Once in the Soviet sphere, the ‘stans of Central Asia are increasingly vital to China’s economic, security, and energy objectives for the province of Xinjiang

Originally published by Business Week,26 May 2010

By Michael Clarke

For many casual observers, the assertion that China is a Central Asian power may come as something of a surprise. Yet, China has had a long and often complex relationship with the lands of Central Asia. The most romantic vision of this relationship is of course that of the Silk Road, a metaphor that conjures visions of cosmopolitan cross-cultural exchanges.

While the various trading routes crisscrossing Central Asia did indeed help transmit religions, languages, and commodities between the ancient civilizations of China, Iran, India, and Europe, such transmissions are not what the contemporary rulers in Beijing have in mind when they formulate Chinese policy towards the post-Soviet Central Asian republics.

Ultimately, Beijing’s approach to Central Asia is underpinned by a triad of more recent core interests – security, development, and energy – that may be far less romantic than visions of the bygone Silk Road but no less important.

China’s relations with Central Asia have been shaped and defined by two factors: the collapse of the Soviet Union and Beijing’s goal of more closely integrating its westernmost Xinjiang province. In Xinjiang, the goal of integration further encompasses the deeper endeavor to incorporate the non-Han peoples of the region into the “unitary, multi-ethnic” Chinese state.

EURASIAN BRIDGE

Significantly, this goal of Chinese policy in Xinjiang not only serves core internal functions but has also served as a key driver of China’s bilateral relations with Central Asia. In particular, it has been the way in which integration has been conceived as both a goal and a series of policies by Beijing since 1991 that has generated this dynamic.

During the Maoist era and into the early 1980s, Beijing perceived Xinjiang’s geopolitical position as a liability and an obstacle to its goal of integration, due not only to the vast geographical distance between the region and the Chinese heartland but also to the historical, ethnic, and linguistic affinities that linked the Uighur and other Turkic-Muslim peoples of Xinjiang with their brethren in a Central Asia then divided between Soviet and Chinese spheres.

However, with the fall of the Soviet Union in 1991, Beijing had something of an epiphany. With the Soviet menace to its western frontiers gone, Xinjiang’s geopolitical position at the crossroads of Eurasia need no longer be viewed as an obstacle to be overcome in search of integration but rather as an important asset to achieve it.

Thus, a dominant goal of Chinese policy from this point onward would be to make Xinjiang a Eurasian bridge connecting the region’s economy with that of Central Asia through the development of direct trade relations with neighboring Central Asian states, increasing state investment in infrastructure projects, and fully developing and exploiting Xinjiang’s abundant oil and gas resources.

However, this was to be achieved by a contradictory internal logic. In order to solve the separatist issue, the Chinese Communist Party (CCP) had to deliver economic development through the entrenchment of Deng Xiaoping’s economic strategy of “reform and opening,” while simultaneously maintaining stability and unity in Xinjiang through the strengthening of the CCP’s hold on power.

While this has been a major contradiction plaguing the CCP’s governance of China as a whole, it has arguably been fraught with much danger in the context of Xinjiang. It needs to be remembered here that, prior to the re-emergence of Deng, the integration of Xinjiang was sought primarily through systematically closing off the region from its economic, cultural, and ethnic ties to Central Asia.

Yet, with the institution of Deng’s “reform and opening” policies, the provincial authorities had to balance the economic benefits of opening the region to Central Asia with the perceived disadvantages for Chinese security.Such a dynamic resulted in the authorities periodically issuing statements betraying a circular logic; for example, Xinjiang Region Chairman Abdulahat Abdurixit asserted in 1996 that, while the authorities “must use economic development to maintain stability,” they simultaneously had to “use political stability to guarantee economic development.”

Despite this, the economic opening to Central Asia would come to offer Beijing a significant element of leverage to induce the Central Asian states to join its quest to secure Xinjiang against what Beijing claims are separatist elements among the Uighur population. This logic continues to inform China’s approach into the 21st century, although it is now framed under the banner of the domestic Great Western Development campaign. Although this campaign is nationwide, its operation in Xinjiang reflects the intensification of Beijing’s state-building policies in the region.

OPENING UP XINJIANG

This strategy in the 1990s was characterized as an initiative to simultaneously integrate Xinjiang with Central Asia and China proper in economic terms while establishing security and cooperation with China’s Central Asian neighbors. A key goal of the strategy was to utilize the region’s position to accelerate economic relations with Central Asia.

