CHINA: China in Central Asia: Riches in the near abroad

Jan 28th 2010

From The Economist

The West’s recession spurs China’s hunt for energy supplies in its own backyard

DURING his first visit to Kazakhstan in 1996, Jiang Zemin was reportedly amused to learn that his Central Asian neighbour, the ninth-largest country in the world by land mass, had a population of only around 15m. “You probably all know each other,” China’s then president is said to have quipped to his hosts. With its population of 1.3 billion, China naturally thinks on a grand scale. This is what the five countries of Central Asia—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan—both admire and fear. Like Russia, looking to its own far east, they worry about Chinese expansionism.

But for most of the 18 years since the Soviet Union’s break-up, China has taken a back seat in the fierce competition between Russia and America for influence in this resource-rich region. In 2009, with the energy needs of its burgeoning economy continually growing, it woke up to new opportunities in its western backyard.

Booming China had not exactly been neglecting Central Asia, but its priorities had lain elsewhere. Since the global financial crisis left Russia and America struggling with their budgets, China has loosened its purse strings to offer Central Asia a helping hand. Its money has been welcome. From a Central Asian point-of-view, Chinese credit offers an additional advantage over the Western kind: it comes with no annoying political strictures.

In June, for example, China agreed to lend Turkmenistan $4 billion to develop its largest gasfield, South Yolotan, close to the Afghan border. This was part of a 30-year deal that should eventually bring China 40 billion cubic metres of gas each year. The same month Hu Jintao, Jiang Zemin’s successor, announced a loan of $10 billion loan to the Shanghai Co-operation Organisation (SCO), a security forum grouping China, Russia and four Central Asian countries, to shore up members faltering in the global downturn. In November China’s largest oil-and-gas provider, jointly with Kazakhstan’s oil-and-gas firm, bought MangistauMunaiGas, a big oil producer in Kazakhstan. In exchange, China had lent the country $10 billion earlier last year.

In December Mr Hu and the leaders of three Central Asian countries gathered at the Saman-Depe gasfield in eastern Turkmenistan for a moment of crowning symbolism. The four men turned a tap to inaugurate a 1,833km (1,139-mile) gas pipeline, running through Uzbekistan and Kazakhstan into China’s far-western region of Xinjiang. For China, the new line forms part of a global effort to secure energy supplies for its rapidly growing economy. For Turkmenistan, it is a chance to reduce dependence on Russian demand.

A few days before the event, Vladimir Putin, Russia’s prime minister, said that Russia could be comfortable with Turkmenistan’s gas flowing eastward. But many Russian commentators bemoaned the loss of strategic ground to China.

Views about China are divided in Kazakhstan too. Late last year the president, Nursultan Nazarbayev, announced that China wanted to lease 1m hectares (2.5m acres) of farmland in Kazakhstan. In Almaty, Kazakh nationalists marched in protest at encroaching Chinese influence. Even the weak opposition briefly sprang to life. Similarly, last July China’s suppression of Xinjiang’s rioting Uighurs, whom Kazakhs consider brethren, raised tempers.

Dossym Satpayev, a political analyst, says that many protesters believe China’s vast population makes it inevitable immigrants will start moving to places such as Kazakhstan. Had dwindling Russia made the request for a land-lease, he says, the reaction would not have been so strong.

China may have taken its time before beginning to pursue its interests in Central Asia, but it seems determined to do so with vigour and for the long term. Mr Satpayev believes that within the next ten years it will come to dominate Central Asia’s political, economic and military spheres, mainly through the SCO. Its main rival will be less affluent Russia, whose historic dominance has left it with the habit of trying to boss former Soviet republics. America, Europe and other powers will become less important. China’s leaders have managed to advance far beyond the largely ceremonial co-operation of “friendship treaties”, without resorting to Russian tactics. As Mr Satpayev has it, “China doesn’t only buy loyalty with documents, but with money given at a low percentage.”

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