Date
16 October 2018

Xi boosts Central Asia ties with Silk Road economic belt

In calling for the rejuvenation of the nation through realization of the “Chinese Dream”, President Xi Jinping is also invoking another aspect of history – the ancient trading route known as the Silk Road, which led from China through Central Asia to Europe.

In Kazakhstan last month on a whirlwind tour of four Central Asian republics – the others were Turkmenistan, Uzbekistan and Kyrgyzstan – the Chinese leader urged the creation of a “Silk Road economic belt”.

“My home, Shaanxi province, is the start of the ancient Silk Road,” Xi said. Then, waxing lyrical, he added: “I can almost hear the ring of the camel bells and smell the wisps of smoke in the desert.”

Xi mentioned the travels of Zhang Qian, a Han dynasty official who, more than two millennia ago, traveled to what is now known as Central Asia to establish trade with the peoples in the region.

The Chinese leader’s words fell on receptive ears. President Nursultan Nazarbayev, who sat next to him as he delivered his address, agreed with him on building a Silk Road economic belt and on enhancing economic cooperation between his country and China.

In fact, Almaty, Kazakhstan’s largest city, already has a major street named after the Silk Road, as does Bishkek, the Kyrgyzstan capital.

While the old Silk Road derived its name from the lucrative trade in Chinese silk, the new route will likely be characterized by energy deals and the pipelines to carry oil and natural gas.

Already, during Xi’s September trip, business contracts were signed that amounted to almost US$100 billion, mostly in energy deals.

About US$30 billion in contracts were signed in Kazakhstan, including the construction by China of a refinery in the country.

A significant step forward for China was an agreement by Kazakhstan for China National Petroleum Corporation to become a stakeholder in the Kashagan offshore oil project. The Kazakhstan government chose CNPC over Indian National Oil Company to take over the 8.4 percent stake that ConocoPhillips was giving up in the Kashagan project, perhaps the biggest oil and gas field in Central Asia, from which China had been excluded in the past.

CNPC will join majors such as Italy’s ENI, France’s Total, Royal Dutch/Shell and ExxonMobil in the exploitation of the Kashagan field.

In addition, US$15 billion in contracts were signed in Uzbekistan and an estimated US$50 billion in Turkmenistan.

China also agreed to invest US$3 billion in Kyrgyzstan, including a new gas route from Turkmenistan to Xinjiang.

China’s trade with Central Asia has risen exponentially, rising from almost nothing little more than two decades ago to US$46 billion in 2012.

In the latest incarnation of the Great Game – the rivalry between Britain and Russia in Central Asia – China is clearly the frontrunner. The United States is a laggard, with no American president ever having visited the region, while Chinese leaders have visited the region multiple times, beginning with Premier Li Peng in 1994 and President Jiang Zemin in 1996.

In fact, in 2009, President Hu Jintao presided over the inauguration of a gas pipeline carrying energy from Turkmenistan through Uzbekistan and Kazakhstan to China. When the Chinese leader symbolically opened a valve, he was flanked by the three Central Asian presidents.

China is now Central Asia’s biggest trading partner, having overtaken Europe in 2010, and is also its main source of foreign investment.

Even Russia, which along with Turkmenistan, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan were component parts of the Soviet Union, has evidently been edged aside by China.

This was evident in a group photograph of the leaders of the Shanghai Cooperation Organization meeting in Bishkek on Sept. 13. The photo shows the Chinese leader to the right of the host, the Kyrgyz president Almazbek Atambayev, while the Russian leader Vladimir Putin is to the left.

While Xi is square in the center in the photograph, Putin is on the side, visual evidence of China’s dominant role.

China benefits strategically from having energy piped in from Central Asia rather than having to rely on oil from the politically unstable Middle East carried on tankers through shipping lanes that the Chinese have to depend on the United States to keep open.

While China is the recipient of energy, it has provided Central Asian countries with a non-Russian export route which has raised their bargaining power in price negotiations with Russia.

Similarly, China’s hand is strengthened in its negotiations with Russia over the prices of natural gas, which the Russians want China to pay for at prices similar to those paid by European countries.

Frank Ching opened The Wall Street Journal’s bureau in China in 1979. He is now a Hong Kong-based writer on Chinese affairs.

– Contact the writer at [email protected], Twitter: @FrankChing1

CG

Frank Ching opened The Wall Street Journal’s Bureau in China in 1979. He is now a Hong Kong-based writer on Chinese affairs.

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