China must get along with regional powers to make its New Silk Road plan work

By Raffaello Pantucci

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First published in South China Morning Post, August 19, 2017

Geopolitics matters. As we move deeper into a multipolar world, the importance of grand strategy will only grow. Relations between states at a strategic, economic and even emotional level will all intertwine to create a complicated web that will require sophisticated diplomacy to navigate. For China this is a particularly important lesson to learn, given its keynote “Belt and Road Initiative” that requires an acquiescent and peaceful world to deliver on its promise of building a web of trade and economic corridors emanating from China and tying the Middle Kingdom to the world. China’s current stand-off with India highlights exactly how geopolitics can disrupt Xi Jinping’s foreign policy legacy initiative.

The details of the specific transgression within this context are not entirely important. China is asserting itself in its border regions and changing facts on the ground to solidify claims. Indian push-back is based on strategic relations with Bhutan that go back a long way and a concern about how this changes Indian capabilities on the ground.
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Why the EU doesn’t get China’s Belt and Road

By Raffaello Pantucci

BRI Roads China

First published in EU Observer, May 19, 2017

Chinese leader Xi Jinping trumpeted his foreign policy vision – the Belt and Road – to great fanfare this past week.

Yet a consistently discordant note was heard from European reporting around the event, with officials talking to press about their lack of understanding of the project. While some of their concerns were understandable, there was an element of missing the point.

Xi Jinping may talk in terms of a project, but in reality what we are seeing laid out is a grand vision: one that Beijing is using to re-shape its engagement with the world.
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Belt and Road: International Concerns Remain

By Sarah Lain

Photo: Nicolas Asfouri/Reuters
Photo: Nicolas Asfouri/Reuters

An edited version of this article appeared in China Daily Europe, May 12 2017

At a time when the US is reducing its international development contributions, China has pledged additional billions to its multi-national Belt and Road Initiative (BRI). At the recent Belt and Road summit this included adding RMB 100 billion to the Silk Road Fund, as well as creating a China-Russia Regional Cooperation Development Investment Fund. However, some countries, such as those from the EU attending the summit, continue to have concerns over the way in which the project will be implemented.

One of the key concerns for many Belt and Road countries is the lack of detail around the feasibility and planning behind some of the projects the Belt and Road Initiative (BRI) is promoting. Some subsequently wonder whether the BRI could in fact create new risks for certain countries along the BRI. Beijing still need to explain how it assesses and mitigates the various risks prior to investing to ensure the sustainability of the foreign policy vision. This will help add reassurance to the ‘win-win’ rhetoric behind the BRI. Continue reading

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China: Understanding Beijing’s Belt and Road Initiative

By Raffaello Pantucci

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First published in RUSI, May 12, 2017

A great deal of rhetoric is expended over China’s gigantic investment initiatives. Still, many of the economic projects are real, and Western governments will be well advised to understand their purpose.

The Middle Kingdom is asserting its centrality in global affairs by hosting the Silk Road summit this weekend. Aimed at showcasing President Xi Jinping’s ‘Belt and Road’ vision, the conference will bring together leaders, officials and experts from around the world.

Apart from the signing of some large deals and some affirmations about China’s eagerness towards free trade, the summit’s real importance is in the message it sends about China’s place in the world.
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SCO Expansion Should Not Threaten the West

By Raffaello Pantucci

SCO Logo

First published in the Conway Bulletin, March 20, 2017

Expanding the Shanghai Cooperation Organisation (SCO) will strain its functions but could boost trade and relations between Central Asia and South Asia, writes Raffaello Pantucci.

The Shanghai Cooperation Organization (SCO) has achieved remarkably little in its decade plus life.

Established formally in 2001, it grew out of a regional grouping aimed at seeking to define China’s borders with the former Soviet Union. Over time, it has expanded beyond its immediate neighbourhood to include countries as distant at Belarus and Sri Lanka as ‘dialogue partners’.

The current push to welcome both India and Pakistan is likely to further test the organisation’s already limited capability. The practical implications for Central Asia are unlikely to be dramatic, though in the longer term it may help bind Central and South Asia closer together and foster a greater sense of community across the Eurasian heartland.
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Is China prepared for a new mantle in Central Asia amid the roll-out of its belt and road?

By Raffaello Pantucci

ChinaUzb

First published in the South China Morning Post, March 19, 2017

As the new president of Uzbekistan, Shavkat Mirziyayev, embarks on foreign visits, Beijing is likely to be fourth on the list, illustrating a broader set of tensions for China in its quest for a Silk Road economic belt through Central Asia.

Since independence from the Soviet Union in 1991, Uzbekistan has maintained a strategic distance from Moscow and been unwilling to open its doors wide to Chinese investment. It also employs tight currency controls, making it hard for companies to withdraw profits.

