Over the past few years, the lion’s share of the countries in Central Asia (CA) have been undergoing a period involving social, economic, and political transformation. The region desperately needs to put transportation and social projects in place, create new jobs, industries, and energy facilities, and improve the quality of education and healthcare, all of which entails tremendous financial costs that the governments of these young countries are not ready to spend due to the glaringly obvious lack of funds. That is why the leadership in Central Asian countries has objectively been forced to turn to various players on the outside for help resolving their domestic troubles, and to obtain outside investments.
Although the scope of financing allocated by the World Bank and its organizations is measured in tens of millions of dollars per year for this or that country across Central Asia, that is usually targeted toward very narrowly focused projects, and cannot influence the overall economic situation. The volumes of loans and financial assistance provided by the IMF are somewhat larger, but they are most frequently used to help balance a country’s budget, and cannot be something that drives growth either.
In this situation, that country pins the bulk of its hopes on other countries that it partners with. Rather significant assistance is provided through the EAEU, but the total amount of resources that this organization has at its disposal is still relatively small.
In these conditions, from among the main external players that are present in this region – Russia, China, and the United States – the role played by the PRC in recent years has taken on the most prominence since, unlike the United States, China’s strategy in Central Asia has not changed for several decades, and is based on three main rules: not to interfere in the domestic affairs of countries, or their relations with each other; to focus on economic cooperation; to strive to boost its international reputation. The policy China espouses in Central Asia completely suits the current leadership in that region’s countries.
As a result, China has bolstered its position in the region as its largest and most important investor in recent years, especially since Central Asia is of particular importance to China. Beijing’s interests are underpinned by three considerations. First, Central Asia is a kind of buffer zone between Afghanistan and the Xinjiang Uygur Autonomous Region, which pose danger for countries adjacent to them. Second, there are the natural resources in the region. Third, the region is geographically located in the center of the Eurasian continental area, and could easily become its land transportation hub. In this situation China, with its substantial financial reserves, and its One Belt, One Road Initiative, evaluated at hundreds of billions of dollars, remains the largest, most attractive source for financing the development of the region’s domestic economies.
Out of all the countries in Central Asia, China has recently paid steady attention to Kyrgyzstan, and has significantly expanded its economic ties with it, since this country and the area it is located in play a key role in implementing China’s One Belt, One Road initiative. The attention Beijing is expressly paying to Kyrgyzstan also stems from both its geographical proximity to the troubled Xinjiang Uygur Autonomous Region and prominent commercial presence the PRC has in this former Soviet republic: at present, it has more than 400 Chinese organizations, and another 1,890 Kyrgyz-Chinese joint ventures. Beijing is Bishkek’s largest investor and trading partner, with bilateral trade reaching $6.35 billion in 2019, according to official Chinese statistics.
However, at a time when Beijing is expanding its economic presence in Central Asia by implementing the One Belt, One Road initiative, China is also running into increasing resistance to its economic projects in Kyrgyzstan. This country is now particularly active in staging protests against Chinese economic activities, mainly in those villages and towns close to where the Chinese are involved in extracting mineral resources. For example, an enraged public in the village of Maidan, in Batken Province, locked a Chinese gold company worker in a metal cargo container a year ago, accusing Chinese workers in the company of “illegal” gold prospecting work. In April 2018, villagers from the southern Jalal-Abad Province, fearing for the environmental situation in their area, attacked the Kyrgyz-Chinese joint venture Makmal GL Developing, and set it on fire. In the beginning of 2019, unrest broke out in Bishkek, caused by rumors that ethnic Kyrgyz in China were being maltreated: according to widespread statements made by the protesters, in China’s Xinjiang Uygur Autonomous Region their compatriots are being sent to “re-education camps” with horrid conditions.
According to analysts at Stratfor (USA), anti-Chinese demonstrations will continue to grow as China continues to expand its economic presence in Kyrgyzstan, which in turn may negatively affect Beijing’s plans to invest in the country, and implement infrastructure projects.
Chinese businesses incurred a certain degree of damage during the Kyrgyz unrest that began in October: rioters stormed and plundered gold, coal, and copper mines, taking management hostage. Now, on the very dawn of another revolution, Bishkek owes Beijing more than $4.7 billion, which is about 26% of its national budget. However, while Moscow has waived more than half a billion owed by Bishkek since 2013, China is not Russia at all, and does not intend to forgive any loans. For every dollar borrowed, the Chinese can take natural resources cheaply, since the country has nothing else to offer as payment. Currently, the main interests held by the PRC in Kyrgyzstan are related to energy resources and minerals: in 2002, China and Kyrgyzstan signed a cooperation agreement to develop oilfields located in the southern part of Kyrgyzstan; in 2014, Beijing received the right to participate in developing the Mailuu Suu 4, East Izbaskent, Changyrtash, and Chyyrchyk fields; In 2016, the Chinese had plans for the Naryn River, which has serious potential in terms of building a cascade of hydroelectric power plants (while 100% of the electricity generated by this power plant cascade would go to the bordering Chinese Xinjiang Uygur Autonomous Region, which experiences continuous energy shortages).
The “revolutionary situation” that has emerged against the backdrop of the October 4 parliamentary elections in Kyrgyzstan has also put China’s assets in the republic, already at risk due to anti-Chinese sentiments, in a vulnerable position. Therefore, despite its growing economic presence in the region, and especially in Kyrgyzstan (Chinese financial institutions account for over 43% of the country’s $4.7 billion in foreign debt), the Chinese Foreign Ministry limited itself to simply publicly expressing its hope that the situation in the country stabilizes. Chinese Foreign Ministry spokesperson Hua Chunying stressed that this is due not only to the geographical proximity of Kyrgyzstan to the troubled Xinjiang Uygur Autonomous Region, but also to the fact that Beijing is the largest investor and trading partner that Bishkek has. Against this background, China, which is adjacent to Kyrgyzstan, emphasized that it cannot help but pay attention to how its economy is undergoing yet another test of strength following another coup and warring clan factions. The Chinese Embassy in Bishkek also did not go beyond the bounds of just warning citizens about the danger, and opened up a special hotline.
Vladimir Danilov, political observer, exclusively for the online magazine “New Eastern Outlook”.
