China vs. Central asiaThe achievemenTs of The pasT Two decades

aleksandra Jarosiewicz, Krzysztof strachota

45

China vs. Central asia The achievemenTs of The pasT Two decades

aleksandra Jarosiewicz, Krzysztof strachota

nUmBeR 45waRsawocToBeR 2013

co-operation: anna wołowska, marek matusiak

© copyright by ośrodek studiów wschodnichim. marka Karpia / centre for eastern studies

conTenT ediToRsadam eberhardt

ediToRanna Łabuszewska

co-opeRaTionKatarzyna Kazimierska

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isBn 978-83-62936-30-4

Contents

MAIN POINTS /5

I. ChINA ANd CeNTrAl ASIA – The bACkgrOuNd fOr MuTuAl relATIONS /7

1. The historical background /72. The strategic background for relations between China

and Central Asia /92.1. Central Asia as seen by China – key challenges /102.2. China as seen by Central Asian countries – key challenges /13

3. each party’s interests /15

II. ChINA ANd CeNTrAl ASIA – The keY ASPeCTS Of POlITICAl relATIONS ANd SeCurITY ISSueS /17

1. The borders and the uyghur issue – from conflicts to the Shanghai Cooperation Organization /17

2. The stability issue in Central Asia vs. relations with China /203. China in regional geopolitical games /214. The Chinese model of building its political position

in Central Asia /245. Central Asian countries on China /28

III. ChINA’S eCONOMIC PreSeNCe IN CeNTrAl ASIA – The AChIeveMeNTS Of The PAST TwO deCAdeS /31

1. regional differences in the level and nature of co-operation /322. China’s ‘assets’ in the region and plans for development /33

2.1. The oil and gas sector /33 2.2. The uranium sector /49 2.3. Other selected areas of co-operation /52 2.4. Trade /55 2.5. Transport infrastructure – the New Silk road /62

3. The instruments of co-operation: loans and the SCO /643.1. loans /643.2. The Shanghai Cooperation Organization (SCO) /68

4. The balance of economic co-operation /694.1. The geopolitical dimension /694.2. The economic dimension /70

IV. ChINA’S PreSeNCe IN CeNTrAl ASIA IN The SOCIAl dIMeNSION – The AChIeveMeNTS Of The PAST TwO deCAdeS /72

V. CONCluSION – fuTure ChAlleNgeS /75

MAPS /78

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MAIN POINTS

• ThepasttwodecadeshavebeenaperiodoffundamentalchangeinCen-tralAsiatriggeredbythecollapseoftheUSSR.Oneeffectofthiswasthatfivenewstatesaroseintheregion.TheemergenceofChina’spresenceasamajorplayerinCentralAsiahasbeenamongthefundamentalaspectsoftheseregionalchanges.

• Security issues are at the core of Chinese engagement in CentralAsia.Intheregionaldimension,Chinawantstoprotectitswesternprovince,Xinjiang,frompossibledestabilisationwhichcouldspreadfromCentralAsiancountriesordrawinspirationfromthem.Inbroaderterms,BeijingwantstosecureitsinterestswithregardtoRussiaandtheUSA,whicharealsopresentandactiveintheregion.Inturn,fromCentralAsia’spointofview,securingtheregionagainstChineseexpansionisoffundamen-talsignificance.However,at thesametime, thecountries intheregionareawareoftheinevitabilityofco-operationwithChina,andhavebeenmakingeffortstouseitasatoolforstrengtheningtheirownstabilityandsovereignty.

• Althoughsecurityand(inbroaderterms)political issuesarethebasisforrelationsbetweenChinaandCentralAsia,themainfieldofplayfortheirco-operationiseconomicissues.Thisisaneffectoftworealities:theeconomic:thegreatareaandbasicwillingnessforco-operation,andthepolitical:mutual cautiousness and the self-restrictionof thepart-ners, and above all, resistance fromRussia.Despitemanydifficultiesencountered over the past twodecades, Chinahas become a strategiceconomicpartnerforthisregion.Thisismostevidentinthetrade,en-ergyandinfrastructuresectors.Beijinghasoutstrippeditscompetitors:Russia,theUSA,TurkeyandIranoverarelativelyshortperiod.Atthesametime,thescaleofco-operationhasmadeCentralAsiaanimportantregionforChina(especiallyasanelementofthestrategytobringstabi-lisationintoXinjiangandasamajorgassupplier).Chineseeconomicen-gagementinCentralAsia–consideringthespecificsandtheguidelinesofBeijing’spolicy–viablycontributestoChina’sgrowingpoliticalsig-nificanceintheregion;withregardtoindividualrepublicsandrelationsbetweenthemandalsowithregardtoRussiaandtheUSA.Atthepre-sentstage,theregion’scountriesbenefit,bothpoliticallyandeconomi-cally,fromthissituation.Itis,though,givingrisetoseriousconcerninstrategicterms.

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• WhateverattainmentsCentralAsiaorChinahavemadeoverthepasttwodecades,thegeneralsituationinandaroundtheregionremainsunstable,andtheparties’interestshavebeenfixedandsecuredtoalimitedextent.Therefore,theevolutionofChina’sregionalpolicytosecureitsowninter-estsbypoliticalmeans,theultimategeopoliticalbalanceofpowersintheregionbetweenChina,RussiaandtheUSA,andtheabilityofthecountriesofCentralAsiatocontinuetouseChinatoreinforcetheirpositionarestillopenquestions.However,China’s stance isplayingan increasing role ineachoftheseaspects.

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I. ChIna and Central asIa – the baCkground for mutual relatIons

A superficial evaluation of relations betweenChina andCentralAsiamighthavesuggestedthattheirnatureisstrictlylocalandtemporary.Informalandlegalterms,theirbilateralrelationsdatebacktothecollapseoftheUSSRin1991,when thenew independentCentralAsian republics (Kazakhstan,Kyr-gyzstan,Tajikistan,TurkmenistanandUzbekistan)wereestablished.AsseenbyChina,whosepoliticalandeconomicpotential isconcentratedintheeastofthecountry,thisisaremotearea,bothgeographicallyandstrategically,es-peciallyincomparisontothePacificorevenIndianOceanbasin.FromCen-tralAsia’spointofview,theinternalsituation(asseenbyboththeregionasawholeandindividualcountries),therelationswiththetraditionalpoliticalandeconomiccentre,i.e.Russia,andpossiblyrelationswiththeUnitedStates,whichwontheColdWarandwhichisactiveinpolitical,militaryandeconomictermsinAsia,aretheissuesofkeysignificance.

Today’sCentralAsia,however,islinkedtoChinabyalongandtempestuoushistoryandbynumerousbondsresultingfromsharedhistoricevents.China’sandRussia’sgeopoliticalinterestsinCentralAsiaaredeeplyrootedinhistory.Inthiscontext,thesuddenchangestakingplaceinCentralAsia(theappear-anceofnewcountries)andaroundit(primarily,therapidgrowthofChina’spotentialandeconomicandpoliticalambitions,andthedisintegrationoftheRussianempireofthe19thand20thcenturies)areturningtheregionintoady-namicfieldfortheprojectionofChineseinterests.Atthesametime,there-gion’scountries,Russiaandotherinternationalplayersaredevelopingamodus vivendiwithChina.TheseareprocessesofgreatsignificanceforbothCentralAsiaitselfandalsoforChinaandRussia.

GiventhespecialcharacteristicsofChina(suchasthevastandrapidlydevel-opingeconomy)andCentralAsia(suchastheenormousneedforinvestment,thesearchfornewmarketsandsignificantmineralresources),economicis-sueshavethusfarplayedaspecialroleinmutualrelations.Itiseconomicis-sueswhichhaveaffectedthenatureofmutualrelationsandhastangiblybeenchangingCentralAsia.

1. the historical background

Fromahistoricalpointofview,whataretodayCentralAsiaandwesternChi-na(theXinjiang-UyghurAutonomousRegion)usedtoformarathercohesive

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culturalandpoliticalarea1,whichwasdividedinthe18thand19thcenturiesintotheChineseandRussianzonesofinfluence,andwaseffectivelymadepartofthetwopowersovertime2.StrongsocialbondsbetweentheRussianandtheChineseTurkestanwereexpressedonnumerousoccasionsalsointhe20thcen-tury.Manifestationsofthesebondsincludedmassmigrationsofrefugees3andthepermeationofnation-buildingideas(fromRussia/theUSSRtoChina).

Throughoutalmosttheentire20thcentury,formerTurkestanremainedafieldoftacitalbeitbitterrivalrybetweenRussia/theSovietUnionandChina;Russiabeingclearly the strongerandmoreactive rival.MoscowstrengthenedBei-jing’sconvictionthatSovietCentralAsiaposedaseriousthreattoChinainthegeographicallydistantandunderdevelopedXinjiang,butalsototheterritorialintegrityofthecountryasawhole.ThestartingpointwasBeijing’scriticismofthenationalborderimposedbyRussiainthe19thcentury(itsCentralAsiansectionwasnotdelimitedthroughouttheentireSovietperiod).FrustrationswereworsenedbythemoreorlessopensupportMoscowusedtooffertotheUyghurseparatists(attemptsweremadetosetuptheso-called“FirstEasternTurkestanRepublic”in1933–1934andtheso-called“SecondEasternTurkestanRepublic”in1944–1949)4.Individualproblemsweremanifestationsofabroader(de factoglobal)rivalrybetweentheUSSRandChina.TensiongaverisetotheChinese-Sovietborderconflictin1969,oneoftheconflictsitesbeingtheKa-zakhsectionoftheborder(asaconsequenceoftheconflict,theCentralAsiansectionoftheborderremainedcloseduntil1992).Viewedfromthisangle,the

1 ThroughoutthefirstmillenniumA.D.,thiswastheareaofChineseexpansion(whichwasparticularlyevidentinitseasternpart).Fromcirca8thcenturyA.D.,itwasculturallyandpoliticallydominatedbytheTurkishandMongolianelement,whichwouldperiodicallyex-pandattheexpenseofChina.Overtime,Islamhasbecomeanotheressentialbindingfactor(inadditiontoethnicproximity)whichhasunifiedtheso-called“Turkestan”.

2 Theborderbetweenso-called“RussianTurkestan”and“ChineseTurkestan”wasimposedbyRussia inthe late19thcentury. ItcanbeassumedprincipallythattheregionhasbeeneffectivelycontrolledbyRussiasincetheendof thecivilwartriggeredbytheBolshevikrevolution(1920s)andbyChinasinceMaoZedong’svictoryinthecivilwarandthesettingupofthePeople’sRepublicofChina(1949).Inbothcasesincreasingcontroloftheregioninvolvedtheuseofvast-scalerepressionsagainstthelocalpopulationandresettlementac-tionsaimedatweakeningtheirdemographicpredominance.

3 Forexample,atleasthundredsofthousandsKyrgyzandKazakhsfledtoChinaduetore-pressionsfollowingthesuppressionoftherebellionin1916,andlaterasaconsequenceoftheGreatFamineinthe1930s;theDzungar/KalmykpeopledefeatedbytheChineseinthe19thcenturyandUyghursfollowingtherepressionsof1962movedtoRussia.

4 TheprecedentwassetwhenRussiarecognisedtheindependenceofso-called“OuterMon-golia”in1911,whichwasconfirmedbyforcingChinesetroopsoutofMongoliaandforcingMongoliatoacceptcommunismin1921.

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collapseoftheUSSR(1991)speltaseriouscrisisinthefragilestabilityaroundCentral Asia5, created opportunities for reconstructing relations, but evenmoresogaverisetofears,mutualdistrustandcautiousnessamongthepartiesinvolved.

2. the strategic background for relations between China and Central asia

RelationsbetweenCentralAsiaandChinaoverthepasttwodecadeshavebeenaneffectoftwoparallelprocessesoffundamentalsignificancefortheglobalorder.Oneof thesebeingthedisintegrationof theRussian/Sovietempire inAsia(especiallyitscentralpart),andtheother–thesuddenriseinChina’spo-sition(inAsiaandworldwide).

