Posts Tagged ‘Chinese foreign policy’

And now a short paper co-authored with Sarah, my co-editor on the China in Central Asia site, as part of a larger project we have been working on at our home institution of RUSI looking at China in the region. There has been an earlier report in this series, and more to come.

Security and Stability along the Silk Road

Sarah Lain and Raffaello Pantucci
RUSI Publications, 29 February 2016
Central and South Asia, International Security Studies

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.

Things are slowing down a bit now in the wake of the Paris atrocity, though unfortunately am sad to say the story is likely to not go away. Still some interest around the topic though, and spoke to the Sunday Times about the noisy Sally Jones, to the Huffington Post about how ISIS compares to historical threats, as well as the South China Morning Post about China’s view on the downing of the Russian plane and the Straits Times about what China might do to contribute to the anti-ISIS coalition. More on all of this am sure as ever. In the meantime, a new piece which was acually published prior to the Paris atrocity about China-Russia relations globally for the China Economic Quarterly. Huge thanks to the editors for their patience and invitation to do this. Greatly appreciated and definitely a subject that will be returned to.

China And Russia: Locked In Reluctant Embrace

china russia image

The dynamic of the Sino-Russian relationship is one that has long perplexed Western decision makers and thinkers. At a geopolitical level they appear in lockstep in an anti-western front, but below the surface they seem willing to engage with the west against each other’s interests while also sharing some fundamental disagreements. The reality is that Moscow and Beijing have a sophisticated modus vivendi that both allows for a clear disparity in the relationship in Beijing’s favor, while at the same time retaining an equal sense of importance of the broader strategic relationship. The overriding priority for both remains to ensure that they have an ally against the West and as long as this need remains the axis of authoritarianism will persist.

The archetypal space to explore this complex divergence is Central Asia. On the one hand it is a region where China has gradually increased its footprint to become the most consequential actor on the ground, while on the other it remains linked inextricably to Russia through multilateral vehicles and long-standing ties. And while in other parts of Eastern Europe or the Caucasus Russia has reacted negatively to encroaching external influences with armed conflict (like Georgia or Ukraine), in Central Asia the slow creep of Beijing’s influence has happened largely with Moscow’s acquiescence, though not without some counter-reaction.

China’s interest in Central Asia stems from a desire to improve the economic situation in Xinjiang. Seeing economic development as the answer to ethnic tensions between Han and Uighur in the region, Beijing has embarked on numerous large-scale economic projects to develop the western region of Xinjiang. However, for effective economic development to take place in Xinjiang there is a need for the region to have greater connectivity outwards. A fivehour flight from Beijing, Urumqi is as landlocked as the Central Asian countries it is near, and for it to prosper adequately, it needs to develop routes and roads into the region and ultimately to European markets. Consequently, as Beijing has poured money into the region, there has been an ancillary push into Central Asia with policy banks, state owned enterprises and private citizens all seeing the opportunity and need that lies in developing routes and markets into the Russian space.

Chinese cash displaces Russia in Central Asia…

The consequence of this has been a steady growth of economic influence across the region as Chinese capital and companies move into the region to repave, rebuild and open up Central Asian markets while also taking advantage of the region’s natural wealth to feed the Chinese economic machine. Previously a region largely the domain of Russian extractives firms, and, in the post-Cold War period, large Western players, Central Asia has seen CNPC and other Chinese energy firms moved in to stake claims. But significantly, Chinese firms have not stopped at only extracting energy, with firms showing up re-metering national gas infrastructure, re-developing solar furnaces, and building new power plants, refineries, and transmission lines across the region. The most rapid global pipeline growth of the past decade can be seen in the region, as Chinese firms plan, fund and built in quick succession a series of pipelines bringing hydrocarbons back to China from Turkmenistan, Kazakhstan and Uzbekistan.

All of this has largely been done to the detriment of Russian firms, who retain key stakes in most regional energy efforts but find themselves unable to compete with China’s easy funding and rapid construction. The American evacuation of the Manas airbase is a case in point. Initially awarded to a Russian firm linked to Rosneft, the company had to withdraw due to lack of funding, leaving a Chinese firm to step in and take over the contract. In Turkmenistan, a longstanding animosity between Moscow and Ashgabat culminated with the main pipeline to Russia blowing up and not being rebuilt. Instead, Chinese pipelines appeared and China is now the nation’s key partner—so much so that Turkmenistan might question the wisdom of its almost complete dependence on China.

…but Russian weapons are still welcome

Despite China’s economic incursions, Russia remains the most credible security provider. Untested by conflict outside its borders, China’s military is still a relatively timid force that is wary of launching direct confrontations or placing themselves in situations that would lead to such conflict. Whenever there is security trouble in the region, the powers look more to Russia to provide them with support – in particular in the more unstable nations of Kyrgyzstan and Tajikistan, both of whom have looked to Russia to help provide some stability in the wake of interethnic violence (Kyrgyzstan) and to strengthen their border with Afghanistan (Tajikistan).

Moscow has also made better use of regional organizations than has Beijing. The Shanghai Cooperation Organization (SCO), sponsored jointly by China and Russia, is in the most externally observed, but least effective regional multilateral vehicle. The Moscow-driven Common Security Treaty Organization (CSTO), Commonwealth of Independent States (CIS) and Eurasian Economic Union (EEU) are all more active in changing the context on the ground. The EEU in particular is seen as an attempt to recreate the Soviet space and is driven by Moscow as a specific attempt to reclaim the economic dominance and influence it used to hold. Encompassing Russia, Kazakhstan and Belarus, with Armenia and Kyrgyzstan the latest joiners, the EEU gives Moscow the power to dictate border tariffs and standards across the entire region.

In Central Asia the EEU is seen as direct push-back to Beijing’s growing influence. Yet the reality is that the EEU can do little to stem the rising influence of Chinese cash. And for Beijing’s traders keen to take advantage of Xi Jinping’s vision to create a New Silk Road Economic Belt through the region to European markets, the existence of a single tariff zone from Kazakhstan to Belarus will save them money and time in getting goods from China to Europe. Direct trade with Central Asia may be down, but, as traders in Kyrgyz markets at Kara Suu and outside Bishkek pointed out during a visit in early 2015, these markets had been shrinking for years due to closed local borders and weakening local economies. The addition of a failing Russian economy only further softened local currencies and further reduced remittances from Central Asian laborers in Russia, which in the case of Tajikistan or Kyrgyzstan account for almost a third of GDP.

On the whole, Beijing policymakers seem to view the EEU as complementary to their Belt-and-Road strategy; and even if they did not, they have reason to be skeptical of the EEU’s longevity. Belarus and Kazakhstan have already blocked some trade across their borders, and it remains unclear how Kyrgyzstan is going to be able to effectively integrate and thrive in an economic union where it has few advantages.

China has the upper hand in bilateral affairs

All of this takes place against a backdrop of a failing Russian economy that is increasingly looking to Beijing for growth. Whilst previously resistant to letting Chinese firms invest in upstream energy assets, Moscow allowed the Chinese Silk Road Fund to invest in the Yamal gas field. In a sharp turnaround from previous paranoia of Chinese expansion into Russia’s east, Moscow has actively encouraged cross-border trade between Heilongjiang and the Amur region, with the governor of the region going so far as to say that he would welcome Chinese workers coming into the region to help repopulate it. The Russian press is increasingly full of stories of actively encouraging trade across the border, something that stands in stark contrast to speeches by President Putin in 2000 about losing Russia’s East to Asia.

In all this investment, China clearly retains the upper hand. The Power of Siberia pipeline remains a project largely on paper as CNPC lobbies aggressively to get the deal finalized on its terms. And although the large gas deal signed between Russia and China was supposedly resolved earlier in the year after almost 15 years of haggling, the reality is that the agreement was largely cosmetic. It came at a moment when President Putin wanted to be able to show the world that he had strong allies in the face of a growing animosity between Moscow and the west over Ukraine. Within hours of the deal being signed, stories surfaced of re-negotiations taking place and a continuing lack of agreement over the pricing structure of the deal.

At a geostrategic level there are further tensions between the two great powers. Vietnam is a long-time client state to Russia that depends on Moscow for military equipment, including naval assets that Vietnam feels it needs to bolster its claims to islands in the South China sea that it disputes with China. India is another long-term Russian ally that has border disputes with China and a long-standing inferiority complex to its neighboring Asian giant.

It is also clear—despite its lack of public criticism—that China is displeased by Russia’s adventures in Ukraine and Georgia, as it worried about the precedent of annexing parts of neighboring countries and recognizing break-away provinces. Nor is it enthusiastic about Russian intervention in Syria where it seems unlikely that more combatants on the field will resolve the situation. As a status quo power that sees the future as firmly within its grasp under the current world order, Beijing disapproves of Russia’s efforts to undermine current structures.

The SCO was supposed to be a vehicle for joint maneuver in Central Asia, but has bogged down in disagreements. Beijing’s interest in having it focus more on economic issues has been blocked by Moscow. And in turn Moscow has promoted a rapid expansion of the group, against China’s wishes. Unwilling to directly confront and exclude others, China has found itself forced to bow to external pressure in letting the organization expand against its better judgment.

