Central Asia has a rich, interesting and often overlooked position in the world.
To most, it’s a collection of ‘istans’ somewhere Northwest of China and North East of Iran. In recent history the collection of countries was part of the Soviet Union and after independence the economies have struggled to develop in the face of oil market instability. China rapidly capitalised on that, and has had a growing relationship with the region since the conception of its ‘miracle’ economy since the beginning of the 1990’s.
Now, that relationship is rapidly changing. In conjunction with Central Asian countries they are looking to become a central hub for Euro-Asian trade. Unlike other areas of Belt and Road, China has been on the scene in Central Asia on a large scale even before Belt and Road. Since the 1990s Chinese investments in the region has multiplied a hundred fold and the results are fairly simple to see. Since 2002, Kazakhstan’s GDP has risen six fold.
Belt and Road is the biggest projection of Chinese development funds ever, and the consequences for Kazakhstan, the largest of the central Asian countries are numerous. For years, issues for investors in Kazakhstan was its near complete dependence on world markets. Perhaps this new link with China is going to provide greater reassurance for investors? The development of infrastructure paid for by the penny purse of the Peoples Republic of China is extending state control and reinsuring investors.
Roads, rail and pipelines will not only network the region together, but integrate Central Asia into the wider world.
How do we know this? Well, in terms of investment its clear enough for the Kazakhstani government to make the bold commitment to up beef exports from 4000 tonnes in 2017 to 60,000 tonnes in 2018. The majority of this is expected to go to China.
Growth in meat exports sounds rather irrelevant and more at home in a Cold War textbook rather than in commentary on global affairs, but it a demonstration of how Chinese investment is having an effect on Central Asian markets, given some scepticism by analysts because of restrictions some Central Asian countries have on employing foreign workers. China has a history of using its own workforce when it invests in a region, which seems to conflict with the way Central Asian politics now works.
But this deal works well for both parties. While can get their hands on Kazak imports, most notably fossil fuels, Kazakhstan along with other Central Asian countries are not only becoming stronger states, but are also able to offer a stronger attraction to investors, not simply from China, but across the globe.
We need look no further than Kazakhstan’s southerly neighbour. In Kyrgyzstan, a hydro-electric dam project has been recently taken up by a Czech company, when Russia failed to finance the project. There were also suggestions that the Chinese were going to pick up the bill, but that too fell through. Central Asian countries are increasingly reaping the benefit as a Eurasian hub and Chinese infrastructural investments are partly responsible.
Russia’s reaction too is peculiar. As a prime destination for gas exports in the face of Western sanctions, Russia doesn’t want to aggressively challenge China, but neither does it want to see the transference of a former soviet territory from its sphere of economic influence. As a result, we are seeing Russia have a more outward looking economic policy.
The Eurasian Economic Union is an agreement between Belarus, Russia and Kazakhstan initially in 2015, which aims to cut down customs tariffs in an imitation of the European Union. Why? Well we should not ignore that Russia still wants to retain influence in the region, but for Central Asia this all means a greater influx of investment and the growth of State power.
If we look at the region in terms of global politics, Central Asia is a developing fault line between three great civilisations: China, Islam and Russia. The development of infrastructure is only going to increase interactions, with unknown results.
For Central Asia, it means they are seeing the benefits of integration and the region itself is becoming of greater importance on the geo-political scene. For Belt and Road, this region is one often overlooked due to the struggle of rail freight transport. More often, commentators look to water developments, or how Belt and Road will impact the West as it reaches Europe.
The rapid development of this region as a fault line between three civilisations and the growth of state infrastructure and tax revenue as a result of foreign investment should be given greater importance in the analysis of Chinas global power projections, or simply as an interesting analysis of the growth of states.
This region already is becoming a new front in the growth of Chinese power.
Central Asia is no longer going to be seen as a vast Steppe of Irrelevant ‘Istans’, but part of something bigger.