TheformerofthetwoprocesseshasinjectedagreatdealofdynamismintothesituationinCentralAsia:newstatesemerged,andattheonsetoftheiropera-tiontheyneededtofaceaseriouspolitical,social,economicandidentitycrisis.Thiscrisishasbeenmademanifest, for instance, throughmilitaryconflicts(e.g.thecivilwarinTajikistan),politicalcoups(Kyrgyzstan),thedevelopmentofnationalismsandIslamicradicalism,massmigrations,suddenpopulationgrowth,etc.Despitetheenormousprogressseenoverthepasttwodecades,itwouldstillbeinaccuratetoclaimthatthesituationhasbecomestable.Russiahasstrongconnections–boththoseinheritedfromtheUSSRandthosenewlycreated–andthusvastinfluenceinthisregion.Nevertheless,itsmonopolisticpositionhasbeenchallenged:theregionhasopeneditselfuptopolitical,eco-nomic,militaryandcivilisationalcontactswithMoscow’srivals,includingtheUSAandChina.Theregionhasbeenstronglyaffectedbynegative(e.g.thewarinAfghanistan)andpositiveexternalimpulsesalike.Bothtransientproblemslinkedtoregionalsecurityandbuildingdurablestabilityintheregionhaveal-waysbeengrantedtoppriorityinCentralAsia’srelationswithChinaandalsoRussiaandotherplayers.

Another–andbynomeanslesssignificant–factorinthebackgroundofrela-tionsbetweenCentralAsiaandChinahasbeentheenormousincreaseinthesignificance,activityandeffectivenessofChina’spolicyworldwide,thestart-ingpointforwhichwasChina’srapideconomicdevelopmentinthe1980s.The

5 ThisalsochallengedthestabilityofChinaitself–perestroikaposedaseriousthreattothesta-bilityofthePeople’sRepublicofChina,onesignofwhichwerethestudentprotestsinBeijing’sTiananmenSquare,whichwereinparttriggeredbyMikhailGorbachev’svisittoBeijing.

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localindicatorsofthesechangesincludeBeijing’stighteningcontrolofXinji-angandtherapideconomicdevelopmentofthisregion,thoughitremainsare-gionwithproblems. Ineconomicterms,Beijing’srapidly increasingdemandforenergyrawmaterialsandstrugglefornewoutletsnecessarytomaintaineconomicgrowthandinternalstabilityareimportantfactors.Instrictlygeo-politicalterms,thisisChina’sambition(whichissometimesunderstoodandrecognisedworldwide) to gain a position of a leading global power. China’sseriouseconomicinterestsandtheconstantlygrowingstrengthofitsimpactthrough economic influencehaveprovided a foundation for the spectaculardevelopmentofrelationsbetweenChinaandthecountriesofCentralAsiaandforagradualreinforcementofChina’spositioninthisregion.

2.1. CentralAsiaasseenbyChina–keychallenges

2.1.1.Xinjiangandstabilityissues

TheXinjiangissuehasbeenthefirstandtheforemostchallengeforChinainrelationswithCentralAsiaeversince1991.Thisregionhasbeenunderdevel-oped for centuries.Beijinghashad relativelyweak control over it. Further-more,ithasbeentormentedbyseparatismbasedontheethnicandreligiousdistinctnessofitsresidents(mainlyUyghurs,whoareMuslims).AllthishasmadeXinjiangpotentiallyvulnerabletotheseriousthreatposedbyanunsta-bleCentralAsia.ChinawasaboveallanxiousaboutXinjiangreceptivenesstotheideologicalfermentoriginatingbeyonditswesternfrontier(amixofna-tionalism,Islamanddemocraticslogans)andinAfghanistan(theradicalandmilitantIslampropagatedbytheMujahideenandtheTaliban)6.Therewasalsoaserious threat inwhichCentralAsiaeitherunintentionally–due tobeingunabletocontrolthesituation–orwilfully–whetherbyitselforinspiredbyRussia–wouldprovidealogisticbaseforUyghurseparatists.Objectivecon-firmationsof theexistenceof this threat included the increasing resistancedemonstratedbyUyghurstoBeijing7usingnational,religiousanddemocraticslogans,theexistenceofastrongUyghurdiasporainCentralAsia,thelimited

6 TheEastTurkestanIslamicMovement(ETIM),thepillarsofwhichareseparatismandradicalIslam,whichhasbeeninvolvedonasmallscaleinterroristactivity,includinginChina,hasbeenoperatingsincecirca1993inAfghanistanandPakistan’sWaziristan.Inpractice,Chinahasthusfarsuccessfullyneutralisedthisthreat,capitalisingonitsinfluenceinIslamabad(thePakistanisecretservices,ISI,haveamajorimpactontheoperationofMuslimradicalsandtheAfghaniTaliban,andarealsoabletochanneltheiractivitytowardsAfghanistanorIndia,whilerestrictingitinChina,onwhichPakistanisstrategicallydependent).

7 IncludingtheseriousriotsinGhulja/Yiningin1997andinUrumqiin2009.

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abilityofCentralAsiancountriestocontroltheirnationalterritoriesandbor-ders,and–inabroadercontext–conflictsinsidetheindividualcountriesintheregion8.Overthepasttwodecades,Beijinghasrelativelysuccessfullydealtwiththeproblemposedbythisprovinceemployingacombinationoftheuseofforce,demographicmethods(promotingthesettlementoftheHanChinesein the province, thusweakening the ethnic predominance ofUyghurs) andenormouseconomicengagement9.However,CentralAsiastillremainsahypo-theticalthreatduetoarelativelyhighlevelofinstabilitythereandtheneigh-bourhoodofAfghanistan. In this latteraspect, the threat is ‘militant Islam’,whichAfghanistanisstillacentreof,andalsomovementswhichfindshelterinAfghanistan,namelytheradicalUyghurorganisations:theEastTurkestanIslamicMovement (ETIM) and the Turkestan Islamic Party (TIP), linked totheradicalCentralAsianorganisationsoperatinginAfghanistan:theIslamicMovementofUzbekistan(IMU)andtheIslamicJihadUnion(IJU).

2.1.2.Thegeopoliticalrivals

ThecollapseoftheUSSRandtheemergenceofthenewstatesinCentralAsiaofferedChinatheopportunitytoradicallyimproveitspositionintheregioninitsdealingswithRussia:Moscowformallywithdrewfromtheregion,andanactualbufferwascreatedbetweenChinaandRussia,leavingBeijingmoreroomformanoeuvre.AlthoughChinatemporarilyusedRussia’sweaknessasanopportunitytoraisetheissueofborderadjustmentwiththeregionalheirstotheUSSRinthe1990s(seebelow),itrathertendednottoopenlyundermineRussia’s ambitions to retain political andmilitary hegemony in the region,partlyduetoseeingitasamajorstabilisingfactorthere.

TheweakeningpositionofRussiaandthefactthatCentralAsiawasopeninguptoexternalcontactsalsoinvolvedtheneedtoconfrontnewrivals.Theplayers

8 IncludingthecivilwarinTajikistan(1992–1997)and,whenitended,theactivityofsuprana-tionalradicalandterroristgroups(especiallytheIslamicMovementofUzbekistan);masssocio-politicalprotestsin2005and2010inKyrgyzstanusingdemocraticslogans,leadingtotheabolishmentofthethenpresidents;bitterethnicandsocialtensionswithIslamicun-dertonesinUzbekistan(forexample,theearly1990sandbetween1999and2005);primarilyconflictsinAfghanistan(includingthepromotionofthearmedandeffectiveMuslim‘In-ternational’undertheaegisofal-Qaeda,andtheeffectivenessoflocalradicals,theTaliban,backedbyforeignMuslimcommunitiesandPakistan,amongothers).

9 Includingthedevelopmentofagriculture,andthecommunicational (roadsandrailwaysconnectingtheregionwithcentresineasternChina)andeconomicinfrastructure(includ-ingthedevelopmentofspecialeconomiczones),formalisedinthestrategyforthedevelop-mentofthewesternprovincesadoptedin2000).

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interestedintheregionhavebeen:Turkey(posingapotentialthreattoChina,since ithasbeenplayingthecardof thecommunityofTurkicpeoples), Iran(potentiallystokingupIslamintheregion),Pakistan(althoughthiscountryisChina’sally,ithasactively–especiallyinAfghanistan–supportedMuslimradicalsandusedtheminitspoliticalgames)andIndia10.

However,itturnedoutthat,inadditiontoRussia,themainchallengeChinaneededtodealwithwastheUSA,thewinneroftheColdWarandtheindisput-ablegloballeaderinthe1990s.Theactivebutnotparticularlyeffectivepromo-tionofeconomicinterestandtransformationmodelslaunchedbytheUSAinthe1990sinCentralAsiain2001inthecontextoftheglobalwaronterrorismandtheoperationinAfghanistanturnedintoaUSmilitarypresenceinCentralAsia11.Giventheintensifyinggeopoliticalrivalry,theUSpresencewasseenbyChinaascontinuedencirclingbyUSmilitarybases12andaspotentiallypullingofCentralAsiaintotheorbitofUSpoliticalinfluence.TheUSpoliticalactivityincertainareasWashingtonisparticularlyinterestedin,especiallythedesiretoreconstructtheexistingsocio-politicalsystems,isalsoseenasathreatbyBeijing.FromChina’spointofview,thismeansdestabilisationinthecountriesaroundit,andgivesrisetosuspicionsoffomentingpoliticalunrest(e.g.thecol-ourrevolutionsoreventheArabSpring)andof–consciouslyornot–creatingthreats (thecase of intensifying Islamicradicalism inAfghanistan, startingwiththesupportofferedtotheMujahideeninthe1980sresultingultimatelyintheemergenceofal-Qaeda,uptotheriseofradicalgroupingsduringtheEn-duringFreedomandISAFoperationsafter2001).SinceChinese-Russianrela-tionsinCentralAsiahadbeenprincipallyregulatedandWashington’sactivityhadbeenontherise,theUSAbecamethemajorsecuritychallengeforChina,overtakingRussiaandotherminorplayers.

10 IndiaisoneofChina’skeygeopoliticalrivals.Alongwith(generallyunsuccessful)attemptsofeconomicactivationinCentralAsia,ithasconsistentlytakenactiontobuilditsmilitarypresenceintheregion:inthe1990s,itwasco-operationwithRussiaandIranaimedatback-ingtheanti-TalibancoalitioninAfghanistan(anIndianmilitaryforwardoperatingbaseandamilitaryhospital,whereAhmadShahMassoudreportedlydiedin2001,wereoperat-inginTajikistan).Overtime,effortstoopenanairbaseinTajikistan(IndiamodernisedtheAyniairport,butTajikistanreportedlyhadtowithdrawfromleasingthisairporttoNewDelhiduetoMoscow’sprotestsin2005).

11 StrongpresenceinAfghanistansince2001;in2001–2005militarybasesinKyrgyzstanandUzbekistan(andNATOmemberstatebasesinTajikistan),militarypresenceinKyrgyzstanandclosemilitaryco-operationbetweentheUSAandUzbekistanandTajikistan.

12 InadditiontothemilitarybasesinJapanandSouthKorea,theinformalalliancewithTai-wanandthepresenceonthePacificandIndianOceans.

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2.1.3.Theeconomy

ForChina,CentralAsiahasaboveallbeenamarketstimulatingtheeconomicdevelopment ofXinjiang (exports ofChineseproducts); and for years, thishas been themost tangible aspect of economic co-operation. Inparallel tothis,Chinawaspreparingitselftoentertheoilandgasmarketintheregion(especiallyinKazakhstanandTurkmenistan),whichwasexpectedtoensurefuel supplies for the Chinese economy.Unlikewhat has been thus far themostimportantfossilfuelimportroutes,thelandconnectionswithCentralAsiaareseenassafer;themaritimeroutesrunningfromthePersianGulfinthecaseofcrisiscanbeeasilyblockedbytheUSAorIndia,orparalysedduetopossibleproblemsintheStraitofMalacca.ThepartnersfromCentralAsiaareweak,andthusmorewillingtocollaborateandlesseagertousethe‘gasweapon’thanRussia.Inadditiontobeingafossilfuelsupplier,CentralAsiarepresentsenormoustransitpotentialforChina:itpotentiallyoffersacon-nection for theChinesemarket toEurope and theMiddleEast (thediffer-entvariantsof‘anewSilkRoad’),Afghanistanandtheports(PakistaniandIranian)bytheArabianSeaandinthePersianGulf.Ineffectoftherapidin-creaseintheChineseeconomicpresenceinCentralAsia,thereisagrowingneedtoprotectChineseinterestsintheregion,whichalsomeanstheprotec-tionofChina’spoliticalinterests.