Authoritarian birds flock together

Notwithstanding these tensions, the two powers retain a tactical geopolitical alignment. Partially this is for the purpose of mutual support in the UN Security Council. As two of the permanent five members, knowing that they will consistently support each other (by either veto or abstention), means that they need never feel isolated in the body.

Shared political insecurity also draws them together. Both governments are equally paranoid about the overthrow of authoritarian regimes. Both speak equally acerbically about the negative influence of democracy and the wave of color revolutions that swept through the former Soviet space in the mid-2000s and the subsequent ‘Arab Spring.’ Watching as chaos came in the wake of the civilian overthrow of regimes from Georgia, Ukraine, Kyrgyzstan and then later Tunisia, Egypt, Libya and Syria, both ascribe these incidents to a missionary foreign policy advocated by western capitals. Fearing that ultimately this wave of civilian insurrection ends up with regime overthrow in Beijing and Moscow, both see each other as fundamental allies in a world divided between western democratic zealots riven with uncertainty and stable one-party states ruled by strongmen and parties.

These underlying geopolitical realities outline why this axis of authoritarianism continues to function as a genuine alliance of sorts despite fundamental differences and an ever-growing imbalance in power between the two. Russia may increasingly be selling itself to China in a manner that will become irreversible, but it is doing this to a power that it fundamentally sees itself locked in step with. It was President Putin who first enunciated in 2000 the fear that Russia would lose its east to Asian influences, but it is also President Putin under whose reign China has become the Russia’s biggest geopolitical friend.

More catch-up, this time a longer magazine sized piece for the excellent current affairs journal Current History. This explores the China-Russia relationship with a particular focus on Central Asia sitting in between them. Clearly more on this topic to come – including a piece soon focused a bit more on the econ and geopolitical equation more broadly. I have pasted the first paragraph below to give you a flavour, but the whole thing is available as PDF below as well.

China and Russia’s Soft Competition in Central Asia

China and Russia have a long history of conflict and competition in Central Asia. Sitting between the two great superpowers, the landlocked Central Asian nations appear to have little choice or control over their destiny, and are often considered to be pawns in a perpetual great game. Yet this narrow view misses the broader picture of the Sino-Russian relationship. It is undeniable that the region has been slipping out of Russia’s immediate economic sphere of influence for some time, but China has been making inroads with Russia’s full acquiescence. For Moscow and Beijing, Central Asia is increasingly a region of soft competition where they are very aware of and attentive to each other’s interests, rather than a source of conflict and tension.

Overriding any differences concerning the steppe are the larger realities of the Sino-Russian strategic relationship on the international stage, where the two permanent members of the United Nations Security Council continue to support each other’s refusal to bow to a Western-dominated global order. Russia may appear to be the loser in Central Asia, but the two powers have established a modus vivendi that suits the interests of both. The real geopolitical losers are likely to be the Central Asians, slowly slipping from Russia’s orbit into China’s.

Please follow for entire article

 

And more catch up posting, this time in Italian for the excellent think tank Twai’s publication Orizzonte Cina. This one was actually initially written a bit in English and a bit in Italian (thanks to Giovanni for commissioning and Simone for editing and translating!), so am not going to re-print here completely in English, but am sure people can figure this out or it gives you an opportunity to learn a beautiful language.

“Una cintura e una via”: il modello dell’Asia centrale

OC Oct 2015

Annunciata in due fasi dal presidente Xi Jinping e dal premier Li Keqiang, la strategia “Una cintura e una via” è il nuovo orientamento della politica estera di Pechino su cui oggi sembrano concentrarsi quasi tutte le discussioni tra esperti d’Asia. Presentata al mondo prima nel settembre del 2013 ad Astana come “Cintura economica della via della seta”, e poi mesi dopo in Indonesia come “Via della seta marittima del XXI secolo”, le finalità di questa nuova strategia non sono sempre ben definite. Per capire meglio l’indirizzo che la Cina sta prendendo bisogna guardare a ciò che Pechino sta facendo in Asia centrale: è l’Asia centrale, infatti, la pista di lancio di questa nuova iniziativa.

Xinjiang: l’Asia centrale cinese

Descritta dal geografo inglese Halford Mackinder come “il fulcro dell’Eurasia”, l’Asia centrale è al centro del pensiero strategico da secoli. Per la Cina essa ha un’importanza anche maggiore per via della sua vicinanza allo Xinjiang – a tutti gli effetti una parte di Asia centrale dentro ai confini della Cina. È una regione ricca di risorse naturali ma popolata da una minoranza uigura profondamente scontenta del governo di Pechino. Una rabbia che si è intensificata fino al punto di scatenare ripetuti episodi di violenza, con apice nel luglio del 2009, quando gruppi di uiguri ad Urumqi (la capitale regionale) aggredirono cinesi han. In seguito alle violenze, che sono durate un paio di giorni, il governo di Pechino ha dato attuazione a una strategia volta a migliorare la situazione regionale con un enorme investimento economico. Pechino scommette sul fatto che la promozione del benessere economico sia sufficiente a mitigare il malcontento sociale e a soddisfare le rivendicazioni della popolazione.

Il risultato è una corsa allo Xinjiang: altre province si sono date l’obiettivo di investire in aree dello Xinjiang, inviando funzionari del Partito a lavorare a fianco delle autorità locali per trasmettere le ricette applicate con successo nel resto del paese. Una percentuale del Pil di ogni provincia cinese viene dirottata verso lo Xinjiang e le grandi imprese statali che investono nella regione sono tenute a lasciarvi una quota dei loro profitti maggiore della norma. Questo sul fronte interno; le imprese straniere, a loro volta, sono incentivate ad aprire stabilimenti nella regione attraverso sostanziosi benefici e agevolazioni.

Il problema, però, è che – come il resto dell’Asia centrale – lo Xinjiang è lontano dalle rotte oceaniche e dalle vie commerciali tradizionali. Per rendere profittevoli gli investimenti nella regione la Cina deve perciò puntare sull’apertura dei mercati limitrofi tra I paesi dell’Asia centrale e costruire una nuova rete infrastrutturale che li colleghi tra loro. Il risultato è un’enorme spinta allo sviluppo regionale con le grandi banche statli cinesi (come la Exim Bank o la China Development Bank) pronte ad offrire ai governi dell’Asia centrale prestiti a tasso agevolato, a condizione che i progetti su cui vengono investiti vengano realizzati da aziende cinesi – generalmente con manodopera cinese e utilizzando prodotti cinesi.

Per i paesi dell’Asia centrale si tratta di proposte attraenti: la Cina rappresenta una fonte d’investimento più solida della Russia, più generosa di altri paesi asiatici come il Giappone e la Corea del Sud, e più affidabile dei paesi europei e degli Stati Uniti. È una dinamica in atto da più di un decennio: la Cina sta diventando la potenza che persegue con più efficacia i propri obiettivi in Asia centrale, mentre – poco per volta – le strade e le infrastrutture della regione si riorientano da Mosca verso Pechino, via Urumqi.

Il sogno cinese di Xi Jinping

È questa la situazione che la nuova amministrazione di Xi Jinping ha ereditato quando è andata al potere nel novembre del 2012: una relazione con l’Asia centrale costruita su finanziamenti e imprese cinesi, di cui entrambe le parti sono soddisfatte. I paesi della regione sono infatti favorevoli a questa nuova fonte di investimenti, con disponibilità economiche apparentemente illimitate e scevra dalle aspettative di dominazione politica che accompagnano invece gli investimenti russi, nonché dalle condizioni politiche poste da Europa e Stati Uniti. L’esperienza centrasiatica ha insegnato a Pechino quali siano le leve più efficaci per affermare gli interessi nazionali cinesi sulla scena internazionale. A Pechino prevale ancora un approccio incentrato sul principio di non interferenza negli affari altrui, che consente di operare all’estero senza crearsi nemici.

Vi è anche una spinta a riprodurre globalmente il modello sperimentato in Asia centrale: dalla “Cintura economica della via della seta” annunciata ad Astana alla “Via della seta marittima del XXI secolo”, al “Corridoio Bangladesh-Cina-India-Myanmar”, al “Corridoio economico Cina-Pakistan” e a una serie di proposte per altre vie che si sviluppano a partire dalla Cina. Nel loro insieme, questi progetti costituiscono l’iniziative ‘Una cintura e una via’, che mira a ridare alla Cina centralita nella rete internazionale di vie commerciali, aprendo nuovi mercati e riorientando le vie commerciali della regione per rafforzare il ruolo di pivot del paese.

