The Great Bargain between Russia and China for Central Asia

The chiefs of staff of the armed forces of Afghanistan, China, Pakistan, and Tajikistan watch military exercises in Urumqi. (photo: Inter Services Public Relations)
The chiefs of staff of the armed forces of Afghanistan, China, Pakistan, and Tajikistan watch military exercises in Urumqi. (photo: Inter Services Public Relations)

By Daniyar Kosnazarov and Iskander Akylbayev

The recent terrorist attacks in Kazakhstan, considered to be the most stable and prosperous state in Central Asia, followed by the assault on the Chinese Embassy in Kyrgyzstan exposed the vulnerability of the domestic and regional security environment. In addition to that, the ongoing power transition in Uzbekistan and Taliban activity near the Afghan-Tajik border raise serious security questions among geopolitical heavyweights such as Russia and China. Continue reading

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China’s development lenders embrace multilateral co-operation

By Raffaello Pantucci

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First published in the Financial Times Beyond BRICS, November 1, 2016

There has been much speculation on the role of the Silk Road Fund (SRF) and Asian Infrastructure Investment Bank (AIIB) in China’s outward investment push.

They are both instruments created by Beijing to provide economic firepower and bring international credibility to the ‘Belt and Road’ vision that has become President Xi Jinping’s keynote foreign policy concept. But in reality they have both undertaken a series of investments that, while substantial and linked to ‘Belt and Road’ countries, pale in size next to China’s overall outward investments.

While the AIIB has quite clearly been subsumed into the ‘Belt and Road’ project, the SRF has so far largely focused on commercial projects which are focused on profit rather than national strategy.
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How New Is The Belt and Road

By Raffaello Pantucci

World Economic Forum - Annual Meeting of the New Champions in Tianjin, People's Republic of China 2016

First published on China Policy Institute: Analysis, October 7, 2016

Back in the late 1990s, then-PRC President and Communist Party leader Jiang Zemin noticed that the country was facing an imbalance. Deng Xiaoping’s economic reforms had opened up the coastal cities, transforming them into beacons of international industry and development. Cities like Shanghai, Shenzhen and Guangzhou were on their way to becoming international hubs. And yet looking inland, the difference was stark, with parts of the centre or border regions with neighbouring Southeast, South and Central Asia remaining poor and underdeveloped. Seeking to rectify this, and in part to help Chinese companies go out, Jiang Zemin instigated a ‘Develop the West’ or ‘Great Western Development’ strategies.

Academics like Zheng Xinli came back from their travels along China’s borderlands with southeast Asia with ideas of developing multilateral institutions that would help address one of the key problems in the region, a lack of infrastructure to help accelerate trade between parts of the world that were already deeply economically interdependent. To China’s west, the problems were political and had a security bent to them thanks to the proximity of Afghanistan, historical conflicts with Russia and an angry resident Uighur population. As the Soviet Union fell apart, China accelerated a process of border demarcation going on between itself, Russia, Kazakhstan, Kyrgyzstan and Tajikistan into a process called the ‘Shanghai Five’ – named after the city in which they met. The priority was largely to define what China’s borders were, with a later attempt to move the discussion towards other economic and political goals.
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Karimov’s Death Seen From Beijing

by Raffaello Pantucci

zhang-gaoli-karimov

Islam Karimov’s death is the realisation of a regional concern that many have long worried about: succession amongst leaders of the Central Asian states. The question of who comes next has been a persistent concern, particularly in Kazakhstan and Uzbekistan. Beijing is not immune to these worrries. On every visit to Beijing in which Central Asia has been a focus of discussions, there have been inevitable conversations with Chinese Central Asia analysts who have been particularly perplexed about what might happen in a post-Karimov Uzbekistan. Yet, now that this scenario has arrived, China seems unperturbed and experts spoken to seem equally unconcerned. Seen from Beijing, Uzbekistan post-Karimov is a case of business as usual.

The biggest indicator of China’s reaction to Islam Karimov’s death is how the leadership responded to the news of his demise. It came at an awkward time for China, with Beijing policymakers and planners consumed with the preparations and meetings around the G20 Summit in Hangzhou. Consequently, the best that Xi Jinping could muster was a formal note through the MFA to acting President Nigmatilla Yuldoshev praising Karimov as ‘true friend’ to China. He later dispatched Vice Premier Zhang Gaoli to the funeral as his special envoy, while Prime Minister Li Keqiang paid his respects at the Uzbek Embassy in Beijing.