2.2. ChinaasseenbyCentralAsiancountries–keychallenges

2.2.1.Theconcerns

TheapproachthecountriesofCentralAsiataketoChinaischaracterisedbythesenseofforeignnessandthreat.Theyoungnationswhosestatehoodisnotyetwell-established, face numerous domestic problems, inherited from theUSSRandawholehostoffearsandproblemslinkedtotheireasternneighbour.Chinahasbeenseenasatraditionallyexpansionistpowerenteringthephaseofaccelerateddevelopment.ItisworthnotingthattheChinesetransformationmodel–incontrasttofascinationswithWestern,TurkishandMusliminspira-tionsandvariationsofalltheseappliedacrosswhatwasnotsolongagoazoneofSovietinfluence–hasnotattractedsomuchinterest.Inturn,quiterealis-ticconcernshavebeenraisedbyChineseborderclaims,Beijing’sbrutalpolicytowardsUyghursandthethreatthatChinacouldinterferewiththeinternalaffairs of Central Asian countries. A deeper foundation for such concernsoriginatedfromthestate-andnation-buildingprocessesandthedevelopingnationalisminCentralAsiancommunitieswhichaccompaniedthemandwas

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reinforceddueto thealarmistandanti-Chinesetonepresent intheRussianmedia,whichhassignificantlyaffectedtheviewsinCentralAsia.

2.2.2.Theopportunities

Alongwiththeconcerns,relationswithChinabroughtopportunitiesforsupporttoCentralAsiafromBeijing:diplomaticrelationswereestablishedquicklythusaddingcredittothenewlyestablishedstatesintheregion,enablingeconomicdevelopmentandeasingtheconsequencesofthecrisisthecollapseoftheUSSRhadbrought about (especially at the social level, owing to the ‘suitcase trade’typicalofthe1990s).TherapidlyincreasingscaleofChina’seconomicpresenceintheregionsignificantlyaddedtotheattractivenessofChinaasakeyeconomicpartnerforCentralAsia(seebelow).ThefactthatChina(unlikeRussiaandtheUSA)demonstrateditslackofinterestinimposinganyofitsdomesticpolicyso-lutionsuponindividualCentralAsianstatesturnedouttobeamajorpositiveelementinrelationswithChina(especiallyinthefirstdecadeofthe21stcentury).ThusChinabecameafactorwhichhasindirectlybeenstabilisingtheinternalsituationandde facto reinforcingtheregimesoperatinginCentralAsia.

2.2.3.Chinaintheregion’sgeopoliticalgames

RussiahasbeenthekeypointofreferenceininternationalpoliticsforCentralAsiancountries.Thisapproach isbasedonthetraditionalcultural,politicalandeconomicbonds,thebeliefthatthisisacountrywhichguaranteeselemen-tarydurabilityoftheregionalorderandtheawarenessofRussia’sdetermina-tiontomaintainCentralAsiawithinitszoneofinfluencethroughtheuseofitsstrongpolitical,militaryandsocialinstrumentsintheregion.Inrelationsbe-tweenCentralAsiaandChina,Russiaaspirestobethepatronandcensorofthepoliciesadoptedbytheregion’scountries.Onespecialmanifestationofthisap-proachisthedominationoftheCollectiveSecurityTreatyOrganization13(con-trolledbyRussia)intheareaofregionalsecurity,andthesignificanceoftheShanghaiCooperationOrganization14asthemainplatformforpoliticalrela-tionsbetweenCentralAsiaandChina.AlthoughRussiastillhasaverystrongpoliticalpositionintheregion,ithasbeenconstantlyweakenedbytheactivity

13 ThemembersoftheCSTO,inadditiontoRussia,BelarusandArmenia,includeKazakhstan,KyrgyzstanandTajikistan(Turkmenistanhasconsistentlyremainedneutral,andUzbeki-stanhasjoinedandleftthealliancetwice–mostrecentlyin2012).

14 MembersoftheShanghaiCooperationOrganizationare:Chinaandthepost-Sovietcoun-trieswhichborderit:Russia,Kazakhstan,Kyrgyzstan,TajikistanandUzbekistan.

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ofChinaandtheUSA,whiledevelopingco-operationwithRussia’srivalsisanimportantelementstrengtheningthepositionoftheCentralAsianstates.

3. each party’s interests

Given thebackgroundaspresentedabove,China’s interests withregard toCentralAsiainpoliticalandsecuritytermscanbedefinedasfollows:

• tosecurethestabilityofXinjiangandtoavoidanynegativeimpactfromCentralAsiaonthisregionofChina;

• tomaintainandextendinternalstabilityinCentralAsiaasaconditionofsecurityinXinjiangandaconditionnecessarytoimplementeconomic(en-ergyandcommunication)objectives;

• tomaintainandstrengthenthesovereigntyofthestatesofCentralAsianand the regimesoperating there as a condition forunrestrictedChineseeconomic(andpolitical)activityintheregion;

• toweakenthedominationandinfluenceofitsgeopoliticalrivalsinCentralAsia:basically(especiallyintheinitialperiod)ofRussia,andtoanessen-tialandconstantlyincreasingdegreeoftheUSA(especiallyafter2001);

InthecaseofCentralAsia,subjecttoacertaindifferentiationoftheempha-ses,potentialsandpracticesofindividualcountries,theconstantgoals in the policy of Central asian countries towards China are:

• to protect themselves from Chinese expansionism, a special aspect ofwhichhasbeen theborder issue, i.e. resistingor restrictingChina’s ter-ritorialclaims;

• todevelopinacontrolledmannerthepoliticalandeconomicco-operationinitiated by China. At the same time, co-operation is the factor whichstrengthensindividualstatesandregimesbothathomeandontheinter-nationalarena(alsoindealingswithRussia),whileallowingthemtoavoidbecomingdependentonBeijing;

• tomaximisetheprofitsofeconomicandinfrastructuralco-operationwithChinaforinstancebyturningCentralAsiaintoaconveyorbeltforChinesegoodsexportedtoEuropeandthecountriesoftheMiddleEast.

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The interestsofChinaandCentralAsiapresented in thiswayputRussia inadifficultposition.moscow’s traditional interests are:

• tomaintainanddeepenitspoliticalandmilitarydominationandtoregaineconomicdominationinCentralAsia.Factorswhichcontributetothisin-cludetheweaknessoftheindividualstatesandregimesintheregionandMoscow’sabilitytouselocalconflictsandtensionsinitspoliticalgames;

• toblockandeliminatetheinfluenceofitsgeopoliticalrivals,especiallytheUSAandChina;

• tomaintainanddevelopstrategicco-operationonglobalissueswithChinaonequalterms.

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II. ChIna and Central asIa – the keY asPeCts of PolItICal relatIons and seCurItY Issues

Lookingbacktothepast,onecanclearlydistinguishbetweentwoperiodsofrelationsbetweenChinaandCentralAsia.Fearsandtension,mainlydue totheborderandtheUyghurissueswerepredominantinthe1990s,especiallyatthebeginningofthedecade.Inturn,thebeginningofthe21stcenturyhasseenaharmonisationofthepoliciesadoptedbyChinaandthecountriesofCentralAsiaresultinginrapidlydevelopingco-operation.Thefutureoftheserelationsisstillunclear,whichisduemainlytotheuncertainstabilityinCentralAsiaanditsimmediateneighbourhood,aboveallAfghanistan,andtheevolutionofChina’spolicy.ThedegreeofeffectivenessofthereintegrationactionstakenbyRussiaintheregionandthefuturenatureofrelationsbetweenMoscowandBeijingwillalsohaveanimpact.

1. the borders and the uyghur issue – from conflicts to the shanghai Cooperation organization

TheUyghurandtheborderissueswerethegreatestchallengesinbilateralre-lationsbetweenChinaandCentralAsia;andtheseissuesdominatedbilateralrelationsinthe1990s.

ThemostseriousproblemwastheunsettledborderissuewithChina,primar-ilyinKazakhstanbutalsoinKyrgyzstanandTajikistan.Fromtheearly1990s,Chinaopenlyquestionedtheexistingborders,andputmilitaryandeconomicpressure,especiallyonKazakhstan.Thetensionreacheditspeakin1993–1994,onemanifestationofwhichwas the concentration ofChinese troops on theborderwithKazakhstan15.Atthesametime,whiletheuseoffrontierrivershad not been regulated, China embarked on the construction of the BlackIrtysh–KaramaiCanalandonirrigationusingthewatersoftheIliRiver.BothprojectsadverselyaffectedtheeconomicinterestsofKazakhstanandcausedecologicalproblems16.

15 AccordingtounofficialstatementsbyKazakhanalystsandofficials,exchangesoffirewithChinese troopsandChineseraidson the territoriescontrolled thus farby theUSSR/Ka-zakhstantookplaceonseveraloccasionswithinthatperiod.

16 Cf.e.g.EffectsofinterdependencyintheXinjiang-CentralAsianregion,AnnMcMillanhttp://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN021190.pdf

TemirbolatBakhytjan,WaterDisputeThreatensCentralAsianstability,21February2005,IWPR,http://iwpr.net/report-news/water-dispute-threatens-central-asian-stability

SebastienPeyrouse,FlowingDownstream:TheSino-KazakhWaterDispute;16May2007;

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Thefinalestablishmentof theso-called“ShanghaiFive” in1996,whichcon-sistedoftheCentralAsianstatesborderingonChina,ChinaitselfandRussia,madeitpossibletofindapreliminarysolutiontotheKazakh-Chineseborderproblem (see below).Russia’s participation clearly strengthened theCentralAsianstateandallowedthepressurefromChinatotaperoff.Thebordertreatywassignedin1996(Chinareceived22%–whichitsawasofkeyimportance–ofthedisputedterritories).Sincethen,Kazakhstanhasonmanyoccasions(andwithnomajoreffect)resumedtheeffortstoregulatethewaterissues.Thewa-termanagementissueshavenotbeensettledsofar.

Thebordertreatieswiththeotherneighbouringstates,KyrgyzstanandTajik-istan,weresignedin1998and2002,respectively.Itneedstobementionedthattheprocessoftreatyratification,andthedelimitationanddemarcationofthesectionoftheChineseborderwithCentralAsiancountrieswassignificantlyextended17.Reasonsforthatincludedunfavourable–asseenbyTajikistanandKyrgyzstan–solutionstotheborderissueandthefearthatthepublicinthesecountrieswouldopposethedealswithChina.Ineffect,theCentralAsiangov-ernmentsdidnotinformthepublicofthetermsoftheagreements,andaboveallaboutthescaleofconcessionsmadetoChina18.

Inturn,theUyghurissuewasresolvedinarelativelypainlessway.DespitethepresenceofthenumerousUyghurminorityinCentralAsia(asignificantgroupofwhomwasformedbypeoplewhohadfledfromChinain1962)andsupportfromthepublicinKazakhstanandKyrgyzstan,whereUyghursarethemostnumerous,thegovernmentsinAlmaty/AstanaandBishkekdidnotallowthetensionbasedontheUyghurissuetoescalate.Overtime–astheShanghaiFivewasestablishedandlatertransformedintotheShanghaiCo-operationOrgani-sation–thecountriesintheregionmadeactiveeffortsaimedatsignificantly

ChinaBriefVolume:7 Issue: 10;http://www.jamestown.org/programs/chinabrief/single/?tx_ttnews[tt_news]=4131&tx_ttnews[backPid]=197&no_cache=1

ArthurDunn, The ProblemOf TransboundaryRivers BeingA FactorOf Strategic Secu-rityForCountries,http://www.eurodialogue.org/eu-central-asia/The-Problem-Of-Trans-boundary-Rivers-Being-A-Factor-Of-Strategic-Security-For-Countries

ErnstGiese,JenniverSehring,AlexejTrouchine,ZwischenstaatlicheWassernutzungskon-flikteinZentralasien,http://geb.uni-giessen.de/geb/volltexte/2004/1823/

17 TheTajikparliamentratifiedthebordertreatywithChinaaslateason12January2011,thusgrantingconsenttorelinquishingadisputedareaof1,000km²toChina.

18 Partof thetermsof thebordertreatiessignedbyKyrgyzstanwithChinawere leakedtopublicopinioninlate2001,whichledamongotherthingtoapoliticalcrisisandpublicpro-tests(whichwerebloodilysuppressedbythegovernmenton17March2002).