Sin dall’inizio del suo mandato, Xi Jinping ha sottolineato l’importanza della diplomazia economica. Nel gennaio del 2013, in un discorso all’Ufficio politico del Comitato centrale, Xi ha sostenuto che la Cina non avrebbe “mai perseguito l’obiettivo del proprio sviluppo al costo di sacrificare gli interessi di altri paesi”. Questa dichiarazione evidenziava l’importanza degli interessi reciproci come nucleo centrale della strategia cinese verso l’esterno. Lo stesso aspetto veniva evidenziato in settembre ad Astana all’interno del famoso discorso sulla ‘Cintura economica della via della seta’ pronunciato da Xi all’Universita Nazarbayev, nel quale il presidente cinese auspicava che “la Cina e l’Asia centrale [unissero] i propri sforzi per costruire una cintura economica della via della seta che [rafforzasse] la cooperazione”. Lo stesso punto veniva nuovamente ribadito nell’ottobre di quello stesso anno, durante la Conferenza sul lavoro diplomatico nella regione, laddove Xi delineava una lista di priorità in politica estera verso l’“obiettivo di realizzare la grande rinascita della nazione cinese; sviluppare complessivamente le relazioni con i paesi della regione; consolidare l’amicizia con i vicini; approfondire forme di cooperazione reciprocamente vantaggiosa; preservare e impiegare al meglio l’importante periodo di opportunità strategica per lo sviluppo della Cina; preservare la sovranità nazionale, la sicurezza e gli interessi dello sviluppo; impegnarsi per migliorare la relazione politica della Cina con I paesi della regione; consolidare i legami economici, approfondire la cooperazione di sicurezza e intensificare gli scambi culturali tra la Cina e i paesi della regione”.

Le leve economiche del progetto

L’attrattiva di un simile modello è facile da comprendere, da un punto di vista cinese. La combinazione di vie commerciali, investimenti nelle infrastrutture, prestiti agevolati e mercati aperti fa leva su una serie di strumenti che I policy-maker cinesi conoscono bene. Si tratta di strumenti che corrispondono alla nozione cinese di benefici armoniosi e di vantaggi condivisi, e che mirano a ricollocare la Cina al centro della struttura economica globale. Sono strumenti che I policy-maker cinesi sanno come utilizzare: prestiti agevolati e finanziamenti vengono forniti attraverso banche quali la China Development Bank o la ExIm Bank, mentre l’attuazione dei progetti è affidata a imprese di Stato cinesi che hanno esperienza nella realizzazione di grandi progetti infrastrutturali in contesti difficili.

Nel quadro dell’iniziativa “Una cintura e una via”, ciò si è concretizzato in una forte proiezione finanziaria cinese. Sia la China Development Bank che la ExIm Bank hanno articolato una propria strategia per “Una cintura e una via”, ma – accanto a questi veicoli tradizionali – la Cina ha iniziato a promuovere la creazione di nuove partnership bilaterali. Non solo: oltre all’approccio bilaterale Pechino ha promosso un’intera rete di nuove istituzioni internazionali, costitute appositamente per finanziare la nuova iniziativa. Queste istituzioni assumono tre diverse forme. Alcune sono create su proposta e sotto la guida cinese; la più significativa è la Banca asiatica d’investimento per le infrastrutture (Aiib), con un capitale di 100 miliardi di dollari. Altre sono create con il sostegno di Pechino, come la Banca di sviluppo dei Brics (pure dotata di un capitale di 100 miliardi di dollari) e la Banca di sviluppo dell’Organizzazione per la cooperazione di Shanghai, ancora in attesa del varo; infine, crescono a ritmo sostenuto gli accordi bilaterali in materia commerciale e di investimento che la Cina sta concludendo con i suoi vicini – ad esempio l’accordo per l’investimento di 46 miliardi di dollari per il Corridoio economico Cina-Pakistan, annunciato da Xi Jinping durante la sua visita di quest’anno a Islamabad. In aggiunta, la Cina ha annunciato la creazione di un Fondo per la via della seta del valore di 40 miliardi di dollari con un board of advisors che include esperti della Urumqi Central Bank.

È attraverso questa rete di istituzioni finanziarie che viene fornita la liquidità necessaria a finanziare l’iniziativa “Una cintura e una via”. Destinatari dei finanziamenti sono i paesi vicini: per esempio, il progetto di Corridoio economico Cina-Pakistan, in particolare alcuni progetti “early harvest” nel settore dell’energia in Pakistan, saranno i primi beneficiari di finanziamenti dal Fondo della via della seta. Ma i finanziamenti finiscono per la maggior parte a imprese di Stato cinesi impegnate a dar sostanza alla retorica dei leader. Per avere un’idea di quali imprese il governo cinese intenda sostenere con l’iniziativa “Una cintura e una via” basta del resto guardare al progetto di China securities index e Shanghai stock exchange per la creazione di un “indice congiunto che rilevi le performance delle azioni che ricadono entro l’iniziativa ‘Una cintura e una via’”. Composta da 52 imprese attive nei settori di “costruzione di infrastrutture, trasporti, produzione di energia e comunicazioni”, la lista offre una chiara indicazione di quali siano – nelle aspettative di Pechino – i beneficiari dell’iniziativa.

La strategia potrà avere successo?

Ma quante concrete possibilità di successo ha questa ambiziosa strategia? Secondo il Ministero del commercio della Repubblica popolare cinese, nella prima metà del 2015 le imprese cinesi hanno investito circa 7,05 miliardi di dollari in 48 paesi collocate entro il perimetro dell’iniziativa. Ma ciò non elimina del tutto i dubbi sulla concreta realizzabilità della strategia. In Asia centrale, in particolare, ha colto alcuni successi, ma ha anche incontrato ostacoli destinati a manifestarsi altrove.

La logica sottesa alla strategia può apparire benevola. L’apertura di corridoi commerciali, con grandi investimenti e con il coinvolgimento di imprese in grado di realizzare i progetti, garantirà vantaggi in termini di nuove reti infrastrutturali ad alcuni dei paesi più poveri della regione. Ma vi sono dubbi sui vantaggi che questi paesi potranno trarre al di là del mero investimento in infrastrutture. Per i paesi dell’Asia centrale, per esempio, non è chiaro quanto la visione di nuovi corridoi commerciali che li attraversano possa realmente aiutarli nello sviluppo delle proprie economie nazionali. Questi paesi puntano a sviluppare industrie nazionali – ma se si parla con uomini d’affari e commercianti della regione, tutti esprimono la preoccupazione di essere espulsi dal mercato dall’arrivo delle più competitive imprese cinesi.

Un ulteriore dubbio è se i paesi della regione siano nelle condizioni di beneficiare realmente dell’iniziativa. L’apertura di corridoi commerciali è finalizzata a creare nuove vie di trasporto per i prodotti, ma nulla garantisce che ne derivino automaticamente vantaggi anche per i cittadini dei paesi di transito. In Pakistan si è cercato di ovviare a questo rischio attraverso l’istituzione di zone economiche lungo il Corridoio economico Cina-Pakistan, ma sarà necessario del tempo prima che queste decollino.

Infine, tutto ciò non risolve i problemi di sicurezza che avranno con ogni probabilità un impatto su molte delle vie di comunicazione create sotto l’egida di “Una cintura e una via”. In aggiunta alle tensioni nelle relazioni tra la Cina e buona parte dei suoi vicini marittimi (che in teoria dovrebbero cooperare nel progetto della Via marittima della seta), vi sono i problemi di sicurezza di Asia centrale e meridionale: instabilità in Belucistan e in Myanmar, gruppi terroristici attivi in Afghanistan e capaci di espandersi in altri paesi dell’Asia centrale. Alcuni di essi hanno contatti con gruppi dissidenti uiguri, il che rinvia a quelle stesse minacce che la Cina cerca di attenuare attraverso la propria strategia di investimenti in Asia centrale. Queste sono parti del mondo in cui è difficile per chiunque investire, non solo a causa della mancanza di infrastrutture ma anche per i diffusi problem di corruzione e per i gravi deficit di governance.

Nonostante ciò, la visione di “Una cintura e una via” è destinata a diventare la fondamentale direttrice della politica estera di Xi Jinping. Delineata in termini sempre più chiari, e sostenuta dai necessari finanziamenti, essa sta ora muovendo dall’elaborazione retorica all’azione. È presto per dire se sarà coronata da successo, ma la rotta è tracciata ed è già stata sperimentata in Asia centrale. Xi Jinping e la sua cerchia hanno certo letto Mackinder: l’Occidente farebbe bene a concentrarsi su come rispondere al meglio all’agenda di politica estera che la Cina sta articolando.

Finally posting my second piece from last week around the SCO Summit, this time for the South China Morning Post. Focuses more on the China-Russia side of things. Beyond this, spoke to the Independent about the elusive Abdel-Majed Abdel Bary, the Daily Mail about ISIS and women, and Reuters about Chinese intelligence dealing with the counter-terrorism questions outside the country.

Russia holds the door to Central Asia open for China

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Raffaello Pantucci says to a region in need, the Chinese offer of funds and expertise is too attractive to resist, as agreements at the Moscow-hosted BRICS and SCO meetings show

PUBLISHED : Wednesday, 15 July, 2015, 12:05pm

Late last week, the leaders of almost half the world’s population gathered in Ufa, Russia. The collision of the BRICS and Shanghai Cooperation Organisation (SCO) summits was orchestrated by Russia to guarantee exposure and attention, and highlight to the world how many friends Russia has. Dig below the shallow surface, however, and the links between the countries of the two international organisations are barely skin deep, with everyone attending for their own reasons.

