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Win-Win or Zero-Sum Game: Relationship of China and Kyrgyzstan

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In the context of the economic relationship between China and Central Asian countries, mostly Chinese officials emphasize relations as a win-win cooperation. In the context of the win-win cooperation, Central Asian countries export their products and raw materials to China and attract investment and financial assistance from China for improving their infrastructure. In return, China exports its products to these countries, gain new market, diversify its export-import and energy routes and expand its economic influence through Central Asia. With regard to the Sino-Kyrgyz relations, we analyze their economic relations in order to see whether the two countries’ relations bases on win-win cooperation or zero-sum cooperation. If both of them relation basis on win-win cooperation, we may see that in the long term, two countries benefit from economic relations, increase their interdependency and improve their economy. In contrast to win-win, if the basis of the relations on zero-sum cooperation, we see that one side benefits from economic relations in the long term and increase its economic influence, but other side increase its dependency to another side and only benefit economic relation in the short term rather than the long term.

Since gaining independence in the 1990s, economic relations with China play an important role in the Kyrgyzstan economy. Kyrgyzstan was the first country among Central Asian countries that it was a member of WTO. Membership of WTO created a range of opportunities to country improve its economic relations with China. When China became a member of WTO in 2001, two countries’ trade flows increased quickly (Omuralieva, 2014: 81). Kyrgyzstan located strategic geography for China because it plays an important role in diversifying China’s export-import routes and provide a wholesale market for Chinese goods. Chinese officials always argue that Sino-Kyrgyz relations are mutually beneficial and base on win-win cooperation. In this essay, we especially pay attention to China-Kyrgyz economic relations in the context of trade, investment, and aid policy in order to explain the relations between two countries whether base on win-win or zero-sum cooperation.

Trade

Trade and economic cooperation play important role for the development of Kyrgyz-Chinese relations. Cooperation in this direction is carried out in the framework of the signed intergovernmental Agreements on trade and economic cooperation in 1998 and the establishment of the Kyrgyz-Chinese intergovernmental Commission on trade and economic cooperation in 1994.  China is the main trade and investment partner of Kyrgyzstan. China took the first place in trade and investment in the economy of Kyrgyzstan at the end of the 2016 and 2017. Trade between China and Kyrgyzstan is inherently unbalanced. Trade turnover between China and Kyrgyzstan was accounted for 1.597 billion US dollars in 2017. Export was 97.5 million US dollars, import – 1.500 billion US dollars(Embassy of the Kyrgyz Republic in the People’s Republic of China, 2018).Chinese exports to Kyrgyzstan consist of cloths, agricultural products, and light machinery while Kyrgyzstan’s exports toChina agriculture products and natural resources(Reeves, 2015: 122).

Besides, Chinese merchants play a dominant role with the trade network of Kyrgyzstan. Both Dordoi and Kara Suu bazaar are the large wholesale and retail market in Bishkek. Both bazaars due the low taxes and location plays key role for Chinese merchants. 75% of the goods of Dordoi bazaar and 85% of goods of Kara Suu bazaar come from China. Kyrgyzstan import China’s goods and re-export these goods to other regional countries. The monthly turnover of both Dordoi and Kara Suu bazaars were 331 million US dollars and 90 million US dollars respectively in 2012. We may say that these bazaars are the main motor of the Kyrgyzstan’s economy (Omuralieva, 2014: 86-87). Furthermore, China’s import of Kyrgyz products and raw materials also help to Kyrgyzstan to alleviate the impact of inflation (Tian, 2018).

In the context of the trade between two countries, despite the Kyrgyzstan’s gains as an importer and transporter of goods, Sino-Kyrgyz relations consist of the asymmetrical trade relationship. Firstly, last years, Kyrgyzstan textile and apparel sectors grow so fast and China play a key role in these sectors (Reeves, 2015: 122). Because cotton and wool are produced in Kyrgyzstan and export mainly China. In addition, due the lack of modern standards low quality clusters, Kyrgyzstan do not export these goods to developed countries or cannot compete other regional exporters such as China, Turkey and Korea but export to less developed western China’s cities, predominantly (Birkman, 2012: 24-25). Secondly and more importantly, Kyrgyzstan relies on China’s good for its commercial service sector because Kyrgyz traders has developed its commercial sector around the China’s imports which they re-export these goods to other regional countries, that is why, without Chinese imports, country’s service sector would collapse or lose its main sources for economic growths (Reeves, 2015: 122-123). According to Marlène Laruelle and Sébastien Peyrouse, Beijing has transformed Kyrgyzstan into a China-dependent economy that can survive mainly by re-exporting Chinese products (Omonkulov, 2020: 76).

