Thursday, January 27, 2011

China Increases Economic Ties with Central Asia

Sources:
NYT: China Quietly Extends Footprints Into Central Asia
FT: China: Beijing Puts Its Huge Piles of Cash to Work
China Daily: Central Asia Benefits from Peaceful Development Policy
Central Asia Newswire: China's Support for Euro Good News for Central Asia

China has been showing interest in increasing its economic stake in Central Asia. Trade between the five Central Asian nations—Kazakhstan, Tajikistan, Uzbekistan, Turkmenistan, and Kyrgyzstan—and China has risen from $527 million in 1992 to $25.9 billion in 2009. Several recent projects reflect these growing ties. President Hu Jintao of China visited Turkmenistan in 2009 to symbolically open a gas pipeline between the two countries, Kazakhstan has agreed to increase crude oil exports to China with a pipeline that has given Kazakhstan an alternative to Russia, and Tajikistan is constructing a trade depot to accommodate increased import of Chinese goods into the region.

These economic advances may signal that China is looking for diplomatic ties to Central Asia. With China’s fast expansion, it will look seriously at oil and gas reserves located in countries geographically closer and that have been more politically stable than some Middle Eastern oil-producing countries. Alliances and economic development between Central Asia and Xinjiang, the western region of China that borders Central Asia, would also benefit China politically. Increased trade and employment in China’s western provinces may help quell unrest in Xinjiang between Uighurs, the Muslim population, and the ethnic Han.

The strengthened relationship between Central Asia and China benefits both parties, but is in no way exclusive. Central Asian consumerism is rising and the region needs the economic investment that China offers. However, the region still needs resources and technology that come from Europe and the U.S., two regions that have expressed interest in Central Asia’s oil and gas resources and its strategic military location. The United States uses Central Asia as a staging area in its war efforts in Afghanistan, and the region is generally a transportation hub between Europe and Asia.

China concurs with Central Asia’s view of the relationship—the country is not diminishing its relationship with other emerging nations in favor of Central Asia. China has increased its exports to Brazil, Russia and India, with heavy direct investment in Brazil. It is seeking to diversify its investments away from the U.S. dollar amid fears of inflation, and is not restricting its investment opportunities to any region.

Discussion Questions:
1. Could China’s interest in Central Asia encourage Europe and the U.S. to increase competition for the region’s resources?
2. What are the benefits to China in developing healthy trade with its geographic neighbors?

2 comments:

N.D. Jackson said...

Great topic! India has also been active in seeking resource opportunities in the region. I’m also curious whether the Shanghai Cooperation Organization will place greater emphasis on economic ties between the Central Asian countries, Russia, and China.

Kari said...

Interesting comment. It is very possible that the SCO will encourage regional economic development. Just last week the SCO was involved with an economic tie between Siberia and Kyrgyzstan. See http://tiny.cc/2o4ao for an article on the agreement.