For China, the two summits provide another opportunity for global engagement, as well as helping Beijing advance two international financial institutions. A timid player in many ways on the international stage, Beijing has found that its capital is one lever that it can use without raising too many hackles, and the meetings in Ufa gave it another opportunity to flex these financial muscles.

Fixating on the slow path to SCO membership for India and Pakistan, the world largely missed the key takeaway from the summits: China’s growing financial domination of Russia and its immediate backyard.

In the wake of the first Ufa summit, greater clarity was cast around the BRICS development bank, a new financial entity to emerge from the grouping of Brazil, Russia, India, China and South Africa, with an initial market capitalisation of US$50 billion. The leaders also created a US$100 billion currency exchange reserve, of which US$41 billion was offered by China, while Russia, Brazil and India each gave US$18 billion, and South Africa contributed US$5 billion.

A day or so later, the SCO members agreed once again to try to advance the concept of an SCO development bank or at least a joint fund.

China has been pushing the idea of an SCO financial institution for some time.

Seeing economic engagement as its major advantage in Central Asia, many years passed before Chinese interlocutors first presented the idea of an SCO development bank.

However, the idea has never quite taken off, with Russia in particular concerned that the vehicle would simply leave the door to Central Asia wide open for Beijing.

We live now, however, in different times, and, rather than be concerned, Russia has opened the door to Beijing. Indeed, Moscow appears to be helping to hold the doors open as China uses its lever in Russia’s backyard. Already endowed with the Silk Road Fund (focused on China’s western partners in Central and South Asia) and the Asian Infrastructure Investment Bank, China’s external constellation of economic firepower has been further enhanced by Ufa.

Russia itself has further opened up its own economy to Chinese investment, offering Chinese state-owned firms majority stakes in its oil and gas fields.

Eager for foreign investment and unable to look west anymore, Moscow is reaching east and apparently willing to throw open not only its backyard, but also Central Asia’s.

The result is a further strengthening of China’s hand in Central Asia, as the country pours finance and infrastructure into a part of the world that is crying out for it.

While in the short term there is little to worry about this investment (these are infrastructure-poor countries that will benefit from China’s appealing combination of low-cost construction firms and cheap loans), over the longer term, Chinese leverage will certainly offer Beijing a grip over the region. The lesson from Ufa is that the region’s one great resistor, Russia, has largely lifted its objections and is now welcoming all the Chinese investment it can attract.

Raffaello Pantucci is director of international security studies at the Royal United Services Institute

This article appeared in the South China Morning Post print edition as Russia holding the door to Central Asia open for China

Alongside Qingzhen Chen, a former RUSI colleague, I have a piece in the latest edition of ECFR’s China Analysis journal. This looks at the geopolitical risks that Chinese scholars and experts have identified in the ambitious ‘one belt, one road’ strategy that they have been trumpeting around the world. The piece is freely accessible, but a bit too complicated to repost here, so please follow this link to it in its entirety. I have posted below the Chinese pieces that it draws upon as well as the first paragraph which lays out the questions it focuses on (after that it becomes very difficult because of all the footnotes!). China_analysis_belt_cover

The Geopolitical Roadblocks

by Raffaello Pantucci and Qingzhen Chen

Sources: Zhang Yunling, “Analysis says One Belt One Road Faces Five Challenges,” Xiaotang Caizhi, 23 March 2015.

Tang Yiru, “Where does the money come from for the One Belt One Road? Geopolitical risks cannot be ignored,” Guoji Jinrong Bao, 9 February 2015.

Hu Zhiyong, “How to understand the political risks of ‘One Belt One Road’”, Aisixiang, 2 March 2015.

Jia Qingguo, “A number of issues that the OBOR urgently needs to clarify and prove,” Aisixiang, 24 March 2015.

Ge Jianxiong, “The History of One Belt One Road is misunderstood,” Financial Times (Chinese version), 10 March 2015.

Pang Zhongying, “One of the resistances to the One Belt One Road is from India,” Aisixiang, 4 March 2015.

Chinese authorities – and authors selected here – describe China’s “One Belt, One Road” (一带一路, yidai yilu, hereafter OBOR) strategy as one of the most important foreign policy initiatives in the twenty-first century, and Chinese authors agree. Across the country (and, increasingly, across the world), Chinese universities and research institutions are conducting projects to explore how the vision might be implemented. Meanwhile, China’s leadership is offering economic incentives to help make the vision a reality, either through bilateral connections or through the new constellation of multilateral international financial institutions that China is developing.38 However, Chinese comments also reflect that the strategy will have to overcome many challenges. Is Chinese business ready to go global? Are the countries along the routes ready to embrace the initiative? How much does China know about the countries involved and about how they will be changed by Chinese investment? And is China properly prepared to implement this strategy?

Another short op-ed in between longer pieces of work, this time for Reuters looking at the China-India-Pakistan trilateral relationship and all its complexities. Reflects a number of views I heard on recent trips to all three capitals.

Untangling the web of India, China and Pakistan diplomacy

By Raffaello Pantucci
May 25, 2015

(Any opinions expressed here are those of the author and not necessarily those of Thomson Reuters)

On the eve of Prime Minister Narendra Modi’s visit to China, Xinhua published a rare opinion piece by his Pakistani counterpart Nawaz Sharif. The obvious choreography of the visit and article shows the delicate balance in relations between China, India and Pakistan.

For Beijing, both powers are important if it is to realize its ambitious strategy of trade and economic corridors emanating from the Middle Kingdom under the rubric of the Silk Road Economic Belt. For current governments in Islamabad and New Delhi, Beijing’s economic miracle offers a way of helping develop their economies. Yet we are some way off before this trilateral relationship will be able to live up to its potential as the economic powerhouse at the centre of Asia.

Islamabad reaped substantial benefits from President Xi Jinping’s delayed visit to Pakistan. The formalization of the China-Pakistan Economic Corridor (CPEC) to the tune of $46 billion signalled a major investment by China into Pakistan’s future (even if one takes a skeptical view that the money was repackaged old deals and multiple-year contracts conflated for a public announcement).

The current outline for the CPEC is a multistage strategy starting with the development of Pakistan’s parlous energy infrastructure and the redevelopment of its road, rail and pipeline network. A series of economic zones will be established along the CPEC route in Pakistan to attract industry that is finding itself increasingly priced out of Chinese markets. As envisaged, the corridor will not only open up China’s western regions to the seas through Gwadar Port, but also create a latticework of prosperity across Pakistan.

India has traditionally seen a close China-Pakistan relationship as a source of concern. Seeing it as a relationship that is built on the foundations of anti-Indian sentiment, hawks in New Delhi are concerned by this proximity. But the new government of Narendra Modi has appeared willing to open up a new conversation with Beijing, one that tries to look beyond these historical tensions to build stronger economic ties, resolve long-standing border disputes and helps reshape the global order to the advantage of the two Asian giants. China has also offered a direct link to India in one of the numerous trade corridors it is pushing out from Beijing — in the form of the Bangladesh-China-India-Myanmar (BCIM) Corridor.

But underlying these optimistic perspectives are a number of fundamental problems, the most central of which is regional security. In the context of CPEC, security in Pakistan (in the form of growing sectarianism, terrorism, as well as separatists in Baluchistan) and in neighbouring Afghanistan pose major threats to the route. And while India may be interested in the BCIM as a potential concept, it remains concerned about encirclement by China through the Maritime Silk Road and the network of relationships China is building in the Indian Ocean as well as the ongoing border tensions in Ladakh. India has continued to keep China out of SAARC and Modi’s Project Mausam is a direct pushback to China’s maritime strategy, in contrast to the country’s willingness to engage on the BRICS Bank, AIIB and to work on joint projects in Iran.

And bringing the trilateral complexity of these relationships into focus are incidents like theattack on the Park Palace Hotel in Kabul. While it remains unclear what the ultimate target was, the potential presence of the Indian Ambassador and Indian casualties immediately painted the incident as part of the shadow war between Pakistani intelligence and the Taliban on the one side, and Afghan intelligence and their Indian supporters on the other. Such incidents stoke paranoia on all sides and complicate efforts to try to forge a regional peace and stability.

The China-India-Pakistan trilateral relationship is a complicated one. All three need each other to succeed, but do not believe this to be the case, remaining fiercely independent in their outlooks and jealous when the other two appear to be moving closer together. On the one hand, China has the potential to act as an honest broker, offering economic investment to all while trying to help offer a platform for discussions. But in reality, China wants no part of a situation where it ends being responsible for brokering peace in such a fractious part of the world, and it continues to take advantage of opportunities to assert its dominance over its Asian neighbours. For India and Pakistan, history continues to be stuck in the legacies of partition.

Yet this is a trio of countries that together account for about a third of the world’s population and where future prosperity is likely to come from. The danger at the moment is the assumption that economic development and prosperity will resolve everything and is the goal that needs to be achieved for regional stability. In reality, all three powers need to shed their historical legacies, and find ways of ending the paranoid tensions that underlie their global outlooks. Until this has been achieved, the CPEC, BCIM and any other regional economic framework will be undermined and no long-term stability will be found in the heart of South Asia.