All of this produces problems for China’s vision of open trade and economic corridors under the “One Belt, One Road” initiative.
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China’s expanding security role in Afghanistan

by Raffaello Pantucci

An Afghan security personnel keeps watch at a road construction site, which is being built by a Chinese company, in Khogyani district of Nangarhar province
An Afghan security personnel keeps watch at a road construction site, which is being built by a Chinese company, in Khogyani district of Nangarhar province November 19, 2015. REUTERS/Parwiz/Files

First published in Reuters, March 1, 2017

Stories have emerged once again of China’s military presence in Afghanistan. These reports come after China thwarted India’s attempt to get Jaish-e-Mohammed leader Masood Azhar added to the U.N. list of proscribed terrorist individuals, and China appeared to christen a new regional grouping after a meeting in Moscow with Pakistan and Russian officials to discuss the future of Afghanistan.

Seen from New Delhi, the picture could be interpreted as one of growing Chinese alignment towards Pakistan. In reality, these shifts mark the growth of China as a regional security actor whose views are not entirely dissimilar to India’s.

The main characterization of Beijing’s efforts in Afghanistan remains hedging. China continues to engage through multiple regional and international formats. Either through international multilateral vehicles like the Shanghai Cooperation Organisation (SCO), the ‘Heart of Asia’ or ‘Istanbul Process’, the Conference on Interaction and Confidence-Building Measures in Asia (CICA); or through sub-regional groupings like hosting Pakistan-Afghanistan-China trilateral, bilateral engagements with India, Russia, the UK, Germany, the U.S. or Pakistan focused on Afghanistan (some including specific projects – like the American joint training programmes); or finally through Chinese instigated mechanisms focused on Afghanistan like the Quadrilateral Coordination Group (QCG made up of Afghanistan, Pakistan, U.S. and China) or the Quadrilateral Cooperation and Coordination Mechanism (QCCM, made up of Afghanistan, Pakistan, Tajikistan and China).
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One Belt, One Road and Many Countries

The inaugural train from Angren to Pap. (photo: Railway Gazette)
The inaugural train from Angren to Pap (photo: Railway Gazette)

by Dr Farkhod Tolipov

After the collapse of the Soviet Union the newly independent countries of the Central Asian region for the first time in their modern history looked beyond the iron curtain with which they were isolated from the world within the Soviet era. They quickly remembered that in ancient times they were an important part of what today can be called a global system of communication and trade – the Great Silk Road, which connected China to Europe through the Eurasian continent. Central Asian countries desperately needed to break their newly land-locked status. Forming a trade path from East to West was part of their unique selling point. However, such a position is not merely their geographical destiny. It is also a geopolitical condition due to the fact that unlocking the region depends largely on neighboring great powers – namely China and Russia. But interestingly, the opening and unlocking of Central Asia appears to be a more complicated and protracted process than expected, in which the ‘Modern Silk Road’ needs to balance multiple national interests. Continue reading

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Chinese Companies Increasingly Employ Central Asians

by Dirk van der Kley

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It’s often received wisdom that Chinese companies mainly employ Chinese workers on their projects in Central Asia (for example David Lewis of Exeter University recently on the Majlis podcast). This view fails to recognise that Chinese companies have been localising for some time, and that old narratives on Chinese labour practices in Central Asia need to be reexamined.

There is significant evidence of Chinese companies employing Central Asians, particularly in labouring, clerical and interpreting jobs. Criticism of a lack of opportunities in management and technical positions is probably justified but some companies, such as Huawei, offer opportunities at that level too.

Chinese firms are acutely aware of the public relations benefits of hiring (or being seen to hire) locals. Most of the big Chinese projects now purport to employ a significant number of Central Asians. For example, Xinjiang Zhongtai claims that it will employ more than 3000 locals at a textile park it is constructing in Dangara, Tajikistan. These kind of statements are repeated again and again on cement plants, mining companies and oil refineries etc.
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Trade Connectivity: The Missing Link in the Belt and Road

By Sarah Lain

Photo credit: Khwahan
Photo credit: Khwahan

First published in The Diplomat, 23 November 2016

On Li Keqiang’s recent visit to Kyrgyzstan and Kazakhstan, the economic emphasis in discussions was China’s objective of helping to increase the countries’ “production capacity.” Building up production capacity is crucial to Central Asia’s ability to boost exports. This will facilitate the trade promotion that accompanies all China’s engagement on the Silk Road Economic Belt (SREB) and broader Belt and Road Initiative (BRI) which will be key to the projects’ long-term success. This is particularly true if China is serious about the project being “win-win.”

During past interviews in Central Asia with experts examining the SREB, concerns were repeatedly raised regarding the lack of clarity on how Central Asian populations will benefit from the project. There is a perceived risk that the “corridors” of China’s overall BRI will mainly provide China with benefits through the transport of resources to China or Chinese goods passing through Asia. It may also benefit political elites, who negotiate many of the deals with Beijing, and who may be in charge of the large state-owned enterprises participating in them. If tangible benefits are not identified and communicated to local populations, then the SREB will not only fail to reach its full potential; it could also raise suspicions that this is more of a geopolitical project than China says, with China benefiting far more than the Central Asian populations and gaining further leverage over the region’s political elites through economic influence. Continue reading

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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

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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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