These included the re-centralization of economic decision-making to increase the region’s dependency on Beijing; the expansion of Han colonization of the region; increased investment for the exploitation of Xinjiang’s potential energy resources; the opening of border trading “ports” with Central Asia, such as Alashankou along the Sino-Kazakh border; and significant investment in transport links with Central Asia.

Since 1993 all 33 border counties of Xinjiang, and their major cities such as Yining, Tacheng, and Kashgar, have enjoyed the same preferential policies that had previously characterized the special economic zones of the cities on China’s east coast. This has been coupled with major investment in infrastructure links – including highways, rail links and direct air links – with neighboring Tajikistan, Kyrgyzstan, and Kazakhstan.

Since 2002 alone such efforts have included a pledge of $15 million for the construction of a highway linking Xinjiang and Lake Issyk-Kul in Kyrgyzstan, a Chinese government-funded $2.5 million feasibility study to construct a Kyrgyz-Xinjiang rail link, and a trilateral Uzbek-Kyrgyz-China project to link Andijan, Osh, and Kashgar by a 1,000-kilometer rail and highway connection.

Significantly, a major theme of Chinese overtures to the Central Asian states was Xinjiang’s potential role in linking the economies of China and Central Asia to become the hub of a new Silk Road along which oil and natural gas, above all, would move. In this light, Xinjiang’s petrochemical industry was to become a pillar of the government’s strategy, with the primary goal of establishing the region as a transit route and refinery zone for Central Asian oil and gas.

Such an approach ultimately enmeshed China into the wider geo-political competition for access to Central Asia’s oil and gas, and also for greater political and economic influence in the region. Indeed, Beijing’s reorientation of its energy strategy toward Russia and Central Asia in the early 1990s was induced largely by the realization of the strategic weakness of China’s growing dependency on Middle East sources of oil and gas.

SECURITY CONCERNS

The development of this strategy proved to be a further incentive in generating China’s greater engagement with the new states to its west. In many respects, China’s economic and security concerns regarding its frontiers with the new Central Asian states complemented each other. The development of bilateral relations, spurred on by the development of economic links, was further strengthened by the identification of common interests in the security sphere.

Significantly, Beijing worked both on the bilateral level and through the nascent multilateral Shanghai Five forum (China, Russia, Tajikistan, Kazakhstan, and Kyrgyzstan) to pressure the Central Asian states to control and suppress the activities of “separatist” elements among the significant Uighur diaspora population in the region – a theme that continues to define China’s participation in the Shanghai Five’s successor organization, the Shanghai Cooperation Organization (SCO).

Indeed, since 2001, China, by virtue of bilateral security agreements with key Central Asian states and police/security cooperation through the SCO, has successfully extradited a significant number of alleged Uighur separatists and terrorists from Kazakhstan and Kyrgyzstan. Beijing has been quite successful in neutralizing the potential for these states to take a more activist stance with respect to Uighur unrest within Xinjiang. Indeed, although there were notable protests by the Uighur diaspora in both Kazakhstan and Kyrgyzstan in the wake of the July 2009 unrest in Urumqi, the Kazakh and Kyrgyz governments remained tight-lipped. Clearly their lack of response stemmed from their interest not to derail the significant bilateral and multilateral ties each have with Beijing. Building on close security and policing ties with these Central Asian states, Chinese authorities have successfully demanded the extradition of a number of alleged Uighur separatists and terrorists back to China since 2002.

Domestically, the question of Xinjiang’s economic future has assumed national importance over the last decade with the central government’s launching of the Great Western Development campaign in 2000. As part of this ambitious scheme, which covers more than two-thirds of China, Xinjiang is seen as growing into an industrial and agricultural base and trade and energy corridor for the national economy.

This goal can only be achieved with the development of greater interaction and cooperation between China and the Central Asian states – a point underlined by Chinese rhetoric and policy since 2001 with ongoing references to the mutual benefits of developing a “continental Eurasian land bridge” that will link the major economies of Europe, East Asia, and South Asia. Such talk has not simply been rhetorical: Sino-Central Asian trade and economic relations have experienced significant expansion since 2001 with trade flows increasing from $1.5 billion in 2001 to $5.8 billion in 2005.