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reducingtheactivityofUyghurorganisations,especiallythecirclesengagedinanti-Chineseactivity.

from the shanghai five to the shanghai Cooperation organization

TheUyghurand theborder issues servedasa foundation fordevelopingthemodelof co-operationbetweenCentralAsiaandChinaandbetweenChinaandRussia,namelytheShanghaiFive,whichlatertransformedintotheShanghaiCo-operationOrganisation(SCO).TheonsetoftheShanghaiFivewasmarkedbythepost-SovietrepublicsborderingonChina(Russia,Kazakhstan,KyrgyzstanandTajikistan)signingtheTreatyonDeepeningMilitaryTrustinBorderRegionson26April1996.ThiswassupplementedayearlaterbytheTreatyonReductionofMilitaryForcesinBorderRegionssignedinMoscow.Inparalleltothis,co-operationoncombatingterrorismandseparatismwasdeclared(implicitly,thepartiescommittedtorefrainfromplayingtheseparatismcardagainsteachother).ItwasthefirsttimesincethecollapseoftheUSSRthattheformerSovietrepublicshadactedtogether(referringtotheirpost-Sovietbondsandcommunityofinterests)todealwiththedisputeswithChina(forthecountriesofCentralAsiathismeantreinforcingtheirpositionowingtoco-operationwithRussiaandanopportunitytomutuallycoordinatetheiractivity).Thedistrustthecoun-triesofCentralAsiafelttowardsChinadiminishedinlinewiththeirin-creasedsenseofself-confidence.ThisofferedBeijinggreateropportunitiesforco-operationonborderissuesandthestabilityofthefrontierareas.

As a consequence of the relatively positive co-operation as part of theShanghaiFive,(includingasignificantimprovementoftrustbetweenthestates) and ineffectof increasing tension inCentralAsia (theactivationof the IslamicMovementofUzbekistan in 1999–2001),Uzbekistan joinedtheShanghaiFive,andtheShanghaiCooperationOrganizationwasestab-lished(15June2001,Shanghai).Theprimarygoalofthisorganisationwasdeterminedtobethefightagainstterrorism,extremismandseparatism.ThusChina’skeydemandsweredecreedasthebasisforco-operationbe-tweenthecountriesintheregion,andatthesametimeaplatformwascre-atedforthedevelopmentofpolitical,securityand(potentially)economicco-operation.Thiswasalsobeneficial for theCentralAsianstates.How-ever, thisdidnotmean thedevelopmentofbilateral relationswasrelin-quished.Overtime,theSCOhasbecomethemostimportantplatformfordialogue(co-operationandrivalry)betweenRussiaandChinaregardingCentralAsianissues.

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2. the stability issue in Central asia vs. relations with China

CentralAsiaisaregionwithahighpotentialforinstability.Thishasbeenman-ifestedthroughmilitary19andethnicconflicts20,politicalcoups21,theactivityofMuslimradicals22andsocio-economictension23.Othersourcesofthreatin-cludethelimitedefficiencyofgovernmentstructures24andtheunstablepoliti-calsystems25.Post-SovietCentralAsiabordersdirectlyonAfghanistan,whichhasbeentraditionallyseenasahotbedofradicalIslamandethnicconflicts,andacradleofpowerful criminal structures involved in thedrugbusiness,whichareusedbyexternalpowersintheirpoliticalgames26.Neithertheindi-vidualcountriesinthisregionorRussia(whichaspirestohegemonyinCentralAsia)havethetoolstoresolvetheseproblemsinadurableandeffectiveway.ItisalsounclearpreciselywhatRussia’sintentionsare;shouldtheinstabilityissuesinCentralAsiaberesolved,Moscowwouldbedeprivedofitsmosteffec-tiveinstrumentofapplyingpressureontheregion.

19 Inparticular,thecivilwarinTajikistanin1992–1997,whichhadthefeaturesofbothanin-ternal(clan,politicalandideological)andregionalconflict(duetotheengagementofothercountries);andtoalesserextenttheactivityofterroristorganisations(mainlytheIslamicMovementofUzbekistan).ThethreatofinterstateconflicthasbeenregularlyreiteratedinUzbekistan’srhetoricaddressedtoTajikistan:attheturnofthemillennium,themainrea-sonforthatwastheshelterUzbekoppositionfoundinTajikistan,whereasnowitisacon-flictovertheuseofTajikistan’swaterresources(DushanbehasbeenpushingthroughtheconstructionoflargehydroelectricplantswhichcouldputUzbekagricultureatstake).

20 IncludingviolentKyrgyz-Uzbekconflictsin1990and2010.21 ThisconcernsespeciallyKyrgyzstan,wherepublicprotests (indirectlysupportedby the

circumstancesandexternalplayers)broughtaboutreplacementsofthepresidentsin2005and2010.Governmentchangesintheothercountrieswerecausedeitherbycivilwar(Ta-jikistan)orpalacecoups(Turkmenistanin2006).

22 Inparticular,theIslamicMovementofUzbekistaninoperationsince1998(andthegroupslinkedtoitandtoal-Qaeda).ThemostspectacularactionsweretheIMU’sattacksonKyr-gyzstanandUzbekistanin1999and2000.ThemountainousareasofTajikistanarereport-edlystronglyinfiltratedbytheMujahideen;whilelocalradicalgroupingshavebeenactiveinurbanareas(especially,butnotonly,intheFerganaValley).

23 E.g.the2005‘rebellion’inUzbekistan,aspecialmanifestationofwhichwerethebloodilysuppressedprotestsinAndijanon13May2005.

24 EspeciallyevidentinTajikistanandKyrgyzstan.25 The succession problems (and the questions about political stability and continuity) in

UzbekistanandKazakhstan.Inthepast,thepossibilityoftheviolentdemocratisationofKyrgyzstan(thecoupsin2005and2010wereaccompaniedbydemocraticslogans,andthefirstofthetwofittedinwiththewaveofthe“colourrevolutions”,whichwerebelievedtobelinkedtoUSpolicy)wereamongthesourcesofanxiety.

26 ThetensionhasbeenpresentinAfghanistan,withvariouslevelsofintensity,continuouslysinceatleast1979.AstheNATOandUSmissionsinAfghanistanaresettoend(besignifi-cantlyreduced)in2014,anewescalationoftensionisexpectedthere.

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ForChina,theinstabilityinitswesternneighbourhoodisaseriouschallenge;itposesathreattotheimplementationofeachofthegoalsoftheChinesepolicyintheregion.However,Chinahassofarmanifestedneitherthewillnoranyin-strumentsnecessaryfordirectengagementinthetensionsinsideCentralAsia.Formally,securitythreatstoChineseinterestsinCentralAsiaaresupposedtoberegulatedbytheShanghaiCooperationOrganization,whichhasnotpracticallydevelopedanyeffectiveinstrumentsnecessarytodealwithregionalsecurityis-sues27,andasaconsequencehasnotplayedanyroleinresolvingsubsequentre-gionalcrises28.Infact,BeijingrespectsRussia’sinterestsandinitiativesregard-ingregionalsecurityissues.Forthetimebeing,Beijinghasbeenabletoforgeitsweakness intoapositive imageofacountrywhichdoesnot interferewiththeinternalproblemsofitsneighbours.ThissituationhasalsostimulatedChinatodevelopbilateralpoliticalandmilitaryco-operationwithSCOmemberstates(andTurkmenistan),especiallyatthelevelofpolitical,financialand(toalim-ited extent)military support (supply ofmilitarymaterials and financial andtrainingsupport).However,itwouldbedifficulttostatethatthissituationhasbeenultimatelyresolvedinawaysatisfactorytoChinaandresistanttoregionalturbulences.InparticularsinceChinahasbarelyconcealeditsannoyancewithRussianactivityintheregion–aboveallwiththeconsentgrantedtotheestab-lishmentofUSmilitarybasesafter2001(whichwasseenbyChinaaseitherRus-sia’sweaknessorconsciousanti-Chineseactivity),and,inbroaderterms,withRussia’sinefficiencyinbringingstabilitytoCentralAsia.

3. China in regional geopolitical games

BothChina’sglobalambitionsanditsregionalpotentialandinterestsplaceitamongthestrongestgeopoliticalplayersinCentralAsia.Atthesametime,theinterestsofRussia,theUSAandChinaoverlapinthisregion,thusturningitintoaplacecontrib-utingtothedevelopmentofglobalrelationsbetweenthesecountries.

Chinese-RussianrelationsareofkeysignificancefortheregionitselfduetothehistoricalbackgroundandthefactthatbothofthesecountriesborderCentral

27 For example, one of the SCO’s flagship projects, the Regional Anti-Terrorist Structure(RATS),established in2002. Itstillremainsmerelyaplatformfortheexchangeof intel-ligenceinformation.Nopromisedconstantrapidreactionforces,nottomentionabasefortheoperationofsuchforcesintheregion,havebeencreated.Commonexercisesarelimit-ed.Furthermore,itwasadmittedduringtheSCOsummitin2012thatnon-militaryimpactremainedthemainareaoftheSCO’sactivityasregardssecurityissues.

28 Forexample,duringtheKyrgyz‘revolutions’in2005and2010,andespeciallyduringtheviolentethnicconflictbetweenKyrgyzandUzbeksinsouthernKyrgyzstanin2010.

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Asia. The first and the fundamental circumstancewhich has characterisedRussia-ChinarelationsinCentralAsiasince1991– inadditiontothechangeinbothcountries’globalpotential–isthefactthatMoscowhaslostitsdirectandunquestionablecontrolover theregion. It is thefirst timeoverthepasttwocenturiesthatRussiaisunableand,aboveall,hasnopoliticalwilltotreatCentralAsiaasitsbaseforexpansiontowardsChinaortouseCentralAsiaasameanstoapplymilitaryandpoliticalpressureonChina.Instrategicterms,thepasttwodecadeshavebroughtanabsolutelynewqualitytothegamebe-tweenBeijingandMoscowinCentralAsia.

Ashasbeenmentionedabove,Russia’sandChina’sstrategicinterestsdifferatsomeessentialpoints:Russia’sregionaldominationintheareaofsecuritywillbe irreconcilablewithChina’seconomicandpoliticalexpansion in the long-term. The two countries definitely have different approaches to the ‘sover-eignty’and‘independence’oftheCentralAsiancountries,whichareofferingmoreandmoreroomformanoeuvretoChinaandarereducingthesignificanceofRussiaasapatronandguarantorofregionalstability.Ontheotherhand,onemayalsonotice–inMoscowandBeijingalike–similaritiesofinterestsinglobalpolitics(primarily,restrictingtheglobalpositionoftheUSA)andthecommonwilltoreducetensioninbilateralrelations.Inthiscontext,CentralAsia isoneof themost interestingandmostversatilefields for thedevelop-mentofChinese-Russianrelations. In turn, thesearebest illustratedby theShanghaiCooperationOrganization:itwasestablishedpartlywiththeaimofneutralisingtensionbetweenRussiaandChina,ittakesintoaccounttheex-istenceofthenewrepublicsinCentralAsiaandcoversupthedifferencesex-istingbetween its twomajormember states.Characteristically, theRussianandtheChineseconcepts for thedevelopmentof thisorganisationhavecol-lided:whileMoscowhasseenitprimarilyasanewgeopoliticalblocwhichaddsstrengthtoMoscow’svoiceontheinternationalarena,ChinawouldliketoseetheSCOasaplatformofco-operationinsecurityandeconomicissues.TheSCOremainsapoliticaldialogueplatform:thisorganisationhasnotunderminedtheRussiandominationinthesecurityarea,neitherhasitchannelledChineseeconomicactivityawayfromtheregion.Noneofthecountriescanclaimthatstrategicgoalsarebeing implementedhere. It isstillanopenquestionwhatroletheSCOcouldplaywhentheISAFmissionisoverinAfghanistan.Onthelevelorrhetoric,theSCOaspirestosharetheresponsibilityforthefutureofAfghanistan,whileinpracticeitdoesnotseemtobepreparedforthis.