 

I am travelling and working on various projects which is impeding my productivity and ability to post. A few pieces to come this next week hopefully though. This one is an op-ed for the EU Observer, somewhere I used to write more frequently for but I like to hope gives me an hearing in Brussels. At its base, the idea of the piece is to try to raise awareness of China’s Silk Road Economic Belt in Brussels where so far it has not quite taken off. A Chinese friend pointed out it was translated into Mandarin, while I also see that the Russian press has picked it up. Not sure what I should read into that. More on this topic undoubtedly to come.

Europe: The other end of China’s Silk Road

I'm preparing for my trip to China and when I bought the currently I was a little surprised to see that Mao is still on the Yuan notes.  Hmm. I took some detail shots of the money as well - I always enjoy seeing the currency of different countries.  This shot was taken with my 100mm Macro f/2.8 IS.  Flash fired remotely with a poverty wizard to add sidelight to enhance the texture of the paper.

China is coming closer to European markets (Photo: dolmansaxlil)

LONDON, 18. MAY, 09:24

All of the attention around Xi Jinping’s recent European trip was focused around his visit to Moscow in time for the May Day military parade.

By focusing so singly on the Moscow stop, however, the importance of the route he took was missed.

Coming soon after the President’s visit to Pakistan in which he laid out the China-Pakistan Economic Corridor (CPEC), this trip affirms one of the key routes of the Silk Road Economic Belt – running through Kazakhstan, Russia and Belarus to ultimately end in Europe.

This final link is the key which Europe needs to wake up to, to understand that this Chinese outward push is one that is both a reality and one that can advance European interests.

The Silk Road Economic Belt route of the ‘One Belt, One Road’ initiative advanced by Xi is going to become the cornerstone foreign policy of the current Chinese administration. Enmeshed in the idea of returning China to its place at the center of global power, the initiative has led to the fanning out of a number of economic and trade corridors from Beijing.

The precursor to all of the ones currently talked about (a latticework of routes stretching out from China’s ports around the world through the Maritime Silk Road, through Pakistan in the CPEC, through Bangladesh-Myanmar and to India in the BCIM) was the route through Central Asia.

Initiated as part of a strategy to develop China’s western regions, the idea was to help reconnect Xinjiang to Central Asia, and ultimately through the region to European markets. For Beijing, Europe is the other end of the Silk Road Economic Belt.

In trying to implement its strategy, China has made a very conscious effort to reach out to Europe, in terms of official statements and an eagerness to try to find ways of working together on making this strategy work.

At this point it has gone beyond rhetoric. As well as pouring massive amounts of money in helping infrastructure across the former Soviet space, they have also looked at undertaking large investment projects in Belarus, Ukraine and other countries on Europe’s south-eastern periphery.

Closer to Europe

An economic force is sweeping along the Silk Road bringing China ever closer to European markets.

To some this will be seen as a threat. Chinese goods getting a quicker route to European markets will only place more pressure on already threatened European industries.

But this is a dynamic that is going to happen anyway and is already underway. Far better to try to focus on the other side of the equation and the potential opportunities.

Not only in terms of high end luxury and technical goods which Europe continues to manufacture which are so keenly desired by the ever-growing middle class Chinese consumer market which can travel back along this route, but also in terms of the development it will bring along the way to countries that Europe has long sought to help along the path of economic development.

This is something that is particularly true in Central Asia.

Europe has long seen Central Asia as a region it has been trying to support. The current Latvian Presidency has made the region a particular priority. As well as the potential economic opportunities (that Central Asians welcome), the region is one that has fraught internal dynamics.

European entities like the EU and OSCE are amongst the only ones that have been able to help bridge some of these divides – providing a set of lessons and experiences that China is simply unable to replicate, but is keen to learn from.

On the economic side of the equation, Chinese firms have been pushing into Central Asia and encountering all sorts of difficulties be it in terms of local governance or security issues.

This is a space that European companies and international institutions like the EBRD have long worked in and have developed a number of strategies for dealing with these very particular regional problems.

There is an opportunity here.

Building missing links

For Europe, China offers the opportunity to magnify effect – Europe’s economic and political force is substantial, but when bolstered by Chinese capacity and means, becomes an even more substantial force.

As well as the $40 billion Silk Road fund, there is the nascent Asian Infrastructure Investment Bank (AIIB) and the slowly developing BRICS Bank, and the sometimes talked of Shanghai Cooperation Organization (SCO) Development Bank.

And China has continued to sign massive bilateral deals in countries along the route, with a particular focus in Central Asia. Admittedly some of this money is hyperbole around official high level visits, but go on the ground across the region and it is impossible to deny the presence of the Chinese funding – tangible as it is in roads, pipelines, railway projects, energy infrastructure and construction across the region.

There is also a larger political point to be made here about China’s relationship with the European Union.

The EU has long sought to find ways to engage with China in a productive manner – Central Asia and the larger Silk Road Economic Belt offers an opportunity to work with China on something that is of direct interest to Europe, but also is clearly a strong strategic priority from the very top of Xi Jinping’s administration.

For Beijing, Europe is the other end of the Silk Road – Europe needs to seize this opportunity to help advance its own interests.

Raffaello Pantucci is director of international security studies at Rusi, a think tank in the UK

 

Still catching up on old posting, new writing has sadly slowed of late. Busy with various projects, including promoting the UK Jihad book. Hopefully usual service will resume soon. In the meantime, the new Brill journal Central Asian Affairs published my contribution to a series of essays commissioned by the excellent Erica Marat about The Chinese Question in Central Asia:

CAA cover

Sinophobia: A Potential Knot in the Silk Road

Sitting in a café in Bishkek recently, a foreign diplomat explained the Chinese problem in Central Asia with a rather simple characterization. The issue, he said, is a “genetic one,” whereby Kyrgyz have an in-built antipathy toward Chinese. While such a simplistic explanation is one that most international relations experts would shy away from, it is one of the clearest issues to leap off the page of Marlene Laruelle and Sébastien Peyrouse’s excellent : , , . The biggest factor in favor of the Chinese often seems to be their very overwhelming presence and the potential that their existence just across the Tian Shan mountains poses to the Central Asian states.

On the ground in the markets at Kara Suu, Dordoi, or Barekholka, the Chinese are largely seen in a fairly passive light. Bored and griping as one would expect from workers who are earning a living grafting and selling products to poor populations, the Chinese salesmen and workers largely operate on the fringe of local societies, aware that attracting too much attention can lead to trouble. Chinese energy giants operating in the region tell of training their workers deployed in country to avoid drinking in public and to always have their documents on them, as well as a phone number, in case they get into trouble with local authorities.

And of course, there is trouble. Early 2014 in Bishkek, 16 Chinese workers beat up a policeman after he came across one of them intoxicated at their construction site. This particular attack on a policeman was novel, but clashes between Chinese workers and locals is a fairly regular occurrence in Kyrgyzstan. But what is fascinating, and in many ways a demonstration of issues China faces going out more broadly, sometimes these clashes involve Chinese workers rioting because they have not been paid by their Chinese employer. Either way they look dangerous to locals. For local Kyrgyz who see their markets full of Chinese goods and a growing presence of Chinese workers on building sites or doing jobs that they feel they could easily do, there is a certain amount of anger and bitterness. This spills fairly easily into resentment that taps into the age-old Sinophobia that Laruelle and Peyrouse attribute to a dearth of Chinese studies in the Soviet era. Where people did study China in Central Asia, it tended to be through the lens of minority populations like the Uyghurs or Dungans—the archetypal Chinese Central Asians.

Into this void fill rumor and conspiracy—concepts endemic to the Russian mindset and consequently ever present in the still predominantly Russian Central Asian region. Stories of a sweeping “yellow peril” fill conversations and discussions. As Laruelle and Peyrouse point out, “Each year the Chinese population increases by more than 15 million people, a number almost equivalent to the total population of Kazakhstan” (p. 183). Or to look at it another way, China will grow by about two Kyrgyzstans plus one Turkmenistan or by two Tajikistans every year.

Of course, these figures and comparisons are completely artificial—a relatively limited amount of this population growth actually takes place in Xinjiang, China’s domestic piece of Central Asia sitting across the border from Kazakhstan, Kyrgyzstan, and Tajikistan. In fact, Xinjiang’s population is proximate to a large Central Asian nation’s: just under 25 million, spread over a geography that accounts for one-sixth of China’s landmass. But bordering the world’s largest manufacturer with a small population that is increasingly becoming dependent on China is a worrying prospect, especially when, as Laruelle and Peyrouse point out, China’s regional efforts have “profoundly changed the economic status quo in the region” (p. 45). All roads in Central Asia no longer lead to Moscow; the newly paved ones go to Urumqi or Kashgar, with new spurs and projects constantly being announced. Be they in infrastructure, like the rail tunnel in Uzbekistan, a new thermal power plant in Dushanbe, or more pipelines to get Turkmen gas back to China, Chinese firms stepping in to fill the void as Rosneft backs out of taking over Bishkek’s Manas airbase, or receiving a piece of the Kazakh supergiant field Kashagan over an Indian state-owned firm.