However, the structure and nature of this trade reveals that not only are Sino-Central Asian trade relations unequal but a relationship of economic dependency is developing that China will undoubtedly seek to leverage in order to negate separatist tendencies that it sees as the major threat to its position in Xinjiang.

AN UNEQUAL RELATIONSHIP

While trade flows have increased, Central Asia now accounts for merely 0.6 percent of China’s overall foreign trade. China, however, accounts for 12 percent of post-Soviet Central Asia’s foreign trade. China’s dominance is further underlined if the trade data is broken down on a state-by-state basis. China’s influence is predominant in the Central Asian states with which it shares borders. China accounts for 34 percent of Kyrgyzstan’s foreign trade, 15 percent of Kazakhstan’s and 10 percent of Tajikistan’s.

Of Chinese exports to Central Asia, 85 percent consist of low-priced manufactured goods, while more than 85 percent of Central Asian exports to China consist of raw materials and petroleum/natural gas. Kazakhstan and Kyrgyzstan, with whom China shares the most significant economic relations, reflect this point most clearly, with 86 percent of Kazakh exports and 78 percent of Kyrgyz exports to China made up of petroleum and other natural resources.

The lack of diversification in Central Asian exports to China has also resulted in growing regional concerns that China’s economic interests are driven by the need to fuel its resource-hungry economy. The flooding of Central Asian markets with cheap Chinese-manufactured consumer goods, combined with the increasing activities of Chinese companies and enterprises, has also reinforced societal concern that Russian dominance will simply be replaced by that of China.

Yet there remain major impediments to the development of stronger Sino-Central Asian trade. The most important concerns the lack of adequate infrastructure linking the region to China and ongoing trade barriers such as tariffs and visa restrictions. The latter issues have been important in driving Chinese support for the efforts of the Central Asian states for membership in the WTO, which currently is limited to that of Kyrgyzstan.

For China, investment in improving road, rail, and telecommunications links between Xinjiang and Central Asia and the lowering of trade barriers carry as much strategic as purely economic weight. This imperative has been clear in Chinese policy since the collapse of the Soviet Union, with Chinese investment in infrastructure both within Xinjiang itself and between the province and the neighboring Central Asian states a major element of Chinese policy.

Since 2001, for example, China has invested considerably in construction of highway and rail links with Tajikistan and Kyrgyzstan, a scheme that is part of the Western Europe-Western China transport corridor project part-funded by the World Bank and Asian Development Bank.

China’s energy security strategy of diversification and increased investment and exploration by its state oil corporations has also continued. Major developments and activities in this sphere have included the conclusion of a Sino-Kazakh agreement in May 2004 for joint exploration and development of oil and gas resources in the Caspian Sea; the acquisition of PetroKazakhstan by China National Petroleum Corporation (CNPC) in 2005 for $4.2 billion; the completion in December 2005 of the 1,000-kilometer oil pipeline linking Atasu in western Kazakhstan and Alashankou in Xinjiang; and China’s state-owned International Trust and Investment Corporation purchase, for $1.9 billion, of a stake in oilfields in western Kazakhstan.

CNPC (PTR) is the builder and operator of the Uzbek section of a new multi-billion-dollar gas pipeline from Turkmenistan to China, part of which is now operational. Within a few years, up to 30 billion cubic meters of Central Asian gas will be flowing into China annually.

Chinese companies continued their buying spree in 2009, spending more than $3 billion on stakes in Kazakh petroleum firms. Overall, however, Chinese investment in Kazakhstan’s energy industry still trails far behind the Russian and U.S. presence in this market.

China’s relations with Central Asia therefore have reflected the importance of integration for Xinjiang, with emphasis on the establishment of political, economic, and infrastructure links with the Central Asian states, particularly Kazakhstan and Kyrgyzstan, as Beijing seeks to consolidate its political, economic, and strategic position.

The Central Asian states’ acquiescence to China’s dominant role in the SCO, as well as their assurances and cooperation with Beijing on the issue of Uighur separatism in Xinjiang, along with the growing volume of trade across China’s western borders, and Chinese investment in and acquisition of Central Asian hydrocarbon resources and infrastructure projects, all goes to demonstrate Beijing’s growing gravitational pull for the region.

Michael Clarke is a research fellow at the Griffith Asia Institute of Griffith University in Australia. His most recent publication (co-edited with Colin Mackerras) is China, Xinjiang and Central Asia: History, Transition and Crossborder Interaction into the 21st Century.

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