WhilerelationsbetweenChinaandRussiaaredevelopinginCentralAsiaatthelevelofpoliticalco-operationanddeclarationscorrectlyeconomicissues,tosay

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theleast,remainafieldofbitterrivalry.Afterthetwentyyearsoftheso-called“NewGreatGame”,i.e.vyingforaccesstoCentralAsianenergyresources(whichhavebeentreatedasausefultoolinthestruggleformaintainingpoliticaldomi-nation),itisChinawhohasmanagedtoimplementanddeveloptheoilandgasproductionandimportprojectintheregion.ThismeansthatthepreviousRus-sianmonopolyhasbeenbrokenandthatasteptowardsimplementingthestra-tegicgoalsofChinesepolicyhasbeenmade.GiventheconstantincreaseintradeandChina’sfinancialengagement,thisisaclearsignofthecontinuingweaken-ingofRussia’spositionintheregion.China’ssuccessesprovidedastrongstimu-lusforRussiatointensifyitseffortsaimedatthereintegrationofthepost-Sovietarea,includingeconomicreintegration.Constantlyrepeatedpromises(noneofwhichhavebeenfulfilled,andthusarebecominglessandlesscredible)thatseri-ousRussianinvestmentswillbemadeinCentralAsia,andaboveallthehurriedcreationoftheCustomsUnion(whosemembersatpresentare:Russia,Kazakh-stanandBelarus)areamongthefactorsintendedtocontributetotheimplemen-tationofthisgoal.ThetermsofeconomicrivalryinCentralAsiaaredictatedbyChinaandareclearlyfavourableforthiscountry–thepoliticalframeworkwith-inwhichthisistakingplaceseemstobemoreandmoreatvariancewithreality.

Asseenfromtheperspectiveofthetwopastdecades,China,incomparisontoitsAsiancompetitorsvyingforinfluenceintheregion,hasperformedreallywell:TurkeyandIran,whichhavebeenplayingthecardofculturalcommu-nitywithCentralAsiancountries,areplayingaverylimitedrole,asisthein-fluenceofIndiaandPakistan,forwhomthemainmotivationweretheircal-culationsregardingsecurity.Noneofthesecountrieshavemanagedtobuildastrongpolitical,economicormilitaryposition,andnoneofthemisplayingamajorpoliticalroleintheregion.

TheUSachievementsandpositionintheregionarestillanopenquestion.Ontheonehand,despitecleareconomic(includingtheexpansionofUSenergycompanies,especiallyinKazakhstan),political(theUSAhasbecomeasignifi-cantpoliticalreferencepointinCentralAsia,especiallyintheareaofsecuritypolicy)andmilitarysuccesses(USarmedforceshavebeenpresentinthere-gionsince2001),USpolicyappearstobelosingmomentum.Americanpoliticalandmilitaryengagementseemstohavereacheditspeakin2005,whenCentralAsiancountriesstartednoticingitssideeffects29,andnow,astheISAFmission

29 TheTulipRevolutionof2005inKyrgyzstanwasabreakthrough.ItwasseenintheregionasacoupplottedbytheUSA.ItwasfollowedbyarebellioninUzbekistaninMay2005(theviolentlysuppressedprotestsinAndijanandothercitiesintheFerganaValley),whichfrom

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isbeingwoundupinAfghanistan,itwillfurtherdecline.Economicengage-ment,includinganumberofinfrastructuralprojectsbackedbytheUSA(in-cludingaspartofCAREEC),hasalsofailedtotranslateintodurablebondsbe-tweentheregionandtheUSeconomy,whichwouldhaveprovidedgroundsforenhancingthepoliticalengagement.Asseenfromthisviewpoint,China’spo-sitionintheregionhasbeenrelativelygrowingascomparedtothatoftheUSA.However,ontheotherhand,consideringChina’sgrowingregionalandglobalambitionsandthefactthatitsrelationswithRussiahavebeennormalised,itistheUSAthatisbecomingChina’smainrivalasregardssecurityinCentralAsia.ThepresenceofUSmilitaryforcesintheregion(especially,theairbaseinManas,Kyrgyzstan)hasbeenperceivedasindirectlytargetedagainstChi-na. Inturn,America’sdetermination in itsefforts tocontinuetostrengthenitspresenceintheregiononcetheISAFmissioniswoundup(whichdoesnotmeanatallthattheAmericanswillnolongerbepresentinAfghanistan)hasgivenrisetogreatanxietyinChina.Furthermore,itisfearedthatthesitua-tionbothinAfghanistanandCentralAsiacoulddestabiliseasaconsequenceoftheweakeningWesternpresenceintheregionandthiscouldaffectChina’sre-gionalinterests.Theincreasingroomforco-dependenceandrivalrybetweentheUSAandChinaontheglobalscalewillcertainlybemanifestedinCentralAsia,andwillaffecttheChineseperceptionoftheregionandofUSpolicy.

4. the Chinese model of building its political position in Central asia

WhencomparedtoRussianorUSpolicyinCentralAsiaChina’spoliticalposi-tionintheregionisfarfromimpressive.Thiscanbejustifiedbycomparisonwith the spectacularmanifestations ofRussia’s andAmerica’s presence andengagement in thepolitical andmilitaryareas: the formalalliances (CSTO),economic(theCustomsUnion)andpoliticalorganisations(CIS),civilisationalbonds,militarypresence(includingUSbases),theinfluenceoninternalpoliti-calgamesinindividualcountries,etc.Formally,theSCOistheonlyregionalorganisationChinaisamemberof.Despiteitsenormousinterestinsecurityissues,Beijinghasnoneofthehardinstrumentsnecessarytobearinfluencein thisarea,and ithasbeenavoiding involvement indomesticgames in theregion’scountries.Nevertheless,Chinaisaveryimportantplayerinregion-al policy, primarily owing to its global significance and economicpotential.

Tashkent’spointofviewwasaneffectofUSpro-democraticpropagandaandattempt tointerferewiththecountry’sdomesticaffairs.Inthesameyear,Uzbekistanendedmilitaryco-operationwiththeUSAandNATO,andUSproblemsinKyrgyzstanandalsoinrelationswithRussiaintensified.

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Butthisisnotall:atypicallyChinesemodelofbuildingapoliticalpositioninagradualanddiscreetmanner(whichhasalsobeenobservedinotherpartsoftheworld)isemerginginCentralAsia,whichisdefinitelydifferentfromtheRussianandtheUSmodels.Fromtheperspectiveofthepasttwodecades,thismodelcanberecognisedasinternallycoherentandeffective.

the existence of the independent states which emerged from the rub-ble of the ussr has been the foundation of China’s presence in Central asia – supporting their existence and the governments which guarantee their existence has been a constant element of Chinese policy. ThishasbeenclearsincethecollapseoftheUSSR:Chinaimmediatelyrecognisedthesecountries’ independence and opened up to economic co-operation (primar-ilytrade).Its‘affirmative’approachtowardsthecountriesofCentralAsiahasbeenmanifestedthrough:thehighlevelofbilateralvisits,China’sinterestinsigningstrategicco-operationagreements,anditssupportforCentralAsiancountriesontheinternationalscene,especiallyintwoespeciallysensitivear-eas:thelegitimisationandthestabilityoftheregimes,andtheirindependencefromsuperpowers,especiallytheUSAandRussia.

China has consistently accepted and strengthened the rights of the coun-tries of Central asia to total freedom in creating their domestic situa-tion, andhasvehementlyopposede.g.theimpositionofWesterndemocraticstandardsor forcing themtorespecthumanrights.Thisproblemwasespe-ciallystronglyemphasisedafter2001,duringtheUSexpansionintheregionandattempts topush throughdemocratic solutions (anextremeexampleofwhichwasthesupportgrantedtothecolourrevolutions),whileChina(bothindividuallyandaspartoftheSCO)firmlydefendedthelocalregimesanditsowninternalstability.

OnespecialmanifestationofthisapproachwasthepoliticalsupportgrantedtoUzbekistanandPresidentIslamKarimovfollowingtheAndijanmassacre(May2005),whentheWest(includingtheUSA)wasinsistingthataninternationalin-vestigationintothemassacreneededtobelaunched,andtheEUimposedsanc-tionsonUzbekistan.Tashkentsawthisasdirectinterferencewiththecountry’sinternalaffairs.IntheweekswhichfollowedtheAndijanincidents,whileUz-bekistanwasbeingisolatedbytheWestandhaddifficultrelationswithRussia,ChinawasthefirstcountrytoacceptandbackIslamKarimov.

China’s relations with Turkmenistan serve as another vivid illustration ofitsapproach.China isacountrywhosestandardsareextremelyatvariance

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withtheWesterndemocraticstandardsandwhichisdistrustfuloftheexter-nalworld(aboveallRussia).HereChinahasconsistently turnedablindeyeonextremeshortcomingsregardingnotonlydemocracy,butalsotheruleoflaw.ThusithasbeengainingthetrustofTurkmenistan’sgovernmentandhasbeencapitaliseduponthisineconomicco-operationand,ineffect,inChina’sincreasinginfluenceonTurkmenistan’spolicy.

ThisapproachwhichChinatakestodomesticaffairsintheregioniscrownedwiththestrikinglymoderate stance it takes on internal political games in individual countries. Bycomparison,RussiaistreatedasastatewhichcantoasignificantextentcreatetheinternalsituationinCentralAsiancountries,proofsofwhichincludedthecivilwarinTajikistanin1992–1997andtheoust-ingofPresidentBakiyevinKyrgyzstanin2010.Russiaisalsoaconstantfactorbeingconsidered in thesuccessionscenarios inKazakhstanandUzbekistan(partlydue to its strongconnectionswith theoppositionand thegroupingsinside the government elite). The United States similarly has been accusedofinspiringtheTulipRevolutioninKyrgyzstan(2005)orthepro-democraticopposition (fromsupporting the freepressandNGOs tobackingpotentiallydemocratic parties, e.g. the Sunshine Coalition in Uzbekistan in 2004/05),i.e. of having a desire to gain direct influence on the local political scene.UnlikeRussiaandtheUSA,Chinahasneverbeenperceivedasapotentialpa-tronofanypoliticalgroupingintheregion.

beijing’s moderation in pushing through political and legal solutions or,morebroadly,promotingtheChinesevisionsforthemodernisationofCentralAsia,fitsinwiththisapproach.ThisisanotherfactorwhichmakesChinasig-nificantlydistinctespeciallyfromtheWest(open,thoughinconsistent,pres-suretoadopttheWesternmodelofpolitical,socialandeconomictransforma-tion)andalsofromRussia(cherishingtheelementsoftheSovietheritage,andosmosisbasedonparticipationincommonpolitical,economicandmilitaryor-ganisations).Ineffect,co-operation(especiallyeconomic)withChinadoesnotinvolvethesensationofadirectthreatbeinglevelledattheregionalregimesand is not conditioned by the policies the regimes adopt at home. Proofs ofthisincludeChina’sabilitytoco-operatewithcountriesfollowingsuchdiffer-entdevelopmentmodelsasTurkmenistanandKazakhstanand,ontheotherhand,thecontinuityofco-operationwithallthegovernmentsinKyrgyzstan,regardlessoftherevolutionsin2005and2010.

Anotheraspectof the ‘affirmative’policy towards theregion is thediscreet support for individual countries in case of tension in relations with

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russia or the usa:Chinahasoffereddisinterestedandbenevolentbacking.ThiswastheovertoneoftheaforementionedpoliticalsupportforUzbekistanin2005andthiswastheroleChinatookatthetimeofthechangeingovern-ment inTurkmenistan (theRussia-China-Turkmenistan talkswhichaccom-paniedthefuneralofSaparmuratNiyazovwereheldattheChineseembassyinAshgabat,whichwas ‘neutrallybenevolent forTurkmens’).Anespeciallyvividmanifestationofthiswasthefinancial,andde facto political,assistancegrantedbyBeijingtoAshgabatwhenthelatterhadfounditselfunderstrongpressurefromMoscowduringtheRussian-Turkmengascrisis(2009).AveryclearsymbolicsignofChina’ssupportforthedurabilityofthepoliticalorderinthepost-Sovietarea(andonedesiredbytheregion’scountries)wastheSCO’sstanceontheGeorgia-Russiawar(2008):thisorganisationdidnotrecognisetheindependenceofAbkhaziaandSouthernOssetia,whichMoscowwasin-sistingonandwhichthecountriesofCentralAsiawerereluctantto.SupportfromChinaallowedthemtostandtheirgroundindealingswithRussia.