But while these are all signs of China’s growth in the region, the reality is that there are a number of games at play here. Since Laruelle and Peyrouse’s book was published, the parameters of a possible strategic outline for China’s push into the region have begun to emerge. Back in September 2013, in the middle of a tour of Central Asia in which he signed almost $56 billion in contracts, President Xi Jinping gave a speech at Nazarbaev University in which he referred to China seeking to create a “Silk Road Economic Belt” that would connect China to Europe through Central Asia.

To take this speech as a full-on strategy, however, is apparently premature. In discussions in Beijing, Shanghai, and Urumqi (as well as across Central Asia), officials, experts, and others all continue to express a lack of certainty about what exactly this Silk Road Economic Belt means. As one prominent expert recently put it in Shanghai, “Our leadership likes to lay out visions and then leaves it to others to work out the details.” Specifically, Beijing appears to be waiting for the National Development and Reform Commission () to outline the practicalities of the vision, and then all the responsible ministries will be able to implement it. This is meant to happen later this year, and after that—by all accounts—we should start to have a clearer sense of what China’s vision for Central Asia looks like.

But as with all geopolitical puzzles, this is a fluid one, and while China seems to be clarifying its intent regarding Central Asia, Russia has upended the chessboard with its action in Ukraine, causing concern across Central Asia. The push toward a Customs Union and Eurasian Economic Union stretching across Kazakhstan, Kyrgyzstan, and eventually Tajikistan, as well as the Western sanctions are all having a knock-on effect in Central Asia. In Kazakhstan they are causing concern at an official level as they worry about the impact on their own relations with the West and the fact that through the Customs Union they are tied more closely to Russia’s economy. Talk to traders in Kyrgyzstan’s Dordoi or Kara Suu and they have been feeling this impact for some time; since the Customs Union came into play between Kazakhstan and Russia, re-exporting their goods across Kazakh borders is more challenging. They worry that once their country joins, the cheap Chinese products will have little reason to be re-exported through Kyrgyzstan and it will make more sense to simply go in through Kazakhstan.

And yet, in the face of this, Russia remains the clear primary partner of choice for Kyrgyzstan. Customs Union membership is on track for 2015, and the Kyrgyz still see Russia as an important partner, their primary security guarantor, and employer to the thousands of Kyrgyz who work in Moscow and elsewhere send precious remittances to support family members who stay behind. The first port of call for Kyrgyz politicians remains Moscow, rather than Beijing. Out of choice or fear, they look to Russia as a geopolitical parent even though their long-term economic future lies to the south with China, India, and the other rising powers.

Kazakhstan faces a different issue. Already caught in Russia’s embrace, they are more desperate to make their much-vaunted multivector strategy a reality. China is but one partner in this picture, and Kazakh officials and businessmen will highlight their nation’s growing links to Iran, pending membership, and the fact that they are renewing their partnership agreement with the European Union as evidence that it is alive and well. Russia is an important partner for them, but not the only one.

The key question here is what this means for the logic of China being the increasingly consequential partner for Central Asia. Is it possible that China’s influence in the region is one that is more fragile than it seems and that the underlying Sinophobia is a problem that can be stoked at will to blunt China’s push? The raw economic force behind Chinese investment would seem to belie this, especially as Russia has little chance to properly counter this strength, given a faltering economy that is already facing new burdens in Crimea and over Ukraine.

But it does raise questions about China in Central Asia. And it does cast an ever-larger light on what the meat of China’s proposed Silk Road Economic Belt will be and how they will try to counter these regional forces and the Sinophobia under it.

For the time being, three aspects would benefit from getting greater coverage:

First, what are Chinese views regarding the long-term goal? Both Laruelle and Peyrouse have long experience in China, but the text does not always address the fundamental question of what the long-term Chinese goal is. On the one hand, this is partially because a clear enunciation of it is something that we are only now starting to see with Xi Jinping’s announcement of the Silk Road Economic Belt, but it is something that Chinese strategists have been edging toward for some time.

Second is the reality of the much-vaunted “multivector” foreign policy that Central Asians so often talk about as their strategy. Talk to officials in any country and they will deny Chinese (or any other) dominance, declaring that it is something that they are ably playing one power off the other. The reality of this is often questionable, especially when one considers the irresistible economic force of China compared to all others, making one wonder to what degree the Central Asians actually are able to manipulate and control their destiny.

And finally, there is the dilemma of absorption. How much does China want responsibility or can the Central Asians avoid finding themselves increasingly looking to China to help resolve issues? Is China becoming the regional hegemon by default, with no-one having really thought through the consequences or what it means for regional stability (or who the principal provider of regional security is) in a situation where Beijing is increasingly the most consequential player on the ground that assiduously avoids conflict or becoming embroiled in resolving it? Central Asian tensions and problems will not fade as China rises, and what this means for China is an as-of-yet unanswered question.

Been quiet for a while as am getting very caught up with administrative things which are driving me a bit crazy. Have some more writing which I will publish over this week, mostly around my China looking west work, and more pieces hopefully in the pipeline, but the big push over the next few weeks is going to be my UK Jihad book. Am hoping for more reviews around that. So far, have had the Evening Standard and a very nice write-up based off the book in The Times. More hopefully en route.

This aside, have spoken in the past month to the South China Morning Post about extremists on campus in Guangzhou University and China in Central Asia, to the BBC about new government measures to handle extremist preachers, to the Daily Mail about ISIS, Voice of America about China, to the Associated Press about the attacks in Tunis, Bloomberg about China’s counter-terrorism policy going out and China getting Uighurs sent back to China, El Mundo about al Muhajiroun, and to the Times about ISIS using deaf mutes in its videos. There are also likely others, but cannot find links.

The main body of this post, however, is my submitted written testimony to the US-China Economic and Security Commission (USCC) where I had the honour to testify last month on China in Central Asia. The hearing was an excellent opportunity to hear a lot of the top experts on Central Asia in the same place at the same time. Please note that the footnotes seem not to have survived posting here, please follow this link for the full PDF.

March 18, 2015

Raffaello Pantucci

Director, International Security Studies

Royal United Services Institute for Defence and Security Studies (RUSI)

Testimony before the US-China Economic and Security Review Commission

Looking West: China and Central Asia

 

Background

 

In September 2013 during a visit to Astana President Xi Jinping spoke of establishing a ‘Silk Road Economic Belt’ (SREB) that would ‘open the strategic regional thoroughfare from the Pacific Ocean to the Baltic Sea, and gradually move toward the set-up of a network of transportation that connects Eastern, Western and Southern Asia.’ Made during the President’s inaugural visit to Central Asia, the speech was both an articulation of a policy in a region that had been underway for around a decade, as well as the first declaration of a foreign policy vision that has increasingly shaped China’s own projection of its approach to foreign affairs. Founded in Central Asia, the SREB and the development of trade and infrastructure corridors emanating from China that it has come to symbolize, is slowly becoming Beijing’s dominant and most vocalised foreign policy strategy and is possibly set to be the defining public narrative for Chinese foreign policy under Xi Jinping.

 

Xinjiang

 

To understand the SREB in its proper context, it is important to first understand Xinjiang. Xinjiang occupies approximately a sixth of China’s landmass, with around 1.5% of its population (at around 22.09 million according to the 2011 census). It is home to large oil and gas reserves (about a fifth of the national total of oil), and has about 40% of the nation’s coal reserves that are close to the surface and of good quality (coal remains one of China’s main sources of electricity generation). It also has a major agrarian industry, with 70% of China’s tomatoes grown in the province, making the region one of the world’s major sources of ketchup and tomato paste. Xinjiang is a region that is beset with tensions focused around ethnic rivalries. Home to Uighurs, a Turkic speaking people’s whose language, culture and ethnicity is closer to Uzbek or Turkish, the region has faced community tensions between Uighurs and Han Chinese for decades. Uighurs were once a majority in the region. PRC census data from 1953 indicates that at the time the province was 75% Uighur and 6% Han, a figure that today stands instead at around 40+% each according to the 2011 census. There is resentment against the growing presence of Han Chinese, with the Uighur population feeling that their identity and culture is slowly being eroded down as Beijing profits from the region’s natural wealth.

 

Since the People’s Liberation Army (PLA) conquered Xinjiang in 1949, the region has faced tensions with angry Uighurs occasionally rising up against the state or inter-communal violence erupting between the growing Han population and the increasingly minority Uighur one. This has expressed itself in terrorist violence at home and abroad. Groups of Uighurs have travelled abroad into Central Asia or Afghanistan, where they have connected with extremist groups and created training camps to prepare to return to China and fight.

 

Most recent attention, however, was focused on July 2009 when rioting in the region’s capital led to an estimated 200 deaths as mobs of Uighurs rampaged through the city attacking, and killing, Han Chinese. The next day, counter-marches took place with angry Han taking to the streets to protest both against the Uighur-led atrocities, but also the failure of the government to protect them. The local government’s failure to quell the violence was so dramatic that President Hu Jintao had to embarrassingly leave the G8 Summit in L’Aquila to return home to manage the crisis. The result of this was a change in leadership in the region, with of the removal of a number of local figures from their positions (for example, Li Zhi, Communist Party Secretary in Urumqi, and Xinjiang Public Security Bureau head Liu Yaohua) and most dramatically, a year later, the removal of long-time regional party boss Wang Lequan.