Investment and Finance

China also play dominant role in Kyrgyztan economy in terms of investment and finance. Since 2001, China was the main source of the all FDI investment (Reeves, 2015: 123). Between 2006-2017, cumulative gross of Chinese FDI flow as equal to 2.3 billion US dollar and for this period China provided 25-50% of total FDI of Kyrgyztan, which is equivalen to 2-7% of the country’s GDP (Mogilevskii, 2019: 09).

Since 1990s, China mostly has been preferring to invest Kyrgyztan’s mining and oil sector. For example, in 2011, a Chinese company namely Zijin Mining purchased mine, which is located in Talas province in Taldy- Burak region and Chinese Full Gold Mine Company operated Ishtamberdy mine in Jalalabad province in the south part of Kyrgyzstan in the summer of 2011(Omuralieva, 2014: 90-91). In 2012, Chinese company purchased old paper factor and 20 hectares of land in order to construct oil refinery. The company will invest 70 million US dollars for constructing factories.  Furthermore, Chinese companies operate some 10 medium-sized mines producing gold-copper concentrate which is exported for refining to China(Mogilevskii, 2019: 10). In addition to mining sector, China also invests oil sector in Kyrgyzstan. For example, China financed two refineries in Kyrgyzstan, namely Kara-Balta and Tomok oil refineries. These refineries are supplied by CNPC-operated oil fields in neighboring Kazakhstan and produce 1.35 million refined products per year (Pradhan, 2018: 10). Moreover, China announced that it would provide $1.4 billion in FDI for constructing Kyrgyzstan-China oil pipeline (Reeves, 2015: 123).

In the context of the Belt and Road Initiative (BRI), China also prefers to invest infrastructure and energy project in Kyrgyzstan. In terms of infrastructure projects,the planned China-Kyrgyzstan-Uzbekistan railway and the North-South Highway, for which China’s Exim Bank has lent 400 million dollars for the construction of its first phase, are considered as one of the most ambitious transportation projects in Beijing’s Kyrgyzstan (Omonkulov, 2020: 72; Toktomushev, 2016: 02). By the help of the China-Kyrgyzstan-Uzbekistan railway, China has a chance to diversify its export and imports routes and also secure its energy routes. For Kyrgyzstan side, officials in the country hope that attract Chinese investment. In addition, Kyrgyzstan will gain 261 million US dollars per year as a transit country. However, the project has been postponed for years due to government debt and domestic political concerns in Kyrgyzstan. That is why, China and Uzbekistan introduced combined road-rail corridor – freight from China will be unloaded in Kyrgyzstan to reach the Uzbek section of the railway by road (CHOICE, 2021).Apart from railway project, China gave 60 million Yuan unreturned credit to Kyrgyzstan for the construction of China-Kyrgyzstan-Uzbekistan highway in 2011(Omuralieva, 2014: 83-85).

With regard to the energy projects, China has financed the construction of the Datka electricity substation and the 405-kilometer Datka-Kemin transmission line. These projects help to improve country’s energy system and reduce its dependence from regional countries (Toktomushev, 2016: 02; Mogilevskii, 2019: 09). For securing its energy security, China also try to diversify its energy routes. From this perspective, Kyrgyzstan play a strategic role for China. In the context of the China-Central Asia gas pipeline energy project, China decided to construct one of the routes, namely gas line D, through theKyrgyzstan. Construction of the gas line started in 2018. By the way of the this project, Kyrgyzstan take a benefit as a transit country (Akıncı, 2019: 88; Omuralieva, 2014: 88).