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Xinjiang trade raises doubts over China’s “Belt and Road” plan

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By Raffaello Pantucci and Anna Sophia Young

First published in the Financial Times Beyond BRICS, August 10, 2016

The vast Chinese northwestern frontier region of Xinjiang may serve as a useful early indicator of how Beijing’s much-touted “Belt and Road Initiative” (BRI) is supposed to work – and how successful it may become.

The region, which is home to several muslim minority peoples, has been wracked by ethnic turmoil for decades, prompting Beijing to seek to nurture social stability by driving economic development through hefty investments.

But for this strategy to gain traction, Beijing realised that it needed to boost development in the region around Xinjiang by building commercial corridors to neighbouring Central Asian countries such as Kazakhstan, Tajikistan, Kyrgyzstan, Uzbekistan and Turkmenistan. Thus, Xinjiang was key motivator behind the BRI concept.

But so far the results have been underwhelming. In the three years since the forerunner of the BRI was launched, Xinjiang’s trade volume has not increased and it still constitutes an unchanging portion of total Chinese trade with Central Asia (see chart). This discrepancy between action and results raises questions about whether the BRI is a turning point in Chinese economic policy or simply old wine in a new bottle.

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Why do Kazakhstanis Fear China?

By Umida Hashimova

Photo by Sania Tolken, RFERL
Photo by Sania Tolken, RFERL

At the end of May 2016, Kazakhstan experienced unexpected protests sparked by proposed amendments to the Land Law adopted in 2014 that were to enter into force in June 2016. The changes would have allowed foreigners to rent agricultural land for 25 years, up from the previous 10. There was some misunderstanding over an assumption that the amendments would allow foreigners to own land, which officials say is not the case. It is unlikely, however, that these changes to the law were the primary cause for the protests, instead reflecting underlying discontent with government actions and a popular fear of growing Chinese economic influence in the country.

A major underlying reason for popular discontent was the state of the economy, given that the price of oil had crashed and the Russian economy with it. This led to the devaluation of the Kazakh tenge, and a reduction in the value of savings, salaries, and social benefits. This, along with historical Kazakhstani fears of a more powerful China that might expand its territory into Central Asia under the cover of land deals, were the main significant contributing factors that led people to the streets. The amendments to the national law simply snapped the patience of Kazakhstanis with the state of economy and unsatisfactory government service. Continue reading

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China’s Belt and Road: A View From Delhi

By Raffaello Pantucci and Sarah Lain

First published by RUSI, 29 June 2016

Proceedings of a workshop held in New Delhi in March 2016 to explore the challenges that China’s strategic Belt and Road vision to connect Central Asia hopes to address.

Download the report here

In March 2016, RUSI, in collaboration with the Vivekananda International Foundation (VIF) hosted a workshop in New Delhi to discuss the challenges of connectivity facing China’s strategic Belt and Road vision, which aims to connect Central Asia and develop strategic economic corridors across the region.

The workshop covered the different economic corridor concepts initiated by China and India and their aim of enhanced connectivity in Central and South Asia, how such visions will be realised and how they could enhance the security and economic development of the region.

The report summarises these discussions and provides insights into co-operation between China and its regional partners.

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China’s Place in Central Asia

XJP Nazarbayev

By Raffaello Pantucci

First published in Eurasianet, June 20 2016

China’s rise in Central Asia marks one of the most consequential changes in regional geopolitics since the turn of the century.

China announced that it intended to be a major player in Central Asia back in September 2013, when Chinese President Xi Jinping gave a speech in Astana that inaugurated the “Belt and Road” vision — the most dominant expression of Chinese foreign policy from his administration. Yet this declaration notwithstanding, it remains unclear whether Beijing has a coherent vision for Central Asia. Instead, Beijing continues to grow into a role of regional prominence without a clear plan to manage the ramifications of its growing role.

The narrative of spreading Chinese influence throughout the region is not new. Indicators of China’s influence are plentiful. Markets are full of Chinese products, infrastructure is heavily built by Chinese firms with Chinese loans, leadership visits — either Chinese to the region or regional to China — are followed by announcements of massive deals being signed, and increasingly China is playing a more prominent role in regional security questions. Even so, China remains a hesitant regional actor, and is keen to continue casting itself as subordinate to Russia. Beijing is also eager to avoid becoming embroiled in inevitable regional economic and political complications.