 

At the same time as changing the regional leadership, on May 17-19, 2010, Beijing hosted a major conference on the region. The Xinjiang Work Conference was hosted in Beijing by the CCP’s central committee and the State Council, involving then President Hu Jintao and then-Premier Wen Jiabao, as well as both of their successors Li Keqiang and Xi Jinping. This was a rare but significant work conference about a specific region (a number have been done for Tibet), and it led to a number of new policy approaches to the region by Beijing. Focusing on ‘leapfrog development’ the main thrust of the conference was economic development as the key to solving the region’s problems. Amongst the raft of economic measures was the developed of a twinning policy between more affluent provinces in China and prefectures in Xinjiang. For example, Shanghai took on responsibility for parts of Kashgar – something that translated in practice to the transfer of Shanghai officials to work in the region for a year, the delegation of a portion of Shanghai’s GDP as financial support for the region, and delegation visits from Shanghai to the region to advise on developing institutions and structures that had added to Shanghai’s prosperity. State and provincial companies are actively encouraged to invest in the Xinjiang, while different provinces would attempt to teach the parts of Xinjiang that they are responsible for some of the things that helped their success. For example, Shenzhen helped Kashgar develop a Special Economic Zone. Another innovation was the transformation of the then relatively moribund Urumqi regional trade fair into a Eurasian Expo, aimed at bringing in traders, businessmen and officials from across the Eurasian landmass to Urumqi – a city described by an Urumqi official to the author as the ‘closest big Chinese city to Europe.’ Economic investors from Europe and elsewhere were actively encouraged with preferential benefits and gentle persuasion. For example, a Turkish-Chinese business park was developed just outside Urumqi to bring Turkish investment into the region. German carmaker VW was encouraged alongside its Chinese joint venture partner SAIC to build a sedan factory in the region. Central Asian businessmen and traders were actively targeted for the Eurasian Expo, and another Special Economic Zone was established at the border crossing with Kazakhstan at Khorgos. And finally, funding was allocated to develop infrastructure, roads, rail and airports across the region to enable Xinjiang to become ‘a gateway for mutually beneficial cooperation between China and other Eurasian countries’, as put by Premier Wen Jiaobao during the Second Eurasian Expo in Urumqi in September 2012.

 

China’s policy towards Xinjiang was not, of course, solely one of economic investment. Alongside this surge of inward investment (something that had been underway for some time through various ‘develop the west’ initiatives) was a growth in security spending in the region. Emphasis was placed on trying to strengthen the security forces in the region and stamp out the periodic bouts of violence that continue to plague the region. China’s approach was in essence a binary one of heavy economic investment and heavy security clampdown. The balance between these two seemed to be shifted back in favor of ‘stability’ (or security) in the wake of a second Xinjiang Work Conference under Xi Jinping’s leadership in January 2014. However, the State Council also emphasised the importance of economic investment when it announced in June 2014 that the Xinjiang government was to spend approximately $130 billion to develop the region’s infrastructure.

 

But for both the security and economic surges to work, there was clearly a need to develop stronger links to the region around Xinjiang, and it is here that Central Asia starts to play a prominent and key role. Abutting Xinjiang, Central Asia is China’s westernmost periphery. Scattered around the region are pockets of Uighur populations – with major communities found in ethnically proximate Uzbekistan, Kyrgyzstan and Kazakhstan. In Kazakhstan in particular, Uighurs play a substantial role in the nation, with current Prime Minister Karim Massimov an ethnic Uighur. In Pakistan, relatively large Uighur communities live along Pakistan’s side of the Karakoram Highway. Within these communities and countries, China sees concern and Beijing and Urumqi security chiefs have developed strong links with their local counterparts (at a bilateral level, but also through the Shanghai Cooperation Organization) to ensure that, should any dissident Uighurs flee across the border, they will be rapidly repatriated.

 

More visible than this strong security bond, however, is the huge level of economic activity and investment that is slowly spilling across the border into Central Asia from China. Something that has always happened naturally given the borders, traditionally nomadic people’s and the nature of trading across Central Asia, it has increasingly taken on a life of its own as Chinese investment has poured in to refurbish and revitalize the trade routes across the region. The logic to this growth is simple: Xinjiang is as landlocked as the Central Asian countries it abuts. If Beijing is going to ensure that the region prospers, then it will need to be better connected to the world. Given the relative land proximity to Europe, it therefore makes more sense to develop the region’s physical links into Central Asia, not necessarily for Central Asian prosperity in itself, but rather to ultimately help transport Chinese goods to Eurasian and European markets (and vice versa). Hence the need for infrastructure that helps re-connect and re-wire the Eurasian landmass from China to Europe. Ultimately, if Xinjiang is going to benefit from the push for economic investment within China, it is going to have to have somewhere to trade with and through. Logically, conduit for this has to be Central Asia.

 

China’s Economic Surge into Central Asia

 

It is in many ways the economics of China’s push into Central Asia that is the most significant external aspect of this ultimately domestic policy response. The narrative of Chinese investment into the region used to be one of mineral extraction and exploitation. A late entrant into Central Asian energy through investments in Kazakhstan, CNPC purchased aging Soviet oil fields in Aktobe, western Kazakhstan and rapidly built an oil pipeline back to China. Built with great speed and efficiency, the pipeline became the symbol of China’s relations with the region. Most perceived China as viewing Central Asia simply as a large source of fuel and minerals that it could exploit to feed the seemingly insatiable energy needs its economic development required. This view was further affirmed through CNPC’s major investments into Turkmenistan, where the country has been one of the few to successfully operate and buy Turkmen gas. CNPC has become one of the largest supporters of the Turkmen national budget, through gas purchases and the development of almost four different pipelines to transport gas back to China.

 

This superficial view of China’s growth in the region misses the reality on the ground whereby China is slowly becoming a dominant player in a vast array of different economic areas. From Kyrgyzstan, where the import and re-export of Chinese goods plays a huge role in the national economy, to Tajikistan that is increasingly becoming one of China’s biggest debtor partners. To better understand the breadth and depth of China’s economic influence in the region, it is useful to look at the extent to and manner in which China operates in the energy industry, one of the dominant industries in which China participates in Central Asia.

 

As has been mentioned, China is the major player in Turkmenistan, where it is the sole country that is able to get substantial access to Turkmen hydrocarbons. Russian volumes have shrunk and Iran has had difficulty paying in cash (offering barter instead), making China the preferred player in Ashgabat. This is a similar story in Kazakhstan, where China has not only constructed one of the quickest-built pipelines ever in the country, but it has also bought 8.33% of the supergiant oil field Kashagan, purchasing American firm ConocoPhilips’ stake. Buying into a project run by a multi-national consortium is a new endeavor for a Chinese company in Kazakhstan. It is also a major purchaser of Kazakh uranium. In 2014 Kazakhstan’s state-run nuclear energy agency Kazatomprom said that 55% of Kazakh uranium production was exported to China. In Uzbekistan, China has signed contracts to extract some gas and build a pipeline across the country from Turkmenistan. It has also aided in developing electricity re-metering , as well as helped the country to develop its solar panel production capability, and refurbish solar furnace factories.

 

Tajikistan, until relatively recently considered a very energy poor country, made discoveries of large potential gas reserves in the Bokhtar region. Chinese company CNPC partnered with Canadian Tethys and French Total to undertake further exploration. Downtown Dushanbe, once famous for its blackouts, now has a large Chinese-built thermal power plant that provides electricity to the city through the cold winter months. A major producer of hydroelectric power, Chinese firms have explored the possibility of both exporting Tajik hydroelectric power, but also building some of the infrastructure to support it. And finally, Kyrgyzstan, remaining energy poor has nonetheless benefited from Chinese attention in the energy field. While Russian firm Gazprom remains a major player in the nations energy mix, CNPC has offered to build refineries in the country, as well as helping connect the country upgrade and build power transmission lines. China is a player across Central Asia’s energy fields, not solely in extractives.

 

The funding for these projects comes in a number of different ways. In some cases, like a coal-fired plant in Dushanbe, the project was one that is offered by a Chinese firm in exchange for preferential treatment on another project. In other cases, it is funded through Chinese policy bank loans that are offered at preferential rates and stipulate that the implementing party must be Chinese. One example of this structure is the decision to build a camera monitoring system in Dushanbe to help monitor traffic in the city. Money was offered through an ExIm Bank loan, and the implementer was Chinese telecoms giant Huawei. This approach is not actually novel to the region, with both Korean and Japanese banks offering similar structures in regional contexts, but the scale and size of Chinese loans and rapid implementation is significant.

 

Increasingly one can see China assisting in the rewiring of roads, railways, pipelines and electricity grids across the region so that all lead back to China, or at least in some way benefit China’s access. All of this helps connect up what is happening in Central Asia with the all-important domestic strategy in Xinjiang. Consequently, the economic push into Central Asia by China comes from a blend of economic forces as a result of the economic investment into Xinjiang, as well as the ongoing outward push by Chinese firms and money.