China’s investment in Kyrgyzstan have both positive and negative effects to country’s economy. From the positive sides, firstly, some of the Chinese project is under the construction and some of the is completed recently, that is why we cannot expect major impact on the countries production capacity but  we see these projects effects via comparison of the average annual GDP growth rates. A comparison of the average annual GDP growth rates in 2011-2017 and in 2000-2010 shows some increase from 4.2% per annum (2000-2010) to 4.8% per annum (2011-2017)(Mogilevskii, 2019: 12).There is no doubt that other factors also contribute the GDP growth but most Chinese investment increases share gross domestic products in Kyrgyzstan and affect positively to GDP. Secondly, improving the relationship with China contribute to Kyrgyzstan’s developing country’s total factor productivity (TFP) and help to country to develop an export-oriented economy, better market linkages. Moreover, China’s investment creates new jobs for local people.Furthermore, China’s investment inindustry of Kyrgyzstan inject energy to landlocked country’s economy and promote flexible and innovative entrepreneurial development in Kyrgzystan. One of the example is emerging sewing industry in Bishkek (Tian, 2018).Finally, Chinese investment contribute to improve Kyrgyzstan’s infrastructure.

Aid and Loan policy

Most of China’s assistance to Central Asian countries mostly consist of the soft loans (i.e. concessional or low-interest loans below market rates, which do not contain grant elements – and government- backed or subsidized investments in infrastructure and natural resources). Compare to the Western assistance, China’s assistance gives a great advantage to donor such asincreased access to energy resources and lucrative contracts for Chinese companies. Due the bad governance, poverty and instability, Kyrgyzstan is one the country that receive largest share of Chinese assistance. China is the one of the most important for Kyrgyzstan in terms of concessional loans and grant aid. China is the largest concessional loans provider to Kyrgyzstan which is account for more than 60% of the country’s planned funding between 2013 and 2016. Most of China’s loans and aid design to improve infrastructure projects, such as North-South highway or China-Kyrgyzstan-Uzbekistan railway. For example, China pledged 3 billion US dollar loans for infrastructure development. China is also main sources for the Kyrgyzstan in the context of the aid. For instance, China gives 16 million US dollar to Kyrgyzstan between 2000-2007 (Reeves, 2015: 123-124). In addition to the assistance for improving infrastructure, China also sends aid for building school and hospital, as a result of which, new and existing schools and hospitals benefit from improvement and upgrading of specialist equipment, technology and logistics. Finally, China also sends aid to Kyrgyzstan for reconstructing of the residential areas of Southern Kyrgyzstan which were affected violent ethnic riot in 2010 (Bossuyt, 2019). 

Firstly, China’s aid to Kyrgyzstan help to country improve its infrastructure and break landlocked geography. Furthermore, improving of infrastructure also create a chance to Kyrgyzstan diversifies its export and import routes. Secondly, sending aid for modernizing or building new hospital and school may increase people’s lifestyle and contribute to education of younger people. Finally, China’s aid also helps to country upgrade its electricity generation plants and transmission line. Developing electricity system contribute to the energy independence of Kyrgyzstan.

The fast development of Kyrgyz infrastructure by the way of the massive inflow of resources resulted in the growth of Kyrgyzstan’s debt burden. China also main creditor of Kyrgyzstan. Kyrgyzstan’s debt to China reached 1.7 billion dollars or 44% of its total foreign debt (3.8 billion dollars) as of February 2018. At the same time, Kyrgyzstan borrowed a total of $ 4.5 billion from China’s credit line under the Belt-Road Project (Omonkulov, 2020: 75). Despite the positive impact of aid on Kyrgyzeconomy, growing debt also increase country’s dependency on China and lead vulnerable position versus China.

Conclusion

In the context of the Sino-Kyrgyz trade relations, despite Kyrgyzstan’s gains as an importer and transporter of Chinese goods, Sino-Kyrgyz relations consist of an asymmetrical trade relationship. Kyrgyzstan export mainly textiles and raw materials to China and import technological and manufactured products. Maybe Kyrgyzstan benefits from trade relations in the short term but, in the long term, Kyrgyzstan’s dependence on China increases. In addition, exporting mostly export raw materials to China, Kyrgyzstan does not improve its human capital and high skilled labor force. With regard to the trade relations, Sino-Kyrgyz relations seem to bases on zero-sum cooperation in the long term rather than win-win cooperation.