AlthoughthepoliticalactivitymodeladoptedbyChinaoverthepasttwodec-adesisrelativelysuccessful(CentralAsiancountriesaretrustingChinamoreandmore,andare increasingly interested indevelopingeconomicco-opera-tion), itstilldoesnotguaranteeChineseinterests intheregionsecurityandsustainability.Chinaisunabletotakeanydirectactionincaseofmajorinter-nalcrises,especiallymilitaryconflicts,or–morebroadly–processesinwhichthemilitaryfactorplaysthedecisiverole.Thisfactorisofgreatsignificanceintheregion,wheretheriskofsuchconflicts–bothdomestic(e.g.theproblemwith‘militantIslam’andethnicconflicts)andexternal(e.g.threatsoriginat-ingfromAfghanistan,andthepresenceoftheUSandRussiaintheregionandwiththepossibilityofRussiausingforce;thisthreathypotheticallyalsoexistsinthecaseoftheUSA)–isquitereal.Beijinghasrealisedthisonseveraloc-casionsoverthepastdecade.ThefirstoccasionhappenedduringthemilitaryraidsbytheIslamicMovementofUzbekistan(in1999and2000),thenduringtheUSandNATOoperationsinAfghanistan(since2001),andfinallyatthetimeofthecoupsinKyrgyzstan(especiallyin2010)andtheviolentethnicconflictbetweenKyrgyzandUzbekpeopleresultingfromthelastcoup.IneachofthecasesChinahadnorealimpactonthesituation,despitethefactthatthebasicconditionforitsabilitytoinfluencetheregion,i.e.thestabilityandefficiencyoflocalgovernments,wasputatstakeinallofthesesituations.

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5. Central asian countries on China

ThespecialnatureofChinaanditspolicy intheregion(includingitspoliti-calandeconomicpotentialandtacticalminimalisminitspolicytowardstheregion) offers the countries ofCentralAsiano other choicebut tomaintainareactiveandconservativepolicytowardsBeijing.Furthermore,politicalre-lationsareafunctionofeconomicrelations.

Thisbecameawell-establishedstatus quooncetheproblematicborderissueshadbeensettled,theSCOhadbeenconstituted,andthecountriesofCentralAsia had accepted China’s key political interests. This status quo was testedinpracticebetween2001and2010,atempestuousdecadeforthisregion.NotevenoncedidChinatakeapoliticalstanceinthatperiod,nordidittakeactionthatcouldraiseconcerninCentralAsia.Asmentionedabove,Beijinghasonnumerousoccasionsofferedessentialpoliticalsupporttotheregionalregimes,andalsofinancialsupport,whichde factotranslatedintopoliticalsupport.

In currentpolitics, the countries of the regionhaveonnumerous occasionstreatedChina as a convenient counterbalance in their dealingswithRussiaand theUSA.Thehigh frequencyofvisitsbetweenCentralAsian countriesandChina,whichhavebeen focusedonbilateral co-operation,especially intheareaoftheeconomy,andwithnoelementsofpoliticaldispute,hasbeenaimedatprovingthatBeijingoffersanimportantalternative;primarilyfinan-cial,butalsopolitical.

However, given the positive atmosphere of current political co-operation(whichisevenmoretrueregardingeconomicco-operation),thewaybilater-al relationswilldevelop in the longer term is stillanopenquestion.This istheareawherethedifferencesinperceivingtheproblembyeachofthestatesshowupmostclearly.

The special features of the smaller states (especially Tajikistan and Kyr-gyzstan),theirpoliticalandeconomicweakness,andthefactthatcurrentin-ternalproblemsarepredominantintheirpolitics–allthiscausesthatitisdif-ficulttonoticeanypotentialinthepoliciesadoptedbythesecountriesortheambitiontocreatelong-termstrategiesfordevelopingrelationswithChina.

Thesituationlooksdifferentwhenseenbythelargerstates,whicharecompar-ativelybetter-establishedandhavepoliticalambitions (KazakhstanandUz-bekistan).Theyareforcedtomakelong-termplansduetotheneedtodevelop

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theenergysector(KazakhstanandUzbekistan,and–forslightlydifferentrea-sons–Turkmenistan). In thecaseof thesecountries, long-termcalculationsaremorenoticeable,andconcernscanbeseenalongsidethepositiveaspectsofdevelopingco-operationwithChina.Inpractice,thisboilsdowntoactionsaimedatthediversificationofbothenergyco-operation(allthecountriesaredevelopingenergyco-operationwithChina,andeachofthemhastakenactiontodevelopalternativeroutes),and–inthebroadersense–economicandpoliti-calco-operation.

InthecaseofKazakhstan,Chinaisakeypoliticalandeconomicpartneralong-sideRussia.Kazakhstan isopentoanykindofco-operationwithChina(es-peciallyintheareasofeconomyandtransport).Theirbilateralrelationsmaybetermedastrategicpartnership.However,inlinewiththedevelopmentofco-operationwithChina,Kazakhstanisbuildingakindofsecurityagainstbe-comingexcessivelyortooquicklydependentonChina.Oneexampleofthisisthedevelopmentofco-operationwiththeUSAandtheEU,andaboveallwithRussia,which isseenascounterbalance toChina.Kazakhstan’saccession totheCustomsUnionwassymptomatic,asthisprovidedAstanawithgroundsforrestrictingChineseeconomic,andconsequentlypolitical,expansion.

Uzbekistanhas treatedChinawithmuchgreater reserve.Despite the crisisinrelationsafter2005,Uzbekistanhasbeenactivelydevelopingpoliticalandmilitaryco-operationwiththeUSAandNATO,especiallyonthefoundationsoftheISAFandOEFoperationsinAfghanistan.Whiledevelopingeconomicco-operationwithChina(agaspipelineandtransportationprojects),Uzbekistanofall theCentralAsiancountriesisthemostactivelyengagedindevelopingeconomicco-operationwithEasternAsiancountrieswhichareChina’sde factocompetitors:SouthKorea, Japan,Malaysiaandothers; thisneeds tobe seenasasignofdistrusttowardsChina.However,UzbekistanistheCentralAsianstatewhichhasmoststronglybeenexpressingitsambitionsofbecomingin-dependentfromRussiainpoliticalandmilitaryterms,anditsgovernmenthasearnedareputationofbeingcapableofmakingsuddenturnsinforeignpolicy(balancingbetweenRussiaandtheUSA).TashkentisconcernedaboutbeingpossiblydominatedbyBeijing,butatthesametimecannotaffordtolagbehindtheotherCentralAsiancountries. It is thusset todeveloppoliticalandeco-nomicco-operationwithChina(oneproofofthiscanbePresidentKarimov’sproductivevisittoBeijinginApril2011).

ForTurkmenistan,Chinahasbeende factothemostimportantpoliticalpart-neroverthepastfewyears.Thisislinkedtodevelopingenergyco-operation

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and seriouspolitico-economic tensionswithRussia.However, following theeuphoriainrelationswithChinain2007–2009,Ashgabathassoberedup:thetemporarybenefitsofco-operationwithChinahavefailedtocompensateforthefinanciallossesresultingfromtheshrinkinggasexportstoRussiaandtheneedtoallocatepartoftheincomesfromgassalestoChinaforpaymentsfortheservicesrenderedbyChinesecompaniesengagedinTurkmenistan.Turk-menistan’spoliticalshifttowardsChinahasalsoturnedouttobeanillusion.Theshort-termbenefitgainedbyreducingitsdependenceonRussiawithChi-na’shelpposethethreatthatRussia’sdifficultpatronagewillbereplacedwithanequally inconvenientChinesepatronage.ThishasmotivatedAshgabat tosearchfornewpoliticalandeconomicpartners(thebestexampleofwhichisthefactthatTurkmenistanhasbeenlobbyingforagaspipelineprojectrun-ningtoIndiaandPakistan).Atpresent,however,therearenogroundstocon-cludethatAshgabathasfoundarealalternativetoChina.

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III. ChIna’s eConomIC PresenCe In Central asIa – the aChIevements of the Past two deCades

ChineseengagementintheCentralAsianeconomyhasbeenaimedatimple-mentingBeijing’sstrategicinterestsintheregionintheareaofsecurityinthestrictestsense, aswellastheeconomicsecurityofChinainvolvingsuppliesofnaturalgasanduranium.Giventhewiderangeofactionsandcloseconnec-tions,itiseconomicco-operationthatChina’spositionintheregionisbasedupon,includingitspoliticalposition.

Intheminimumoption,fromChina’sviewpoint,theeconomictoolsaremeanttopreventthecollapseoftheweakeststatesinCentralAsia,whilethemax-imumoptionprovides for theconstructionofa ‘welfarezone’ in theregion,thuscontributingtoanimprovementofitsstability.ThestabilisationofCen-tral Asia through economic development and achieving ‘welfare’ is in turnaimedatensuringstabilityinChina’sXinjiangprovinceowingtothecreationof economicbondsbetweenCentralAsia andXinjiang. Strong, consolidatedandwell-functioningstatesinCentralAsiawouldalsocreateabufferzonebe-tweenChinaandAfghanistan.Ingeopoliticalterms,Chinawantstouseeco-nomicco-operationtoreinforceitspositionintheregionandprovideabalancetoRussianandWesterninfluences.

However,economicco-operationwithCentralAsiaatpresentisofnostrategicsignificancefortheChineseeconomy:exportstoCentralAsiahaveamarginalshareinChina’sforeigntrade(lessthan1%in2012).Nevertheless,tradewithCentralAsia is of fundamental significance forXinjiang: in 2011, 78%of theprovince’sexportswenttoCentralAsiancountries30.

ChinaineconomicrelationswithCentralAsiais,then,focusedonachievingthreetangiblegoals.Firstly,itwishestocontinuedevelopingtraderelations,consideringthattheyareoffundamentalsignificanceforXinjiang.Secondly,itisinterestedinsuppliesofrawmaterialsfromCentralAsia(aboveall,naturalgasanduranium).Thirdly,itwantstoturntheregionintoatransmissionbeltforexportsofChinesegoodstotheWestandtheMiddleEast.

30 http://www.globaltimes.cn/content/722972.shtml

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1. regional differences in the level and nature of co-operation

Thelevelofeconomicco-operationbetweenChinaandthecountriesinthere-giondependsontheireconomicpotential,theleveloftheirfossilfuelresourcesandtheirsignificanceastransitcountries.TheinternalstabilityofeachoftheCentralAsiancountriesandtheirpolicyandattituderegardingco-operationwithChinaarealsokeyissues.

FromChina’spointofview,themostimportantoftheCentralAsiancountriesisKazakhstan,sinceuntilrecentlyitwastheonlycountryintheregiontohavesignedastrategicpartnershipagreementwithChina31.Kazakhstanhasenor-mouseconomicpotentialduetoitssignificantnaturalresources(oil,gas,ura-nium andmetals), geographic proximity, convenient transport connections(whichdonotrunthroughhighmountains,asisthecasewithKyrgyzstanandTajikistan),itspoliticalstabilityandtheessentialroleKazakhstanisplayingintheregion.Duetothis,economicrelationswithKazakhstanarethestrong-estandhavevastpotentialforfurtherdevelopment.

TheothertwoofChina’sCentralAsianneighbours,TajikistanandKyrgyzstan,aregivenfarlesssignificance.Kyrgyzstanplaystheroleoftheregion’scentrefortradeinChinesegoods,owingtoitsWTOmembershipandfavourablepo-liticalclimate.However,itsrolehasweakenedduetothedevelopmentoftradeandtheinfrastructuretosupportitbetweenKazakhstanandChina,andalsoduetotheemergenceofnewbarriersasaconsequenceofthecreationoftheCustomsUnion.Kyrgyzstanhasbeenattempting tomaintain itspositionasahubbyjoiningtheCustomsUnion.BothTajikistan(especiallysinceitsacces-siontotheWTO)andKyrgyzstancanpotentiallybehighlysignificanttran-sit countries in the transportofChinesegoodsandcanbecomeabridge forexportsofsuchgoodstotheotherCentralAsiancountries,AfghanistanandfurthertothePersianGulfandthecountriesoftheMiddleEast.

Inturn,theChinese-Turkmenco-operationisbasedsolelyonsuppliesofnatu-ralresources.TurkmenistanisseeninChinaasthemostimportantsupplierofnaturalgas,withpotentiallythegreatestcapabilityofincreasingsupplies.Forthisreason,andgiventherapidincreaseingasconsumptionandimportstoChina,relationswithAshgabatareofstrategicsignificanceforBeijing.

31 UzbekistanandChinasignedastrategicpartnershipdeclarationaslateasin2012.

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Uzbekistan isperceivedbyChinaas an important transit country forTurk-mengasandasourceofrawmaterials(gasanduranium).UzbekistanisalsothemostpromisingoutletforChinesegoodsintheregion,primarilybecauseithasthelargestpopulation.However,UzbekistanwasthelastCentralAsiancountrytoestablishrelationswithChina.IttookTashkentthelongesttimeofalltheCentralAsiancapitalstoembarkuponcloserco-operationwithChina.ItwasalsothelastintheregiontohaveacceptedloansofferedbyBeijing.Co-operationwithChinawillbecarefullychannelledandinpracticerestrictedbyTashkent(ascomparedtotheregion)asitwillcontinueaprotectionistpolicyonitsmarket.