 

Enunciating a strategy

 

While this is how things have been playing out on the ground for many years, prior to Xi Jinping’s SREB announcement, China’s investment strategy for Xinjiang and Central Asia was not something that had been directed or enunciated in any clear or coherent way from Beijing. The closest thing to a regional strategy document can be found in the Xinjiang Work Plan and its acknowledgement of the importance of developing markets and routes into Central Asia to improve Xinjiang’s prosperity. In 2011, Chinese academic and Dean of Beijing’s international school Wang Jisi offered some sort of academic theory to the logic of this push in his influential writing about China’s March Westward. But there was no clear policy expression or formulation offered until Xi Jinping visited Central Asia in 2013 and laid out his SREB vision, in essence symbolizing Xi Jinping’s desire to take ownership over a reality that had been going on for some time and stamping his brand and leadership on an overarching policy concept around it.

 

And since the announcement of this belt, and the later addition of the Maritime Silk Road in a speech in Indonesia in October 2013, amalgamated into the phrasing ‘one belt, one road’ there has been a further surge in development and investment to make this vision a reality. At home, the Silk Road has now become a project with huge implications across the west of the country. Maps have been issued showing the city of Xi’an as the starting point, while $79.8 billion has been announced into investment into Gansu. A further domestic fund of some $16.3 billion has been announced for supporting Silk Road projects at home. Mostly infrastructure investment projects, there have also been more specific investments emanating from provinces in Western China to Central Asian countries – like $800 million invested by Henan into Tajikistan. On the ground such investment efforts can be found in Tashkent in the form of trade fairs bringing Xinjiang traders to the region, as well as in markets across the region that are filled with low-end traders and larger property or market owners who have spent a decade or more in Central Asia building up empires of market stalls, local factories and real estate portfolios.

 

Externally, this surge of infrastructure investment is also clearly visible in the form of a growing constellation of investment banks being directed out of Beijing, as well as the expansion of the concept of the SREB. From an initial vision that seemed focused on Xinjiang development through Central Asia, it has now become something that spans the Eurasian landmass (more than 60 countries now see themselves in its route), but has also developed offshoots in the Maritime Silk Road, the Bangladesh-China-India-Myanmar (BCIM) Corridor, and the China-Pakistan Economic Corridor (CPEC). Each of these is less developed compared with the SREB, but at the same time all reflect logical trade corridors that China would like to open up. China has already started to explore how to develop the necessary infrastructure in each case.

 

One of the main reasons why this push seems more credible than previous efforts is the volume of funding that China is pushing towards the projects and the array of development bank vehicles they are creating to help make it a reality. The Asian Infrastructure Investment Bank (AIIB), the BRICS Bank, and the earlier discussed but never realized Shanghai Cooperation Organization (SCO) Development Bank, are all expressions of this. Whilst the AIIB and BRICS Bank are not singularly focused on Central Asia, the model of development they are focused on is one that reflects China’s experiences in Central Asia, using the lever of economic infrastructure investment to help foster trade corridors and routes that ultimately connect China to its markets. The focus on infrastructure reflects not only the reality of a region that has infrastructure huge demand for investment in this area, but also a Chinese policy outlook that is shaped by the concept of regional connectivity and development of a prosperous neighbourhood. This underlying concept is something that has been present in Xi Jinping’s foreign policy outlook from the beginning of his presidency. This is highlighted when in October 2013 he held a rare foreign policy work conference focused on ‘peripheral diplomacy’, meaning China’s relations with its proximate neighbours.

 

Regional repercussions

 

The biggest question in this Chinese push, however, is how the region is going to react to it. Looking to Central Asia in particular, China has played a very careful and sensitive game. This is most clearly exemplified in the SCO, that was first developed as the Shanghai Five, a cooperative grouping focused on delineating China’s borders with the former Soviet Union in the wake of the latter’s collapse. In 2001, Uzbekistan joined China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan, and the SCO was formed with a Regional Anti-Terrorism Structure (RATS) founded in Tashkent. From there, the organization has continued to operate, using counter-terrorism as its main rallying flag, but with little evidence of it developing too much more beyond this. Chinese thinkers and officials have tried to push the SCO in a more economic and development direction, but this has largely been met with skepticism and hesitation by regional powers, in particular Russia, who has hesitated to let the SCO develop too much more beyond its current mandate. At the same time, China’s hesitation to get involved in hard security questions regionally means that the Central Asian members of the organization continue to prioritize the security relationship with Russia over China (though there is some evidence that this is starting to change).

 

With Russia, the question of underlying tensions has remained a major issue, though whenever Chinese officials and experts talk of Russia in a Central Asian context, they go to great lengths to highlight the fact that they would do nothing that would contradict their Russian counterparts interests in Central Asia. For their part, Russian experts recognize that China is the coming force in Central Asia, but seem willing to accept it and highlight that most regional leaders see Moscow as their key international partner who is also able to play a much more decisive security role than Beijing. There have been some deals recently where Russian firms have lost contracts in favor of Chinese companies – for example, the redevelopment of the Manas Airbase in Kyrgyzstan in the wake of American withdrawal, is something that has been passed on to Chinese firms rather than Russian Rosneft who was initially believed to be taking the contract. But at a larger strategic level, both powers seem to have reached a modus vivendi in Central Asia that does not necessarily reflect the strategic balance in outsiders eyes, but that functions for them on the ground.

 

The other key regional question hanging over the region is Afghanistan (and Pakistan). For Central Asia, it is Afghanistan that is seen as the great potential destabilizer, and there is the concern that the massive investments into the SREB that have been done into Central Asia may be negatively impacted should Afghanistan become once again an exporter of instability. This is a concern that Chinese officials will express, though most often when talking about Afghanistan they will express concern that Uighur extremists might once again use the territory as a training ground to export violence back to China. China has increasingly been playing a role in Afghanistan, in particular in trying to offer itself as a broker between the Taliban and authorities in Kabul, as well as mineral extraction, economic investment, and some regional collaboration. But at the same time, it is unclear that Afghanistan necessarily features as part of the SREB, except in some of its northern regions that offer themselves as routes to Iranian and other Middle Eastern markets, in one of the routes offered in Chinese publications of where the SREB actually flows.

 

The biggest regional problem that China faces with its SREB in Central Asia, however, is the question of Sinophobia. Something that is palpable on the ground at times in the resentments that people feel towards Chinese businessmen and traders, there is a noticeable sensitivity when discussions come up about Chinese redrawing boundaries in certain parts of Central Asia. In Tajikistan, online discussions about land deals between Chinese state owned agri-businesses and Tajik authorities were blocked to reflect the perception on the ground that these deals were the government selling the nation to China. In Kazakhstan a similar deal was announced by President Nazarbayev in 2009, but the public outcry against it led to him walking back on the initial deal. Relatively small countries by population, the Central Asians fear overwhelming by China, a sentiment that can also be found in Russia’s border regions with China. This is not only about numbers of people, but also in the fact that all of the Central Asians want to become manufacturing hubs themselves, something that is going to be very difficult when they sit next to the world’s manufacturer.

 

China is not unaware of this Sinophobia, and has attempted through various means to undertake a soft power push in the region. For example, there is a growth number of Confucius Institutes in the region. They have also funded specific research projects in countries like Kazakhstan by local experts and opinion formers to help both shape the individuals views, but also to understand better the nature of the sinophobia so they can react to it. Travel to Aktobe, a city where CNPC plays a major economic role, and it is almost impossible to find a visible Chinese presence in the city. Chinese workers stay outside the city in a compound in an old sanatorium.

 

US Relations and impact

 

From a Chinese and Central Asian perspective, the US’s role is complicated. In the first instance, it is important to understand a bit more of the theory behind the policy. When Professor Wang Jisi drafted his influential work on the need for China to March Westward, his thinking was not only based in trying to get China to focus on its immediate periphery and develop its west, but also to try to get Chinese officials to refocus from their almost obsessive attention to China’s relations with the United States and maritime powers. This underlying logic highlights how to some degree China sees its push into Eurasia as something that it is doing without the United States. At the same time, China has shown itself to being increasingly willing to cooperate with the United States in Central Asia, with a willingness to undertake joint programs in Afghanistan, as well as explore discussions with American officials about what cooperation could be undertaken collaboratively in Central Asia.

 

At the same time, regionally, the United States is seen as something of an erratic actor. With the drawdown from Afghanistan, and the oscillating American attention to Central Asian powers, there is a regional perception that the United States is a fairweather friend or only focuses on the region when national interests are threatened (like in the wake of September 11, 2001). Furthermore, the United States is seen as not offering the same opportunities as China – while there was an interest in the New Silk Road highlighted by then-Secretary of State Hilary Clinton in a speech in Chennai in 2011, little has come from that beyond an expression of interest by the United States in creating a north-west corridor through Afghanistan. Projects like the Turkmenistan-Afghanistan-Pakistan-India pipeline or CASA 1000 are slowly moving forwards, but without the financial push or heft of China behind them, progress is much slower than China’s efforts.