Most recently, these complications have manifested themselves as protests in Kazakhstan, where locals have expressed anger at the government’s decision to change legislation governing foreigners’ ability to rent land for lengthy periods of time. Public anger is rooted mostly in concerns that Chinese firms will exploit this legislation to slowly lease ever larger tracts of Kazakhstani land. Such problems have arisen in the past. In 2009, for example, when President Nursultan Nazarbayev announced a leasing arrangement, Chinese and Tajik censors blocked references in the media to a similar deal in Tajikistan in 2011.
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China’s Big Hedge

Karzai Yuanchao

By Raffaello Pantucci

First published by Durham Global Security Institute, May 19 2016

In November of last year, Chinese Vice President Li Yuanchao visited Kabul to celebrate 60 years of diplomatic relations between Afghanistan and China. The most senior level visit to Kabul by a Chinese official since the now-defenestrated former Politburo member and security minister Zhou Yongkang visited in 2012 the visit showed China’s continuing commitment to Afghanistan, whilst also highlighting its limits. Sitting awkwardly in President Xi Jinping’s ‘Belt and Road’ vision, Afghanistan remains a foreign policy conundrum to China who continues to see the potential risks from the neighbouring country, but that Beijing understands it has a particularly central potential role to play and whose proximity negates a completely detached approach. The result has been a hedging policy in which China continues to show some level of commitment towards Afghanistan whilst not going so far as to taking on the mantle of leadership.

The Belt and Road

One of the central topics of conversation during Vice President Li’s visit to Kabul was the ‘Belt and Road’ concept. In official read-outs from the meetings, both sides agreed to work on cooperatively to help develop Afghanistan’s role in the vision and thereby deepen the link between China and Afghanistan. ‘Belt and Road’ is the term used to describe the vision laid out by President Xi Jinping that is on its way to becoming his defining foreign policy legacy. First publicly raised during a visit to Astana, Kazakhstan in September 2013 when President Xi coined the term ‘Silk Road Economic Belt’ to describe the trade, infrastructure and economic corridor emanating from China’s westernmost region of Xinjiang through Central Asia ultimately to European markets. The next month during a speech at the Indonesian Parliament he built on this characterization to announce the 21st Century Maritime Silk Road that recreated the land model advanced across Eurasia out from China’s ports to the seas. Over the next few months these trade corridors proliferated as a China-Pakistan Economic Corridor (CPEC), Bangladesh-China-India-Myanmar (BCIM) corridor, China-Mongolia-Russia corridor and a New Eurasian Landbridge were all increasingly discussed. In fact, the Pakistan corridor was one that had been agreed prior to the September speech and had been raised during a visit by Premier Li Keqiang’s visit to Pakistan in May 2013 and signed in MoU form on a return visit by President Nawaz Sharif in July 2013. But the corridor was only later identified and absorbed under the logic of the grander vision. The logic of these various routes was largely the same and drew from the same structure as the Silk Road Economic Belt laid out in Astana, but over time was increasingly all captured under the rubric of the ‘One Belt and One Road’ (OBOR) and is now abbreviated to the ‘Belt and Road.’
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China’s Silk Road in Central Asia: transformative or exploitative?

Silk Road
Jin Liqun, AIIB president © AFP

By Sarah Lain

First published in the Financial Times, 27 April 2016

The Silk Road Economic Belt (SREB) builds on China’s long-standing economic investment in Central Asia, and it has the potential to further develop Central Asian economies. However, China’s historical track record of investment engagement in the region raises concerns that the SREB could instead exacerbate economic inequalities and poor governance.

China has long been a key driver of infrastructure investment and construction in Central Asia, covering a wide range of sectors. It has invested heavily in the region’s natural resource extraction, with gas, oil, uranium, gold and copper making up key exports from the region. Continue reading

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China and Russia in Central Asia: Cooperation and Conflict

CAP logo

by Sarah Lain and Raffaello Pantucci

First published by Central Asia Program, April 25, 2016

Despite the significant rise of China’s economic influence in the region, Russia continues to maintain its political leverage in Central Asia. In contrast to China, it explicitly states its intention to keep its grip on this influence, as highlighted by Medvedev’s speech in 2008. This declared commitment to preserving Russia’s ‘spheres of privileged influence’ certainly includes Central Asia. The key aim for Russia is to ensure, at least in theory, loyalty to the Russian government, seeking countries it can depend on for support. The various alliances Russia plays a crucial role in alongside the Central Asian states, such as the EEU, SCO, CSTO and CIS, also have a utility of legitimizing Russia’s position in a visibly multipolar world. Indeed, the SCO is a platform shared with China, but they all act as a way of overtly demonstrating structural equivalents of Western-dominated organizations such as the EU and NATO.

