region. China is taking full advantage of its bilateral and multilateral cooperation mechanism in order to build regional cooperation. It has also established the investment banks like Asian Infrastructure Investment Bank5 (AIIB) and a separate, $40-billion New Silk Road Fund6 (NSRF) to counter the USA dominated world bank and IMF. OBOR is also strategically imperative to countermeasure the United States’ “pivot to Asia”, a perceived policy of encirclement. Thus, Central Asia is witnessing a new “great game”, where the three big power of international politics Russia, China and USA are rushing hard for the resources and minerals of this region. However, the new great game is much more complex and global. Author G. Asgar Mitha has said that “It is now clear that with the renewed great game, “there are more players and more rivalry than it was during the game being played out between Britain and Russia in the nineteen and twentieth centuries.
The very first move of China in Central Asia’s energy sector is inaugurated with the purchase of Canada based Petro Kazakhstan inc. This movement began with the signing of a deal to construct a Sino- Kazakh oil pipeline co. ltd in 1996. It is referred as the Kazakhstan-China pipeline which runs from the Caspian Sea to Xinjiang and acts as a victory over the rival Lukoil which is a private owned Russian giant. Such constructions also represent an alternative source for oil exploration, as China is mostly dependent on the Middle East for its imports. Instability and the dominance of the US navy in the Middle East has made it even more uncomfortable for oil and gas supplies to be transported from this region to China. Chinese projects are aiming to create connectivity with the wealthy pacific region to the big markets of Europe through Central Asian countries. To reach these markets, it only needs to connect with the already robust transportation infrastructure projects of Iran, Turkey and Europe.
However, the Central Asian countries are suspicious of these large infrastructure projects. Nevertheless, these nation states are concerned about trade competition, lack of transparency, lack of corporate social responsibility, environmental degradation, social cost, and the unjust terms of local hiring. Like for the Kyrgyz Chinese project, the company has reserved 70 per cent of the available jobs for Chinese engineers and technical staff, and the rest of the 30 per cent was left for the local people. Subsequent migration of Chinese people and increasing connectivity projects has also influenced the cultural orbit. Large number of Confucian institutes promoting the Chinese language are established in almost all central Asia except Tajikistan. One of the biggest concerns with respect to the BRI projects is the current situation of Sri Lanka, where the government is forced to lease out the Hambantota port to Chinese companies for the increasing debt. Central Asian countries are worried with the same challenge of debt trap. The inability of these republics to meet the loan terms China offers might result in taking on more debt than they could handle to build more infrastructure projects.
These benefits also depend on the extent of soft investments made to the infrastructure projects. Efficient operation and maintenance of the projects are required for the perpetual growth of Central Asia. With time, Beijing has diversified its economic model in Central Asian republics, by sifting it from major infrastructure projects to the manufacturing sector. However, only time will acknowledge the efforts of China in preventing American and Russian influence and the actual growth of Central Asian republics.
Pic Courtesy-Joel Heard at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