With regards to the investment, despite the contribution of Kyrgyzstan’s annual GDP growth rates and improve the total factor productivity and export-oriented economy, Chinese investment has different negative effects on the Kyrgyz economy. One of the main purposes of the Chinese investment in the mining, oil, and infrastructure sector is to increase the country’s extraction and export of natural resources. This creates a range of problems for the Kyrgyz economy. Firstly, these sectors provide fewer employment opportunities to the local population and increase short-term employment in the country, and most of the time Chinese companies prefer to use their own people for working compared to the local people.  Besides, the job creation of China’s companies is limited and they mostly avoid technology transfer to the country. This situation also prevents the improvement of domestic industry. Secondly, extraction of the natural resource improves the certain sector and contribute corruption and unequal distribution of the wealth in the country. Furthermore, Chinese companies also violate the environmental standard. Finally, these sectors vulnerable the external shocks and increase the state’s dependency on China. As trade relations, in the long term, China’s investment affects Kyrgyzstan negatively and only let to improve the specific sector, especially mining and oil sectors, and this situation prevent the country to diversify its industry. With regard to the investment, as a trade relation, Sino-Kyrgyz relations seem to the basis of zero-sum cooperation rather than win-win cooperation. 

Finally, in terms of the aid and loan policy, despite China’s aid and loans help to improve Kyrgyzstan’s infrastructure and develop its industry, it used to try to secure access to mining sites such as gold, ore deposits, and rare earth elements. Furthermore, it tries to involve in the exploration and development of gold deposits in the country. Despite the high unemployment rate in Kyrgyzstan, Chinese loans also promote Chinese firms for using Chinese equipment and laborers. Besides, China’s cheap and handy loans increase Kyrgyzstan’s dependency and vulnerabilities on China. This situation also causes to enhance China’s political and economic influence.

To sum up, in the context of the trade, investment, and aid and loan policy, despite the different positive impacts, Sino-Kyrgyz economic relations basis on asymmetrical economic relations and in the long term give the advantage of China over Kyrgyzstan in the context of the economic influence. As a result, take the example of the trade, investment, and aid and loan policy, we think that two countries’ economic relationship basis on zero-sum cooperation in the long term, rather than win-win cooperation, in contrast to China’s officials’ claims.

Reference

  • Birkman, Laura. (2012), “Textile and Apparel Cluster in Kyrgyzstan”, Boston: Harvard Business School.
  • Embassy of the Kyrgyz Republic in the People’s Republic of China. (2020), Trade and Economic Cooperation, https://mfa.gov.kg/en/dm/Embassy-of-the-Kyrgyz-Republic-in-the-Peoples-Republic-of-China/Menu—Foreign-/–uslugi/Trade-and-Economic-Cooperation/RC
  • Mogilevskii, Roman. (2019), “Kyrgyzstan and the Belt and Road Initiative”, University of Central Asia Institute of Public Policy and Administration, No. 1, p. 1-25.
  • Omonkulov, Otabek. (2020), “China-Central Asia Relation in the Context of the Belt and Road Initiative”, BölgeselAraştırmalarDergisi, Vol. 4, No. 1, p. 45-115.
  • Omuralieva, Alia. (2014), China-Kyrgyzstan Relations, Hacettepe University Institute of Social Sciences, Master’s Thesis, Ankara.
  • Pradhan, R. (2018). The Rise of China in Central Asia: The New Silk Road Diplomacy. Fudan Journal of the Humanities and Social Sciences, 11(1), 9-29. doi:10.1007/s40647-017-0210-y
  • Reeves, Jeffrey. (2015), “Economic Statecraft, Structural Power, and Structural Violence in Sino- Kyrgyz Relations”, Asian Security, Vol.11, p. 116-135.
  • Toktomushev, Kemel. (2016), “Central Asia and the Silk Road Economic Belt”, University of Central Asia Institute of Public Policy and Administration, No. 1, p. 1-5.
  • Emil Avdaliani. (2021, January 20). How China is Breaking Central Asia’s “Geographic Prison”. Retrieved January 29, 2021, from https://chinaobservers.eu/how-china-is-breaking-central-asias-geographic-prison/
  • Tian, Hao. (2018). “China’s Conditional Aid and Its Impact in Central Asia”, (Laruelle, M.), China’s Belt and Road Initiative and its impact in Central Asia. Washington, D.C.: The George Washington University, Central Asia Program, p. 21-34.
  • Bossuyt, Fabienne. (2019). The EU’s and China’s development assistance towards Central Asia: Low versus contested impact. (n.d.). Retrieved January 30, 2021, from https://www.tandfonline.com/doi/full/10.1080/15387216.2019.1581635

Yunis Sharifli graduated with a Bachelor of Arts degree in International Relations from the Azerbaijan State Economic in 2020. At the moment, he is studying at the University of Bologna for his Master's Degree. He was an intern at the Topchubashov Center. He is currently an intern at the Caucasian Center for International Relations and Strategic Studies (QAFSAM). His areas of expertise cover China’s foreign policy in the context of the Central Asia and South Caucasus and also the Belt and Road Initiative.