The Ukraine crisis has undermined Russia’s legitimacy by raising suspicions for both Central Asia and China about Russian intentions in the region. The prevention of color revolutions, which was enshrined in the recently updated version of Russia’s Military Doctrine, has potential implications across the former Soviet space. Indeed, Russia’s commitment to protect Russian- speakers and ethnic Russians abroad causes concern for Central Asians. Although Russia has almost exclusively acted on this in the more Western-leaning post-Soviet countries, such as Ukraine and Georgia, a speech by Putin that addressed Kazakhstan was provocative in light of events in Ukraine. Not only did Putin praise Nazarbayev, but he also highlighted that Kazakhs realized the value of being part of the “greater Russian world,” which raised alarm bells in Astana. Russia has proven it has no issues in leveraging its position over former Soviet states for certain self-interested strategic purposes.
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The China Knowledge Gap in Central Asia

A textile processing park being built by a Xinjiang firm in Dangara, Tajikistan
A textile processing park being built by a Xinjiang firm in Dangara, Tajikistan

By Dirk Van Der Kley

China’s rise has been the major change to the Central Asian foreign policy environment over the past decade. Yet despite China being a major trader, investor and source of aid for the region, specialist knowledge of China among Central Asian governments, business people and academics remains limited. There are signs that this is changing somewhat in business, but much more slowly in government and academia.

For the last three months I have been in Central Asia, interviewing government officials, scholars, and business people about China’s influence in the region. The lack of China specialists was most clear in academia. Every scholar I interviewed openly acknowledged that there are very few China specialists working in Central Asia. There are several identifiable Sinologists in the region, such as Constantine Syroezhkin at the Kazakhstan Institute for Strategic Studies in Astana, but they remain small in number. During an interview in Tajikistan, an academic responded to the question “Is Tajikistan prepared for China’s rise?” by saying “we don’t have a clue…how could we?” On another occasion I asked an interviewee in Bishkek to help set up interviews with China specialists. The answer: “Sure…but who to ask.” Continue reading

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Security and Stability along the Silk Road

By Raffaello Pantucci and Sarah Lain

First published by RUSI, February 29, 2016

Proceedings of a 19 January 2016 workshop on the security context for the Silk Road Economic Belt (SREB) across Central Asia and the stabilising effects of investment and infrastructure development

Download the report here

On 19 January 2016, RUSI in collaboration with the University of World Economy and Diplomacy hosted a day-long workshop in Tashkent on the security context for the Silk Road Economic Belt (SREB) across Central Asia and the stabilising effects investment and infrastructure development could have on the region.

The workshop included a specific discussion about Uzbekistan’s role in regional security in light of the SREB initiative, as well as China’s views and approaches to security questions throughout the broader region. The event brought together participants from Uzbekistan, China and the UK, including representatives from academia and think tanks.

This workshop report summarises the discussions from the conference and offers insights into the current state of the Chinese-led project.

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China’s new silk road is designed to cut Russia out of Eurasian trade

By Raffaello Pantucci

China train arriving Tehran

First published by South China Morning Post, February 16, 2016

President Xi Jinping’s ( 習近平 ) visit to Tehran – the first by a foreign leader since the lifting of sanctions – highlights the potential centrality of Iran to China’s broader regional foreign policy. The opening up of Iran, a country in which China has long maintained substantial interests, means Xi’s “One Belt, One Road” vision can now go cleanly across Eurasia without ever going through Russia. Moscow can be cut out.

Visiting Tashkent, one can see the ancient routes laid out by the Timurid empire that constituted the ancient silk road. Rather than track through Russia, most would go below the Caspian and Black seas to reach Turkey and Europe.

Soon after Xi visited Tehran, a train laden with goods left Yiwu, Zhejiang province (浙江), headed to Tehran following this route. On February 10, it crossed the border from Turkmenistan and arrived in Iran this week. The Ukrainian minister of infrastructure announced at the same time that, by the end of the month, a direct rail line would open between Ukraine and China, cutting across Georgia, Azerbaijan, the Caspian Sea and Kazakhstan. An iron silk road has been established that will track the old silk routes.
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India and China key partners in keeping Afghanistan stable

By Raffaello Pantucci

Li Ghani_FEb 2016

First published by Reuters, February 15, 2016

Landlocked in the heart of Eurasia, Afghanistan sits in between superpowers. Previously this was Russia and the United Kingdom, using its territory as a chessboard across which they would plot intrigue against each other.

During more recent history, it became a covert battlefield between Russia and the United States as the wider ideological struggle between communism and capitalism was played out. Nowadays, however, a new momentum is building behind cooperation between two superpowers whose domestic security is linked to Afghanistan’s stability.

Beijing and Delhi’s ability to cooperate in Afghanistan is likely to be a key axis through which long-term Afghan stability will come.

Both China and India are already active players in Afghanistan. In November last year, Vice Premier Li Yuanchao visited Kabul and offered a package of $79 million for housing construction in the city. Just over a month later, Prime Minister Narendra Modi visited the city to inaugurate the Indian built Parliament building.
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