AsregardsChina’sdirectinvestments,thekeytargetistheregion’sprimarysector. Therefore, a great part of the investments go to Kazakhstan and toalesserextenttoTurkmenistan.Chinahasalsobeenseentoinvestintelecom-municationandalsoinsectorslinkedtotradedevelopment(infrastructure).However, inpractice,Chineseinvestments inotherthantheprimarysectorarenotlargeanduntilnowhavefailedtoprovideastimulustomodernisation.

2. China’s ‘assets’ in the region and plans for development

2.1. Theoilandgassector

ChinahasbeenmostactiveandsuccessfulcountryinmakingeffortstogainaccesstorawmaterialassetsinCentralAsiaoverthepastdecade.China’sin-creasingpresenceintheregionhasledtoareductionintheroleofeconomicco-operationwiththeotherplayersengagedinCentralAsia(aboveallRussia)andtoamodificationofthesignificanceofthisrole.Theprimaryreasonsbe-hinddeveloping energy co-operation between the countries of CentralAsiaandChinaincluded:theirdesiretobecomelessdependentonRussia,theun-successfulWesternplanstobuildinfrastructurerunningfromCentralAsia,andthe increasingattractivenessofChinaitselfasaglobalplayerwithvasteconomicpotential.

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Table 1.China’skeyassetsintheCentralAsianoilandgassector(asof1January2013)

Purchase date

share owner

kaZakhstan

key upstream assets (companies, shares in projects) Production in 2012

AktobeMunaiGaz1997-2003

85% CNPC

6.1milliontonnesofoil,3.7billionm3ofgas

NorthBuzachi 2003 50% CNPC2milliontonnesofoil

KAMProject 2004 50%CNPCandChinaNorthIndustriesCorporation

0.7milliontonnesofoil

CNPC-Ai-Dan-Munai 2005 100% CNPC0.4milliontonnes

PetroKazakhstanKumkolResources(pleasenotethatCNPCsolda50%stakeintheShymkentrefinerytoKMG)

2005 67% CNPC6milliontonnesofoil(2011)

KarazhanbasMunai(NationsEnergy)

2006 50% CITIC2milliontonnesofoil

Mangistaumunaigaz(therefinerywasexcludedfromthetransactionandtakenoverbyKMG)

200950%-2shares

CNPC

5.9milliontonnesofoil0.5billionm3ofgas

KazMunaiGasE&P 2009 11%ChinaInvest-mentCorp.

7.9milliontonnesofoil

Urikhtaufield 2011 50% CNPCExplorationwork(gas)

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minor upstream assets

EmirOil 100% MIEHolding130thou-sandtonnesofoil

KMKMunai 100%YukonEnergyHolding

90thousandtonnesofoil

Sazankurak 100%FirstInterna-tionalOilCom-pany(Sinopec)

93thousandtonnesofoil

PricaspianPetroleumCo.

100%FirstInterna-tionalOilCom-pany(Sinopec)

33thousandtonnesofoil

SagizPetroleumCo. 100%FirstInterna-tionalOilCom-pany(Sinopec)

160thou-sandtonnesofoil

AdaiPetroleumCo. 50%FirstInterna-tionalOilCom-pany(Sinopec)

138thou-sandtonnesofoil

CaspianInvestmentResources

50% Sinopec n/a

TarbagatayMunai(Zaysanfield)

49%GuanghuiEnergy

n/a

refineries Capacity

Shymkentrefinery 2005 50% CNPC5.25milliontonnesofoil

transport infrastructure Capacity

Kazakhstan-Chinaoilpipeline(Atasu-AlashankouandKenkiyak-Kumkolsections)

1997-2009

50% CNPC

12milliontonnes(withtheoptiontoincreaseto20milliontonnes)

TheKazakhsectionoftheCentralAsia-Chinagaspipeline(A,BandClines)–thetransitpipelineforgasfromTurkmenistan,Uzbeki-stanandinthefutureKazakhstantoChina*

2007 50% CNPC55billionm3ofgas

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2008 50% CNPC10-15billionm3ofgas

Zaysan-Jeminay 2013 100%GuanghuiEnergy

0.55billionm3ofgas

uZbekIstan

upstream assets (companies, shares in projects) status

5investmentblockslocatedinUstyurtandAmuDaryaregionsandintheFerganaValley,operator:CNPCSilkRoadGroup

2006 n/a CNPCExplorationwork

RehabilitationofoldfieldsintheFerganaValley

2008 n/a CNPC Exploration

TheAralSeaProject2006-2011

26.6% CNPC Exploration

TheMingulakProject 2008 50% CNPC Exploration

transport infrastructure Capacity

TheUzbeksectionoftheCentralAsia–Chinagaspipeline(theA,BandClines),operator:AsiaTransGasClineconstructioncost:US$2.2billion

2008 50% CNPC 55billionm3

turkmenIstan

upstream assets (companies, shares in projects) status

TheBagtyyarlykfieldontherightbankofAmuDarya

2007

PSA(thenumberofsharesisunknown)

CNPC

Theoutputissettoreach17billionm3ofgas

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taJIkIstan

upstream assets (companies, shares in projects) status

KulobPetroleumLtd. 201233.33%US$30mil-lion

CNPC(partners:Total,TethysPetroleum)

Exploration

kYrgYZstan

upstream assets (companies, shares in projects)

batkenneftegaz 2007 100% ChungCompany

refineries Capacity

kara-balta refinery (annual capacity at 850 thousand tonnes of oil), greenfieldin-vestmentcost:US$250million

2009-2013

99%ZhongdaChinaPetrolCompany

Toreach850thousandtonnesofoil

tokmok refinery** (annual capac-ity at 500 thousand tonnes), greenfieldinvestmentcost:US$60million

2012-2013

n/a

ChinaNaturalInvestmentHoldingCo.,Ltd.viaXinjiangNaturalEnergyGroupCo.,Ltd

Toreach500thousandtonnesofoil

source:Companywebsites,newsagencies,Argus*ChinahasnoshareinthecentralsectionoftheKenkiyak-Kumkoloilpipeline,whichiscontrolledbyKazMunaiGas.**http://www.trend.az/regions/casia/kyrgyzstan/2084714.html

2.1.1.ThecharacteristicsofChina’spresenceintheoilsector

ChinahasmanyoilassetsinCentralAsiabutisnotthelargestoilproducerintheregion.Furthermore,theassetsheldbyChinaareoldanddepleted,whichmeans that theshareChinesecompanieshave in theregion’soilproductionwillfallunlessnewacquisitionsaremade.TheimpressionthatChinesefirmswereexpandingwithout restraint in theoil sectorwasaneffectof the suc-cessful asset acquisition strategy, beginning in 2005,which resulted in therapidgrowthofChina’spositioninthissector.However,thisdoesnotmeanthatChinaisplayingadecisiverolehere.FromCentralAsia’spointofview,co-operationwithChinaofferstheopportunityfordiversificationofoiltransport

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routesandrecipients. In this context, it isbeneficial andhighly significant.FromChina’spointofview,oilsuppliesfromCentralAsiaaresupplementaryto the imports from other directions.Whatmakes this region important isthefactthatitenablesoilsupplybyland.Ifexistingtransportroutesarede-veloped,itssignificancecangrowfurther,butthiswillnevercompensateformaritimeoil supplies.China’spresence in theoil sector isprimarilya chal-lengetoWesterninvestors,whoareforcedtocompetewithChinesefirms.Inturn,thisisbeneficialforthecountriesintheregion.

AsregardsChina’sactivityintheCentralAsianoilsector,itispresentprimar-ilyinKazakhstanandtoaverylimitedextentinUzbekistan.ThefirstChineseinvestments in theregion’soilsectorweremade in the late 1990s.However,theChineseexpansionbeganinearnestinthesecondhalfofthefirstdecadeofthe21stcentury,whenallthemostimportantandlargestenergyassetshadalreadybeenallocatedmainlytoWesterninvestors.Symptomatically,Chinesecompanies hold no shares in any of Kazakhstan’s three largest fields (Ten-giz, Karachaganak and Kashagan), whereWestern investors are dominant.Chinese investments were disfavoured by the government of Kazakhstan,whichfearedBeijing’sexcessiveexpansion,andalsobyWesternenergycor-porationsunwillingtoco-operatewithChina(oneexampleofthiswaswhenWesterncompaniesblockedCNPC’sacquisitionofsharesintheKashaganFieldin200332).Thesituationchangedin2005,whenChina’sCNPCboughtsharesinPetroKazakhstan,acompanyregistered inCanada.This transactionush-eredintheexpansionofChinesecompaniesinKazakhstan,andopenedanewfieldforco-operationbetweentheKazakhstate-ownedholdingKazMunaiGas(KMG)andCNPC33.Regardlessofthis,Chinesecompanieswerestilldeniedac-cesstothelargestupstreamprojectsinKazakhstan.

Before2010,investmentsintheCentralAsianoilsectorweremadepredomi-nantlybythestate-ownedcompanyCNPC.In2010,theChinesegovernmentmodifieditsstrategyandencouragedsmallprivateandlittle-knownChineseenergyfirmstoinvestinCentralAsia(oneexamplewasthepurchaseofthesmalloilproducer,EmirOil,byMIEHoldingsinFebruary2011).Investmentsinsmallfieldsarealsomadebylargecorporationsactingviasmallcompanies,whicharenot explicitly associatedwithChinese capital inKazakhstan. Forexample,Sinopec isoperatingvia InternationalOilCo.This strategymeans

32 http://www.gasandoil.com/news/central_asia/f31ce0c64e6401dfbf15e9f3baa5364833 WhenCNPCwasbuyingPetroKazakhstan,itagreedtorelinquisha50%stakeintheShym-

kentRefinerytoKazMunaiGas.

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thatBeijingismakingeffortstouseKazakhstan’spotentialtoamaximumex-tent,andatthesametimefearspublicreluctancetowardsChinesecapital,andalsoincreasingnationalisminthepolicyadoptedbytheKazakhgovernmentintheoilsector,whichbearsgreatestimpactonlargeprojects.AstanawantsthestatetoregainstakesinlargefieldsattheexpenseofWesterncorporations,oneexampleofwhichwastheacquisitionofKashagansharesin2008.

TheestimatedshareofChinesefirmsinoilproductioninKazakhstanis22%oftotalproduction(dataasof2010)34,andislowerthanthatofUSfirmspresentinKazakhstan(24%).TheassetsownedbyChinesefirmsincludeoldandpartlydepletedfields,whileoilproductiongrowthinKazakhstanwillbegeneratedprimarilybythelargenewprojects,TengizandKashagan.Thismeansthat,un-lessnewacquisitionsaremade,theshareofChinesefirmsinKazakhstan’stotaloiloutputwillcontractand,accordingtotheOilandGasMinistry’sforecasts,will reach 11% in2020.Given thecontroversies linked toChina’spresence inKazakhstan35andthereluctanceofWesterninvestorstoco-operatewithCNPC,Astanahasbeenquitecautiousaboutfacilitatingfurtherassetacquisition inKazakhstantoChinesefirms.ThesaleofsharesintheKashaganFieldbyCono-coPhillipswillbeatestforthisapproach.Kazakhstanhasdecidedtoacquiretheshares(whichIndia’sONGCwantedtotakeover),anditcannotberuledoutthatitwillresellthesharestoChina’sCNPCinexchangefornewloans.ThiswouldbringafundamentalchangetoKazakhstan’sapproachtowardsco-oper-ationwithChina,andwouldmaketheimplementationoftheWesternplansfortransportingoilfromKashaganviatheCaucasusmoredifficult.

One consequence of intensifying Chinese activity in the oil sector and thegradually improving disposition of Kazakhstan’s government was the con-structionoftheoilpipelinerunningfromKazakhstantoChina(cf.mapno.1).Thisroutewasconstructedinstages,startingin2001,andwasfullylaunchedin2012.Thispipeline isrunningfromtheKazakhshoreof theCaspianSea,wherethelargestoildepositsarelocated,throughcentralKazakhstan(whereCNPCoperatesonthesmallerfields), toAlashankouontheKazakh-Chineseborder.TherouteisusedfortransportingbothKazakhoilandsmallamounts

34 ArticlebyKanatbekSafinov, secretaryat theOilandGasMinistryhttp://www.kmg.kz/press/company_news/publication/5935

35 This issue is frequently raisedby themediawhich are opposed to the government, andChina’simpactonKazakhstanisbeingmythologisedamongtheresidentsofthiscountry.Thisispartlyduetothegovernment’sfailuretoinformthepublicabouttherealpresenceofChinesebusinessinKazakhstan.