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The CSTO and the U.S. in Central Asia

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Image source: Aram Nersesyan / Sputnik / RIA Novosti

The Collective Security Treaty Organisation (CSTO) is becoming more active amid growing instability in the wider Eurasian region. Imangali Tasmagambetov, who became CSTO secretary general at the beginning of this year, has met with the secretaries of the Security Councils of Russia, Belarus, Kyrgyzstan and Tajikistan, as well as with the heads of member states (except Russian President Vladimir Putin).

Tasmagambetov might have come to Yerevan as well, but they have recently tried to distance themselves from the CSTO. This year, Armenia refused to host the “Unbreakable Brotherhood” exercise and also decided not to take up the quota of deputy secretary general of the organisation.

Tasmagambetov is tasked with examining the difficult operational environment. On the western flank of the CSTO, there is a growing external threat from Ukraine and Poland, which could draw Belarus into a conflict between “the West” and Russia; in the southeast, there is the possibility of renewed conflict on the Kyrgyz-Tajik border and a growing Afghan factor. All this could have a negative impact on collective security.

On the European track, the urgent tasks of preventing and defending against aggression will first and foremost be handled by the regional grouping of troops from Belarus and Russia, which has been deployed since 2022.

As to the border problem between Kyrgyzstan and Tajikistan, the Russian expert Alexander Knyazev believes[1] that the CSTO should focus on demilitarization of the “conflict” areas and take them under the control of the Organization’s monitoring group and peacekeeping contingent. It is likely that Tasmagambetov visited both republics with these proposals.

The Afghan problem is multifaceted and requires a unified approach among the CSTO member states to curb it.

In addition to exploring challenges and threats in CSTO areas of responsibility, Tasmagambetov began promoting the topic of military-economic cooperation[2] among CSTO member states.

At a meeting with Russian Minister of Industry and Trade Denis Manturov, he suggested forming multilateral cooperation among military-industrial complex enterprises of CSTO countries to jointly develop and produce weapons and military equipment and establish service centres for their maintenance and repair.

Military and economic cooperation within the CSTO is an important component of integration, since it implies not only equipping the armed forces with the latest weapons, but also developing military engineering in all CSTO states and, importantly, maintaining common arms standards.

Tasmagambetov’s initiative will update the Concept for Standardisation of Armaments and Military Equipment within the CSTO, i.e. it will launch the work of defence enterprises under unified technical standards, ensuring compatibility of armaments on various parameters.

In addition, the CSTO itself is gradually being modernised. Ratification of the documents is underway, which will allow the military alliance to interact more effectively with the UN. Once ratification is complete, the CSTO will be able to form peacekeeping contingents and conduct operations under the auspices of the “coordinating state” with a UN mandate.

In February 2023, Russian Foreign Minister Sergey Lavrov announced[3] that the CSTO was developing peacekeeping capabilities. He noted that “on Kazakhstan’s proposal we are making an addition” to the Agreement on CSTO Peacekeeping Activities, “because it says that CSTO peacekeeping forces are deployed by agreement and with the sanction of the UN Security Council. In Sergey Lavrov’s opinion, this norm is redundant and he believes that only an appeal by one of the member states to the Collective Security Council is sufficient.

Looking at the text of the Agreement on the Peacekeeping Activities, Article 3 notes that CSTO peacekeeping operations are authorised by the Collective Security Council (the CSTO body) if they take place on the territory of member states, as for example in Kazakhstan in January 2022, or by the UN Security Council if they take place on the territory of a non-member state of the CSTO.

The point of the forthcoming amendments to the CSTO documents, to which Lavrov referred, is that the CSTO could independently decide to conduct a peacekeeping operation on the territory of non-member states without consulting the UN.

