Daily Times

Last month, the President of
China, Xi Jinping, visited four Central Asian countries before attending the 13th summit of the Shanghai Cooperation Organisation (SCO) in Bishkek. During these visits, Mr Xi discussed plans of mutual cooperation that would bring billions of dollars of investment to the region. The trip is regarded as a Chinese ploy to open up a modern silk road that will serve as the beginning of a new era of economic cooperation between Eurasia and East Asia with China at the helm. The visit also manifests China’s increasing influence in a region that was once dominated by Russia. With its robust Central Asian policy, China is swiftly displacing not only Russia but also the US in a region that, only a decade ago, found itself at the bottom of China’s priority list.

It will be very premature to suggest that the US and Russia have been completely ousted from the region. However, China, at this point in time, is focusing exclusively on mutually beneficial development projects while staying clear of the region’s domestic affairs.

In the past, the US and Europe proposed several plans for laying pipelines that will bring Central Asian gas to Europe. China, however, took the lead and, during the past few years, constructed a comprehensive system of pipelines across the region, which will supply Central Asian gas to China. The Chinese National Petroleum Company (CNPC) has also developed the world’s second largest gas field in Turkmenistan. The project was jointly inaugurated by Turkmen President Gurbanguly Berdymukhammedov and Chinese President Xi Jinping. Presently, China has become the biggest importer of Turkmen gas. By 2020, the volume of Turkmen gas exports to China will be doubled. The additional gas will be carried through another pipeline that will traverse Uzbekistan and Kyrgyzstan.

Chinese triumphs in the region have been further enhanced by Kazakhstan’s formal approval to sell 8.33 percent shares of the Kashagan oil field to the CNPC. The Chinese president also inaugurated the Beineu-Bozoi pipeline in Kyrgyzstan, which will begin supplying gas to China in 2015. Not to be left behind, Russia is also clamouring to finalise deals for selling Siberian gas to China. A basic agreement has been reached between the two countries for supplying 38 bcm of gas on an annual basis, though a final price still needs to be agreed upon. China is buying Central Asian gas at less than half the price that Russia charges from Europe. There is no reason why China should pay more for Russian gas. The Russians are afraid that if a final deal does not materialise soon, they will get nothing out of the Chinese pie.

The development of gas pipelines has helped China establish a wide-ranging trade partnership with Central Asia that covers a diverse array of goods and services.

The SCO summit in Bishkek has affirmed China’s aggressive strategy for the SCO. China’s multilateral approach to the region differs greatly from the Russian and western attitude, which used global and regional organisations as a means of promoting their own interests. On the contrary, China has strictly restrained itself from either implementing restriction on its trade partners, or meddling in their internal socio-political affairs. China’s main objective is to strengthen the SCO and foster a ‘Silk Road’ spirit in its members.

India is another country that is feeling the pinch of Chinese expansion in the region. India’s Connect Central Asia policy was designed to develop economic ties with the region, and simultaneously, marginalise Pakistani and Chinese roles therein. The main flaw in the Indian design was that it excluded Russia from its policy. As a result, India has experienced a series of setbacks, mainly at the hands of the Russians. First, Russia effectively pushed India out of Kyrgyzstan by offering a lucrative military package to the country. The Russians also snatched the Tajik airbase of Ayni from India. Last month, India received another blow in the form of a loss of 8.3 percent stakes in the Kashagan oil fields. The prize was grabbed by China’ CNPC.

India has also seen similar setbacks in Turkmenistan where it had pinned great hopes on the Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI). TAPI was supposed to carry Turkmen gas across Afghanistan and Pakistan to India. While the TAPI pipeline is still in the planning stages, China’s CNPC has already developed and launched the world’s second largest gas field in Galkynysh. China’s growing clout in Turkmenistan has jeopardised the future of the TAPI project.

Presently, India’s only option of getting a foothold in Central Asia is through Uzbekistan with which it shares significant strategic interests. Uzbekistan lies to the north of Afghanistan and is deemed to play an important role once the Americans leave the embattled country. Moreover, the success or failure of India’s North-South Transit Corridor (NSTC) also hinges on Uzbek cooperation. The NSTC corridor is a grand project that will start from the Iranian port of Chabahar to the Zaranj-Delaram highway across Afghanistan. Uzbekistan will serve as the corridor’s outlet to Central Asia. India has already poured billions of dollars into NSTC. Uzbekistan, however, is currently courting Washington with the aim of developing closer ties with the US and NATO. Apparently, India is not one of Uzbekistan’s priorities at this moment. The failure of India’s Connect Central Asia policy has exposed the vulnerability of its grand NSTC project. It seems that the great project will, in the end, become a considerably less significant constituent of a vast SCO corridor that will stretch all the way from the Baltic to the Pacific. Such a corridor will be controlled and managed by China and its SCO partners.

With India effectively out of the picture, Russia is no longer in a position to counter China’s economic encroachment into Central Asia. The US, on the other hand, needs Chinese support in order to keep the post-withdrawal situation in Afghanistan stable. This situation has opened up several prospects for China to increase its influence in Central Asia. China, on its part, seems to be taking full advantage of this opportunity.

The writer is an investment banker and a freelance columnist for various publications. He can be reached at syedatifshamim@hotmail.com