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China's Involvement in Central Asia: Economic and Geopolitical Implications

China's Involvement in Central Asia: Economic and Geopolitical Implications

Speaker:

  • Sebastien Peyrouse

Central Asia

Photo credit: 
Getty Images

China in Central Asia: Economic and Strategic Implications

China is now Central Asia’s largest trading partner, having surpassed Russia’s trading volume in 2010. It has proactively engaged with its Central Asian neighbors to develop its economic and strategic influence since the collapse of the Soviet Union in 1991. Sebastien Peyrouse, Research Professor of International Affairs at the Elliot School of International Affairs at the George Washington University, addressed the scope and scale of China’s engagement in Central Asia; the impact of China’s involvement; and its implications for Sino-Russian relations in his talk titled “China’s Involvement in Central Asia: Economic and Geopolitical Implications” at the China Program on February 22, 2017. His talk was part of its Winter Colloquia series on “China: Going Global.”

Peyrouse first discussed the progression and form of China’s security alliances with its Central Asian neighbors. Arguing that China’s main geopolitical objective has been to ensure stability in Central Asia, Peyrouse outlined how China proactively sought security cooperation on both bilateral and multilateral levels with its five Central Asian neighbors. After quickly reaching border demarcation agreements with Kazakhstan, Kyrgyastan and Tajikistan in the 1990’s and 2000’s, China established a collective security framework called the Shanghai Cooperation Organization (SCO). But the SCO’s security activities, which target non-traditional threats and anti-terrorist exercises, are curtailed by the organization’s pledge not to infringe upon member states’ sovereignty. According to Peyruse, Russia continues to remain Central Asia’s unrivaled strategic and military partner.

On the economic front, however, the story is quite different. According to Peyrouse, China has sought to consolidate its geopolitical influence by bolstering its economic ties in the region. China is now Central Asia’s biggest economic partner, investing heavily in hydrocarbons, extractive industries, infrastructure development, communications, and the service economy; and the benefits of Chinese trade and investments are tangible. It has provided unique opportunities for Central Asia’s landlocked countries to access the international market, to leverage more advantageous opportunities offered by Chinese firms against multinational corporations, especially in the energy sector; to develop new service sectors, enjoy low-priced consumer goods, and construct infrastructure.

Yet, all this Sino-Central Asian economic activity has also engendered a domestic backlash. Calling China a politically charged and sensitive topic in the region, Peyruse contrasted how Central Asia’s political leaders and business oligarchs embrace a pro-China policy while the general population inveigh against China’s inroads into their economies. More specifically, they fear China’s control over Central Asian resources, like hydrocarbons, and their increasing dependence upon their eastern neighbor. Moreover, while about three quarters of Central Asian exports to China are raw materials, between 80-90 percent of Chinese exports to Central Asia consist of finished goods. This has destroyed many finished products industries in Central Asia, and negatively affected vital sectors like light industry, construction, and agrifoods.

Turning then to Russia’s reactions, Peyrouse noted that currently the political and security objectives of both China and Russia are well-aligned. Both wish for border stability, fear destabilization in Central Asia, and are engaged in a fight against drug trade from Afghanistan. Moreover, both wish to keep the region free of Western influence and see strong regimes as the key to stable governance. Thus, while Russia remains the primary security and military partner of Central Asian nations, China has become the leading economic partner for the region. Growing Chinese involvement, both strategically and economically, however, does provoke discomfort in Moscow as could be seen in Russia’s hesitant endorsement of China’s “Belt and Road” initiative and its unease over China’s creation of a new security bloc in 2016 with Pakistan, Afghanistan and Tajikistan.