It is not simply a question of stepping up CSTO activities. Increased instability in wider Eurasia points to the ineffectiveness of the universal global institutions for conflict prevention and resolution, which is the UN Security Council. At least in the form in which it currently exists. Therefore, the CSTO is now probably seen by the political elites of the member states as the basis for an autonomous regional security system.

It is not a question of a permanent break with international institutions such as the UN. The format of interaction with them will remain, and this is what the provision of a “coordinating state”, which will act under a UN mandate, is introduced for.

There is a risk that a peacekeeping operation will be vital, but the UN mandate will be blocked in the Security Council by some other countries. This is why the CSTO is planning to expand its mandate to carry out politico-military activities beyond the borders of its member states.

It is clear that it is not about distant “peacekeeping marches”. The CSTO is interested in the situation in neighbouring states where collective security may be threatened. If we talk about Central Asia, it is Afghanistan, from the territory of which militant groups can begin to carry out military and terrorist acts against CSTO member states.

The revival of the former Soviet-era cooperation between the defence establishments of the CSTO countries, which the Secretary General recently updated, may be aimed at creating a resource base for this autonomous security system in the region.

To prevent the development of military-economic and military-technical cooperation within the CSTO, the United States has initiated a discussion that Russia will at some point be unable to supply Central Asian countries with ammunition and weapons for border protection because of the ASW. In particular, US Assistant Secretary of State for South and Central Asian Affairs Donald Lu stated[4] this. The former U.S. ambassador to Kyrgyzstan noted that there is a debate on where the countries of the region could obtain defence equipment if needed, citing the United States, Japan and South Korea as possible arms suppliers.

Washington clearly understands that the revival of the military industry within the CSTO increases the level of independence of the member states. To prevent this, the U.S. is planning to get some CSTO member states put on the “arms needle”, possibly initially free of charge.

Armenia’s ‘special position’ in the CSTO is probably a phenomenon of the same order, which, according to some experts, is evidence of the desire of the country’s political elite to leave the Organisation. It is clear that this desire is motivated by the West, which seeks to prevent the emergence of an autonomous security system in our region. But according to [5]Yerevan expert Grigor Balasanyan, a country’s withdrawal from the CSTO would not be in the interests of the Armenian people.

So far, with the exception of Armenia, the other CSTO members have demonstrated their readiness for further evolution of the organization, which may be joined by other states. For example, Serbia and Afghanistan are currently observer countries at the CSTO Parliamentary Assembly. In addition, the SCO has a strong interest in developing cooperation with the CSTO, as these organisations have many overlapping lines and areas of responsibility.


[1] https://www.eurasiatoday.ru/expert-opinions/12769-одкб-разместит-миротворческий-контингент-на-территории-кыргызстана.html

[2] https://inbusiness.kz/ru/last/tasmagambetov-vyskazalsya-o-sovmestnoj-razrabotke-vooruzhenij-v-stranah-odkb

[3] https://ria.ru/20230202/odkb-1849206032.html

[4] https://tass.ru/mezhdunarodnaya-panorama/17221079?utm_source=yxnews&utm_medium=desktop&utm_referrer=https%3A%2F%2Fdzen.ru%2Fnews%2Fsearch%3Ftext%3D

[5] https://verelq.am/ru/node/123321

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Competition of U.S.-China in Central Asia & its Implications for Pakistan

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USA China Trade War

US-China rivalry will affect various states, which have good relations with both (China and U.S). After the disintegration of the Soviet Union, China and the U.S. have been ambitious in strategically influencing the Central Asia region. Belt and Road Initiative (BRI) is a part of China’s grand strategy in Central Asia, which has intensified the importance of this region. Further, China’s influence in this region has increased through regional organizations such as Shanghai Cooperation Organization (SCO). Pakistan is an important pivot of China’s regional strategy. China-Pakistan Economic Corridor (CPEC) is the flagship project of China’s BRI. However, US’s grand strategies are phase 1.0 policy to 2.0 policy and C5+1 (Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Turkmenistan with the United States of America) is also part of the US’s grand strategy in Central Asia.

China’s connection with Central Asia can be traced to an ancient times, but established during the Soviet. In 1992, the Ashkhabad summit intensified China’s role in this region.