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ofRussianoil(transportedintransit).Itsannualcapacityis12million(2012)andistoberaisedto20milliontonnesofoilincomingyears.ThepipelineisusedbyChinaasasourceofrawmaterialforrefineriesinthewesternpartofthecountry,whichmeansthatitsdevelopmentdependslargelyontherateofXinjiang’seconomicdevelopment.

ThenewroutehasallowedAstanatodiversifyoilexports,andhasprovidedChinawiththefirstlandroutewhichenablestheimportofoilviaapipeline36.Nevertheless,ChinaisnotamajorrecipientofKazakhoil.In2012,suppliestoChinareached10.4milliontonnesofoil,whichaccountedfor15%ofKazakh-stan’stotaloilexports(10.9milliontonnesofoilin2011).ThismeansthatRus-siaisstillthemaincorridorfortransitofKazakhoiltotheEuropeanmarket,andEuropeisthemainrecipientofKazakhoil,primarilybecauseoftheattrac-tivepricesthere.FromChina’sperspective,oilsuppliesfromKazakhstanareatthemostsupplementarytooilimportsfromothersources.In2012,theshareofKazakhoilintotalChineseoilconsumptionstoodat2.3%,anditsshareinimportsreached3%.

However,inthelongerrun,Kazakhstan’ssignificanceforChinawillbegrow-ing,especiallyifthecapacityoftheoilpipelinerunningtoChinaisincreased.KazakhstanandRussiaaretheonlytwocountriesfromwhichoilistransport-edtoChinaoverland,whichisof fundamentalsignificanceforsecurityrea-sons;mostoftheoilimportedbyChinaistransportedbysea.ChinaisunabletoguaranteethesecurityofmaritimeroutesduetothefactthattheUSAisthedominantnavalpower.TheincreasingsignificanceofKazakhstanasasuppli-erofrawmaterialstoChinaisalsoverylikelytobestimulatedbythecontinu-inginstabilityintheNorthAfricanandMiddleEasterncountries,whichareimportantsourcesofoil imports forChina.Regardlessof this,givenChina’senormousdemandforoil,thesignificanceofKazakhoilinChina’senergybal-anceshouldnotbeoverestimated;itwillneverbeakeysupplier.

Atthesametime,thepossibledevelopmentofexportstoChinawilldependonAstana’sroutediversificationpolicyandalsouponthestanceAzerbaijantakes,sinceitwantstobeatransitcountryfortheKashaganField(from2018).ThusthedevelopmentoftransportroutestoChinawilladverselyaffectabovealltheprojectenvisagingoilexportsintheWesterndirectionviatheCaucasus(usingtheBaku–Tbilisi–Ceyhanpipeline).

36 RailroadoiltransportfromRussiawaslaunchedbeforethis.

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ThepresenceofChinesefirmsintheoilsectorposesaseriousthreattotheoth-erfirmsoperatinginKazakhstan(predominantlylargeWesterncorporations)mainlyduetothefactthatChinesefirms,bothstate-ownedandprivate,havesignificantly largerfundsandfacilitatedaccessto loans,andinvestments intheoilsectoraregrantedstrategicprioritybyBeijingandarebackedateverylevel.Since2005,ChinahasacquiredthelargestnumberofassetsinKazakh-stan,oftenwinningoutagainstotherbidders,includingRussianones.

2.1.2.ChinaonCentralAsia’sfuelandpetrochemicalmarket

Twonewareasofco-operationintheoilsectorwereactivatedin2012:therefin-ingofKazakhoilundertollingcontractsatChineserefinerieslocatedclosetotheborder,andtheimportofChinesepetroleumproducts.Thesupplyvolumeisstillmarginal:itreached25,000tonnesoffuelin2012,butin2013Kazakhstanisplanningtobuy0.5milliontonnesoffuelfromChina.TheKazakh-Chineseco-operationcoveringpetroleumproductsisaneffectofmisunderstandingsoverRussianoilsuppliestorefineriesinKazakhstan37andclearancesforRussianfuelimportedbyKazakhstan.Itappearsthatco-operationinthisareawillseeen-hancements,atleastinthemediumterm.Kazakhstaniscurrentlymodernisingitsrefineries;andthisprocessistobefinalisedwithinthreetofouryears’time.Untilthen,Astanawillbeunabletoreducethedeficitontheinternalmarketandwillhave to importpetroleumproducts fromneighbouringcountries. In thiscontext,co-operationwithChinaisstrengtheningAstana’spositioninnegotia-tionswithMoscowconcerningtherulesoftradeinoilandpetroleumproductswithintheCustomsUnion.Furthermore,RussiaisatpresentthekeysupplieroffueltoTajikistanandKyrgyzstan(andindirectlytoAfghanistan),whileKa-zakhstanandChinaseemtobeinterestedindrivingRussiaoutoftheseposi-tionsandinembarkingupontheexportofpetroleumproductstotheneighbour-ingcountriesbythemselvesinthelongterm.Kazakhstan’srecentinvestigationsintothepossibilitiesofbuildinga low-capacity(1–1.5milliontonnesannually)productpipelineclosetotheChineseborderisyetanothersignofthelong-termplansfordevelopingco-operationcoveringpetroleumproducts38.

Chinahasalsobeenmakingeffortstoinvestintheregion’srefiningsector.Itspres-enceisstillmarginal,however,andisrestrictedtoKazakhstanandKyrgyzstan.Kazakhstan’sgovernmentisunfavourablydisposedtowardsChinese(andmore

37 TheKazakhrefineriesinPavlodarand–toalesserextent–inShymkentimportRussianoilduetotheinfrastructuralconnectionsmaintainedsinceSoviettimes.

38 ArgusRynokKaspiya,6February2013.

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broadly,foreign)activityintherefiningsector,andismakingeffortstoregaintherefinerieswhichwereprivatisedattheonsetofthecountry’sindependence.ProofsofthispolicyincludedforcingCNPCtorelinquisha66%stakeintheShymkentRefinerytothestate-ownedcorporationKazMunaiGasduringtheacquisitionofPetroKazakhstanin2005,andexcludingthesharesinthePavlodarRefineryfromtheprocessofthesaleofMangistaumunaigazcorporationtoCNPCin2009.Ka-zakhstanhasadoptedaprotectionistpolicywithregardtotherefiningsector,andoneshouldexpectpressuretobeputonCNPCtosellbackitssharesintheShym-kentRefineryratherthanconsenttofurtherChineseinvestmentsinthissector.

Inturn,Chineseinvestmentsintheoilrefiningsectorareoffundamentalsig-nificanceforKyrgyzstan.Chinaisbuildingsmallrefinerieswhichrequirelowoutlays(cf.Table1)inKyrgyzstan;theircapacitywill,however,besufficienttosatisfythedemandforthelessadvancedfuelsonthedomesticmarket.ThenewrefineriesarelikelytoadverselyaffecttheinterestsofGazpromneft,thekeyfuelsupplieranddistributorinKyrgyzstan39,andwillthusdepriveMoscowofsomeinstrumentsofpressureonBishkekandimproveKyrgyzstan’senergysecurityandstability40.NorcanitberuledoutthatfuelproducedinKyrgyzstanwillbeexportedtoTajikistanandAfghanistansincethiswillofferChinagreaterop-portunitiestobearinfluenceintheregion.Thepossibilitiesofco-operationwithChinaonbuildingrefineriesarealsobeingcheckedbyTajikistan;thistopicwasraisedduringthevisitbyPresidentEmomaliiRahmontoBeijinginMay2013.

ChinaisalsoconsideringtheuseofrefineryinfrastructureinCentralAsiatorefineCNPC’sAfghanoiloutputandre-exportpetroleumproductstoAfghani-stan,whichisthemostattractivefuelmarketintheregionduetothehighpetrolpricesthere.China’sCNPChasenquiredintothepossibilitiestorefineAfghanoilattheFerganaorShymkentrefineriesinearly201341.Likewise,fuelsmanu-facturedinKyrgyzstancanbeexportedbyChinesecompaniestoAfghanistan.

Over the past few years, Chinese-Kazakh and the Chinese-Uzbek co-oper-ationhasalsoseenexpansionintothepetrochemicalsector42.Theco-opera-

39 GazpromneftsuppliesfueltotheManasbase.Thisfirmalsoownsthelargestchainoffill-ingstationsinKyrgyzstan.

40 TheimpositionofcustomsdutyonRussianpetroleumproductsandincreasingpricesonthedomesticmarketprecededtheoutbreakoftherevoltinApril2010.PresidentKurman-bekBakiyevwasforcedtofleethecountryasaconsequenceofthis.

41 ArgusRynokKaspiya,13February2013.42 AlthoughCNPChasacquireda33%stakeintheShymkentRefinery,Chinesecompaniesare

notpresentintheoilrefiningsector.ThisisprimarilyduetothefactthatAstanatreatsitas

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tionformulaisbasedonloansgrantedbyChinafortheconstructionofnewpetrochemicalplantsinexchangeforsuppliesofpetrochemicalproducts.Oneexampleofsuchco-operationistheUS$1.25billionloangrantedbySinopecfortheconstructionofthepetrochemicalcomplexinAtyrau(Kazakhstan)43.Fur-thermore,Sinopec isalsoasubcontractor inthisproject.CNPCisalsoplan-ningtobuildarubberproductionplantinUzbekistanandisofferingahighfi-nancialcontribution.ThisstrategyisaneffectofChinesecompaniesadjustingthemselvestotheconditionsimposedbytheCentralAsianstates,sincetheyareunwillingtoselltheirkeyassetsintheprimarysectors.

2.1.3.China’spresenceinthegassector

ThekeyplatformofChina’spresenceintheCentralAsianenergysectorisco-operation in thegassector,and itsmostessentialelement is thenewCentralAsia–Chinagaspipelinerunning throughTurkmenistan,UzbekistanandKa-zakhstan.ThisisthefirstinfrastructuralprojectsincethecollapseoftheUSSRtoconnectmostoftheregion’scountriesandinwhichtheyareforcedtoco-oper-atewitheachother.Thisisalsotheonlylargegasroutetohavebeenbuiltintheregionsince199144.ThelaunchofthegaspipelinehasfundamentallychangedthebalanceofpowerinCentralAsiatothebenefitofChinaandattheexpenseofRussia.ThisturnedouttobepossibleeventhoughChinahasrelativelysmallas-setsintheregion’sgasproductionsector.Itsforceisprimarilyaneffectofbreak-ingRussia’smonopolyongasimportsfromtheregionandtheincreasingsignifi-canceoftheChinesemarketforgasexportersinCentralAsia.

The gas contract signed with Turkmenistan (April 2006), followed by thelaunchoftheCentralAsia–Chinagaspipeline,whichwasbuiltatanexpressrate(2008–2009),wasaturningpointinChina’spresenceintheCentralAsiangassector45.Beforethat,ChineseplansfortheimportofgasfromCentralAsia(despiteeffortsstartinginthe1990s)couldnotbeimplementedduetosuchfac-

astrategicsectorasaconsequenceofconstantproblemswithfuelsupplies.ThiswasoneofthereasonswhyrefineryassetswereexcludedduringthesaleofMangistaumunaigazandacquiredsolelybyKazMunaiGas.Chinahasacceptedthis,andhasfocusedondevelopingitsownoilrefiningsectorinXinjiang.

43 http://www.universalnewswires.com/centralasia/viewstory.aspx?id=379044 TwogaspipelinesrunningfromTurkmenistanto Iranhavebeenbuiltsince 1991 inCentral

Asia.However,intermsofcapacity,theseprojectsareincomparabletotheChinesegaspipeline.Furthermore,theyhaveneverbeenusedatfullcapacity,andarenowfilledtoaround30%.

45 Thetotalannualcapacityofthetwogaspipelinebranchesconstructedin2009is30billionm3.Thethirdbranch,currentlyunderconstruction,willhaveanannualcapacityof25billionm3.

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torsas:resistancefromRussia,whichwastreatingtheregionasitsexclusivezoneofinfluence,theconcernthecountr