As Russia's influence recedes, China expands its reach in Central Asia

TASHKENT -- Russia's invasion of Ukraine has created new political and economic opportunities for China in Central Asia, which entail their own risks as Beijing's influence expands.

Nur-Sultan on June 7-8 hosted the third meeting of foreign ministers in the China-Central Asia discussion group.

Kyrgyz Foreign Minister Jeenbek Kulubaev and his Chinese counterpart, Wang Yi, during the meeting discussed the importance of intensifying their joint work on the construction of the China-Kyrgyzstan-Uzbekistan railway, according to the Kyrgyz Foreign Ministry.

Construction of that railway is expected to start this autumn, 24.kg reported in May.

This railway and the Termez–Mazar-e-Sharif–Kabul–Peshawar (Uzbekistan-Afghanistan-Pakistan) railway are important for integrating Central Asia into cross-regional transportation and logistical corridors, Uzbekistan's acting foreign minister, Vladimir Norov, also said at the meeting, according to Kun.uz.

Construction of the Uzbekistan-Afghanistan-Pakistan railway already has begun, Kun.uz reported in March without specifying the date.

The China–Kyrgyzstan–Uzbekistan railway will be the largest project in Kyrgyz history post-1991, Kyrgyz Prime Minister Akylbek Japarov said at a cabinet session in May, according to 24.kg.

The project will create a new rail corridor from the Asia-Pacific region to the Central Asian states and then on to the Middle East and southern Europe.

China's influence is expected to grow as Russia continues to be mired in its invasion of Ukraine.

Even before the war, China was an active presence in Kyrgyzstan's economy and foreign trade, according to Adil Turdukulov, a journalist and analyst from Bishkek.

Now this process has been ramped up because Russia's trade with Central Asian countries has slumped and its investment opportunities have fallen, he said.

Growing debt

Such influence runs the risk of Central Asian states falling into Beijing's debt trap.

As part of the Belt and Road Initiative (BRI, also known as One Belt One Road [OBOR]), Chinese banks have been financing mining projects and the construction of roads, bridges, hydro-electric power plants, subways and other major facilities in Central Asia.

"We need to diversify our foreign debt and reduce it. This is vital for Kyrgyzstan," Turdukulov said.

Kyrgyzstan's foreign debt to China has increased by 6.5-fold from a decade ago, jumping by nearly $1.5 billion, according to Kaktus.media.

In 2021, it reached $1.77 billion, or 42.5% of Kyrgyzstan's total foreign debt.

If Kyrgyzstan does not pay its debts or if it pays late, the Chinese will seize the facilities they financed and for which they issued loans, Kyrgyz President Sadyr Japarov noted in a March 2021 interview with Radio Free Europe/Radio Liberty's Kyrgyz service.

"For example, the combined heat and power plant [in Bishkek], the North–South road and the Datka–Kemin power line. We accepted money for these projects," he said.

The Bishkek power plant modernisation took four years and cost $386 million, which Kyrgyzstan borrowed from China. However, in January 2018, only months after its August 2017 ceremonial opening, the plant failed and left Bishkek without heat for four days.

"We signed agreements saying that if we default on our payment, management of the facilities will be transferred to the other party. If that's not sufficient, they're entitled to other facilities too," Japarov said.

Uzbekistan at the end of last year owed China $4.2 billion, which was 16.7% of its overall debt.

Another Central Asian country, Tajikistan, owes Beijing about $1.1 billion, which is 35% of the country’s foreign debt.

Meanwhile, the largest debtor in Central Asia is Kazakhstan. As of January 1, it owed China $9 billion, according to the National Bank of Kazakhstan.

Dangerous dependence

On the whole, the expected weakening of Russia's economic and political influence in the region is creating a certain vacuum that China will obviously fill, said Alisher Ilkhamov, the director of Central Asia Due Diligence, a London-based organisation.

"China will become the main trading partner and investor in the region after it pushes Russia out of those positions," Ilkhamov said.

"The Central Asian countries need to be careful and make sure they don't become too economically dependent on China," he said.

By all appearances, Beijing's territorial claims on its neighbours will multiply. Right now South Asian countries are bearing the brunt, as is Tajikistan, which ceded a small amount of territory to China [in 2011 to settle a debt], he added.

China is an authoritarian country with major foreign policy ambitions, and becoming too dependent on it -- especially from a financial standpoint -- is dangerous, according to Yuliy Yusupov, an Uzbek economist.

"Anti-China sentiment is very strong in some countries in the region, namely, Kazakhstan and Kyrgyzstan. So I think the intelligent policy would be to diversify trade and investment flows," Yusupov said.

While China may seem like an alternative to Russia, which is facing Western sanctions, "China and Russia are both ruled by authoritarian regimes whose influence negatively affects institution building in Central Asia," he said.

"Both countries are inclined to support authoritarian and corrupt regimes in their neighbours. And this is the problem for the region: there are no 'white knights' standing by, just 'black' ones," Yusupov said.