China joins this region through Xinjiang, an autonomous region with a majority Muslim population. It also falls into the Central Asian region. Xinjiang shares its border with three Central Asian states (Tajikistan, Kyrgyzstan, and Kazakhstan).

The collapse of the Soviet Union curtailed security threats to China’s national security from Central Asia. However, in 1991, the victory of the US in the Gulf War and the emergence of the New World Order was an alarming situation for China. This situation pressed China to discover a role, particularly in regional affairs in newly born states of Central Asia.

In the New Great Game, China has comprehensively increased its national strength politically and economically and has influenced this region culturally. China has utilized classical geopolitical concepts, reviving the Old Silk Road, and divide and rule strategy. Silk Road is China’s identity, which connects Asia and the West by the terminus in Xinjiang.

In 2002, Former Secretary of the State Colin Powel once remarked in House Foreign Affairs Committee that we would enhance our presence and interest in Central Asia that we had not dreamed of before.

US grand strategy falls into two phases towards Central Asia. 1.0 Phase means to protect Soviet Weapons of Mass Destruction (WMD), protect the sovereignty of newly born states from Russian aggression, to break Russian monopoly over transit routes and gas pipelines. In this phase, the US should have paid more attention to its geopolitical approach towards Central Asia and had fewer priorities in this region.

11 September 2001 brought huge changes in US strategy towards Central Asia, and it introduced the 2.0 phase, which means that the agenda of the US towards Central Asia is political and economical. However, the military prevailed over this policy due to US’s military presence in Afghanistan, conducting an operation against terrorism. The US has utilized this policy for military cooperation in this region.

Strategic competition between U.S. and China will directly impact Pakistan’s national security at the broader level, such as economy, military and politics.

At the political level, it impacts Pakistan’s relations with China, Iran, Russia, and the Gulf States. At the military level, Pakistan’s geostrategic location enhances Pakistan’s importance. Pakistan has been an important ally of the US against the war on terror and played its role as a frontline state against this war. At the economic level, China-Pakistan Economic Corridor (CPEC) is a game changer for Pakistan’s economy. It will create opportunities for the economy of Pakistan.

The bigger challenge for Pakistan is how it can maintain its relations with China and the US. Pakistan needs help to maintain good relations with both (US and China). If we see a historical perspective, in the 1970s, Pakistan built a bridge between US and China. Strategic affairs experts strongly believe that Pakistan can defuse the tension between the US and China.

Pakistan has few policy options through which Pakistan can maintain its good relations with both countries.

China is Pakistan’s strategic partner, which addresses Pakistan’s regional strategic concerns in all fields, such as defense, economy, politics and security sectors. CPEC has formed strategic interdependence. Pakistan cannot afford to be the part of the US’s grand strategy to contain China.

Good Pak-US relations are required for regional security. These are guarantors to bring peace in Afghanistan and can counter terrorism and extremism in this region. It is difficult for Pakistan to uncouple from the US. However, the US has a great influence on IMF and World Bank. Pakistan is in negotiation with IMF to get a loan. The US can assist Pakistan with IMF. However, Pakistan has serious concerns over Indo-US growing strategic relations, creating an imbalance in the South Asian region. India is utilizing Indo-US strategic relations as a tool against Pakistan, which concerns Pakistan’s national security. However, good Pak-US relations depend on the US that how it wants to conduct its relations with India and China.

The last option for Pakistan is that it should only place some eggs in one’s basket. Pakistan needs diversifying approach towards all major powers. Although it would be difficult for Pakistan, Pakistan can maintain its relation through an issue-based relationship. It will not affect Pakistan’s relations with anyone rather than choosing one side. This option would protect Pakistan’s regional strategic interests and address Pakistan’s security concerns. 

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The Strategic Importance of Central Asia and India’s influence in the Region

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Long-standing historical, cultural, political, and economic ties between India and Central Asia have evolved into a solid, experienced, and transformative connection over time. In light of the COVID-19 epidemic and the shifting global order, India’s proximity to and growing convergence on concerns with the five Central Asian nations of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan has led to increased collaboration on these issues. The two sides have simultaneously intensified their discussions and cooperation on issues like trade and connectivity, economic development, energy security, regional concerns of shared interest, and the shared geopolitical worries of both sides regarding new challenges in Afghanistan.

