Kyrgyzstan: Exporters of Chinese Goods against Kremlin’s Regional Arrangements

By Erica Marat

Kyrgyz workers loading Chinese TVs

Kyrgyz traders in Karasuu bazaar, Osh region, loading a shipment of televisions that came in from Xinjiang. Photo by Sue Anne Tay

China’s economic influence in Kyrgyzstan has been growing rapidly over the past decade. Thanks to Kyrgyzstan’s early membership in the WTO and its generally free economic environment, the country became a major importer, re-exporter and transporter of Chinese goods. As a result, bazaars have become major economic lifelines for Kyrgyzstan, concentrating great amounts of wealth and benefiting hundreds of thousands of people.

Although Chinese economic presence in Kyrgyzstan (and the wider region) is yet to translate into political influence, there are indirect political consequences for Kyrgyzstan. Over the past few years, shuttle traders importing Chinese goods have been at the forefront of the debate as to whether or not Kyrgyzstan should join the Russia-Belarus-Kazakhstan Customs Union (CU). There are mixed feelings towards the union.

Kyrgyz traders warn the government that if Kyrgyzstan joins the CU, then customs duties for Chinese goods will surge and imports from Russia will flood the domestic market. Some traders organized into informal unions to voice their concerns collectively. Together with other activists, they staged several public protests in central Bishkek and organized press conferences.

In their stance against the CU, shuttle traders have found unlikely allies among Western-funded NGOs who see economic cooperation with Russia as a potential threat to Kyrgyzstan’s democratic growth.

Like NGOs, shuttle traders who depend on China for business view Russia as a regional bully. Some entrepreneurs blame political elites for lacking independence from Russia and failing to act in the interests of their own people. However, unlike NGOs, the entrepreneurial class is not dependent on external, mostly Western, funding and is potentially a self-sustaining, tenacious group. This testifies to the fact that small and medium entrepreneurs are increasingly becoming important pillars of civil society in Kyrgyzstan as well as the wider region.

Yet some traders support the policy and thus urge their government to end “political and economic isolationism” and join the union. According to the owner of the region’s largest bazaar Dordoi, Askar Salymbekov, sitting on the border of the CU creates a “transportation stalemate” for shuttle traders and has slowed down import volumes from China. He argues this is because, of all the goods imported to Kyrgyzstan from China, 80% are re-exported to neighboring countries.

Chinese good in Dordoi Bazaar

Kyrgyz traders transporting a Chinese made ping-pong table through Dordoi bazaar, Bishkek. Photo by Sue Anne Tay

For Salymbekov and other owners of bazaars in Kyrgyzstan, Kazakhstan’s ongoing construction of a trading hub at the Chinese border represents a major potential competition. Officially called International Center for Cross-Border Cooperation “Khorgos,” the hub has indeed been steadily increasing trade volume from China.

Strong resistance against joining the CU has undoubtedly impacted policy decisions in Bishkek, thereby postponing Kyrgyzstan’s official entrance into the union. Although Prime Minister Joomart Otorbayev, an economist with Western professional experience, has openly stated that Kyrgyzstan is interested in joining the union, he does not wish to rush the process.

In comparison to its other neighbors, Kyrgyzstan’s border with China is the most trade friendly. The border with Kazakhstan imposes Custom Union’s trade barriers, while Uzbekistan has long maintained a strict border regime with all its neighbors. Kyrgyz-Tajik relations remain tense due to ongoing border disputes.

In the meantime, Beijing has been careful not to make any statements regarding Kyrgyzstan’s potential joining of the CU. In 2012, China’s Ambassador to Kyrgyzstan Wang Kaiwen said that “It doesn’t matter for us if you join the Customs Union or not” because China’s economy won’t be affected by possible decline of economic relations with Kyrgyzstan. He also added that China is planning to expand its economic presence in Kyrgyzstan by opening industrial sites, thus helping its neighbor to increase exports.

The influence of shuttle traders is felt beyond Kyrgyzstan. With China’s cumulative trade with Central Asia reaching $46 billion in 2013, these traders are important economic links between Central Asian countries and China that otherwise would continue to be divided along political and economic lines. China’s growing economic influence will continue to foster bottom-up regional integration.

Dr. Erica Marat is an Assistant Professor at the College of International Security Affairs of the National Defense University. The views presented here do not represent NDU. Find her on Twitter @ericamarat.

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  1. Pingback: Four Socio-Political Factors That Could Make or Break the Deal for Eurasian Economic Integration after Kyrgyzstan’s Accession — Евразийское Движение Российской Федерации

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