Trade significantly impacts India’s relationships and influence in the Central Asian Region. India’s trade with Central Asian countries helps to foster economic ties and strengthens political and cultural relations. India’s imports from the area, such as oil, gas, and minerals, provide the country with access to critical resources. In contrast, its exports, such as textiles and agricultural products, give the region market access.

Geostrategic Importance of the Central Asian Region

Central Asia is strategically important due to the location at the crossroads of Asia and Europe, making it a critical link between the two continents. The Region also has significant energy reserves, including oil, natural gas, and coal, making it a substantial energy supplier to Europe and Asia. Central Asia is also home to several major transportation and communication networks, including the historic Silk Road, connecting the Region to the rest of the world and making it a hub for trade and commerce. The Region’s proximity to several regional and global powers, such as Russia, China, and India, further highlights its strategic importance.

Central Asia is strategically located in the middle of both Asia and Eurasia. It connects Asia and Europe as a bridge between Eastern and Western nations. Central Asia’s importance is acknowledged due to its geopolitical, geoeconomic, and geostrategic position. The Central Asian states have historically been a centre of trade, rivalry, and warfare due to geography. It now serves as a bridge connecting North and South and East and West. In addition to its strategic location, the Central Asian Region is also seen by outsiders as the new global geopolitical and economic battleground. Over 2000 years of conflict have been etched into its history as the past great empires struggled to control the Silk Route, the vital trade route between Europe and Asia.

India’s Policy for growing its potential in the Central Asian Region

India’s trade with Central Asia also has the potential to help balance China’s growing economic influence in the Region. India has been actively pursuing a policy of economic engagement with Central Asian countries and working to increase investment, trade and energy ties with these countries. Several factors, including energy security, access to raw materials, and regional economic integration, have driven India’s engagement with the Region. India has made efforts to increase trade and investment flows with the Central Asian countries, which includes establishing trade agreements and participating in regional economic forums. Regional politics, competition with other major powers such as China, and regional security have also influenced the trade relationship. By engaging in trade with Central Asia, India can tap into the Region’s resources, enhance its economic footprint, and contribute to regional stability and prosperity. Drug trafficking, fundamentalism, and religious extremism threaten the strength of these communities and the wider area. Water, security, environmental, and immigration issues have all become urgent. The Region is threatened by more recent acts of narcoterrorism coming from Afghanistan. Russia, China, the U.S., Turkey, Iran, Europe, the E.U., Japan, Pakistan, India, and Afghanistan are all claimed to have significant economic and security interests in the Region, making the area a “theatre of the great game” where this and other conflicts are being played out. A significant obstacle to fostering and growing ties is that India still needs to have a shared land border with any of these states. Direct travel from Pakistan to either Afghanistan or Central Asia is prohibited. Thus, China is the transit country for time- and money-consuming land trade. India has made significant headway towards enhancing connectivity by signing a security cooperation agreement for the refurbishment of Chabahar port, the creation of the International North-South Transport Corridor (INSTC), and accession to the Ashgabat Agreement. This gap is expected to be closed by India’s involvement in both the Eurasian Economic Union (EEU) and the Shanghai Cooperation Organization (SCO). 

The India-Central Asia Summit was presided over by Indian Prime Minister Narendra Modi in January 2022 in the presence of all five Central Asian heads of state. The online meeting showed India’s dedication to its “Extended Neighborhood Policy”, which mandates that New Delhi diversify its geopolitical allies and diplomatic objectives, as well as its readiness to cooperate with its Central Asian partners on several fronts.

Overall, trade helps to position India as an essential player in the Central Asian Region and contributes to its regional and global significance. More interaction is anticipated to enhance regional economic growth and mutual security. Economically, Central Asia offers India’s industry a “near abroad” market, overland links to the Middle East’s and Russia’s rich resources, and considerable energy supplies at comparatively close ranges. Suez and the Mediterranean Sea are both shorter than the INSTC corridor route. This Region is projected to become more significant as competition with China for resources increases.

The increased trade can also help India to reduce its dependence on other areas for energy supplies and increase its bargaining power in the global market. It aimed at improving the flow of goods, services and investment between the two regions and also to tapping into the vast energy resources of Central Asia. Additionally, more significant business can lead to infrastructure development and job creation, thereby improving the economic conditions in both regions. However, it also faces challenges such as competition from other countries and the need for a well-developed transport and communication network in the area.

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