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China: The Dragon in Central Asia - PART 1: The hunt for friends, and oil

Despite its geographic proximity, China for the past century played only a marginal role in Central Asia. Economically, politically and culturally, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan were firmly in Russia's orbit. But independence in 1991 brought changes, among them the opening of the "Bamboo Curtain" to the East. Initially, it was shuttle traders bringing consumer goods from China who began to fan out across Central Asia. Then came big business and senior politicians. In just over a decade, China - with its booming economy and growing political clout - has become a major player in the region.

Chinese pop music blares from loudspeakers, mixing with the cries of Chinese traders at a busy local market. Welcome to China? No, in fact, we are in Kazakhstan's commercial capital, Almaty, at the Ya-Lian bazaar.

Since it opened in 1997, the Ya-Lian has become one of the city's largest market places, attracting thousands of shoppers to its stalls, which offer everything from household appliances and clothes to consumer electronics.

It is a scene repeated at hundreds of Chinese markets across Central Asia. Initially, the traders were locals bringing in scarce goods from just across the border to sell. But in recent years, they have been replaced by an influx of Chinese tradesmen who have set up more permanent shops and become a fixture of Central Asian urban life.

This street activity is just one sign of China's growing presence in the region. But at higher levels, Chinese officials and business leaders have been crisscrossing the region, signing cooperation agreements and contracts that aim to expand Beijing's foothold. China's interest in countries such as Kazakhstan and Turkmenistan is motivated to a large extent by its need for their energy resources. China's economy is booming, but its domestic oil and mining industries cannot keep pace with demand.

Chinese officials, as a result, have fanned out across the globe, including into Central Asia, in search of suppliers, as Xu Yihe, senior reporter with the Dow Jones News wires in Singapore, told RFE/RL. "Chinese oil companies are almost everywhere in the world," Xu said. "They're dispatching teams of oil experts to negotiate oil projects, especially upstream projects in Asia, the Middle East, Africa and North America."

Those efforts are beginning to bear fruit. In May, after seven years of negotiations, China and Kazakhstan agreed to build a 1,000-kilometer pipeline from Kazakhstan's central Karaganda region to China's northwestern Xinjiang region by the end of 2005. The pipeline will be a key link in a 3,000-kilometer project that aims to join China to the Caspian Sea. China has also offered to help Uzbekistan develop its small oil fields in the Ferghana Valley.

Chinese investment is also going into other energy resources, such as hydroelectric projects in Tajikistan and Kyrgyzstan, with scores of additional plans up for discussion.

Niklas Swanstrom is executive director of the program for contemporary Silk Road studies at Sweden's Uppsala University. Speaking to RFE/RL from Beijing, where he is a guest lecturer at Renmin University, Swanstrom said the quest for natural resources shapes China's policies in Central Asia, but the quest is not the whole picture.

China is rapidly emerging as a world power. In a decade or two, it might directly challenge the supremacy of the United States, Japan, and Europe. But before this happens, Beijing's leaders are trying to create a zone of friendly and stable countries around China's borders that will give them political support, as well as economic leverage in the future.

This has led Beijing to set up trade missions in every Central Asian country, invest in local enterprises, donate money to aid projects, and give a high profile to new organizations, such as the Shanghai Cooperation Organization that group the region's countries, plus China and Russia.

"The Chinese do want natural resources," Swanstrom said. "They do want oil and gas because China is in desperate need of these as its economy grows. But it goes deeper than that. They want to secure the borders. They want to make sure that Central Asia is a stable region. Because if Central Asia runs into military conflicts, it is likely to spread over to Xinjiang, China's westernmost province. And that would be a problem for the Chinese government. So part of this is to create stability in the Central Asia region because stability in Central Asia means stability for China. And also, it's in the Chinese interest to develop these markets, to create the infrastructure in Central Asia."

On the security front, Beijing has found eager partners in Central Asia's authoritarian leaders, who share its worries about Islamic militancy, as international affairs expert John Garver, a professor at the Georgia Institute of Technology in the United States, noted. "I think there is a meeting of the minds between China's leaders on the one hand and the leaders of the post-Soviet Central Asian states on the other. And cooperation in this area takes the form of intelligence exchanges, police cooperation, training of police, training of military forces, and the design of military operations targeting terrorist activities," Garver said.

Omurbek Tekebaev, leader of Kyrgyzstan's opposition Atameken (Motherland) Socialist Party, told RFE/RL that it was the US that involuntarily helped China expand its presence in Central Asia. He traced the rise to the September 11, 2001, terrorist attacks against the US. "After 9/11, the United States broke the old stereotype, sending its troops to Central Asia and the Transcaucasus," Tekebaev said. "When the US strengthened its position, China began to also show that it was interested in Central Asia. So, recently, the Chinese leadership told a meeting [of regional leaders] in Tashkent that it will invest about US$4 billion in the Central Asian countries. For example, Chinese leaders spoke openly about their intention to pay the full cost of about $1.5 billion for the construction of a highway from China to Central Asia, via Kyrgyzstan."

Swanstrom of Uppsala University said Russia's sometimes tenuous grip over the region has paved the way for outsiders, including the Americans, to come in. But the Chinese - because of their comprehensive regional economic and security interests - have been the most effective.

"It has to do with the Russian domestic weakness to a certain extent, and that gives the Chinese and many other actors - among them, of course, the United States and Europe - an opportunity to move in," Swanstrom said. "But the Americans and Europeans have not taken that opportunity to the same extent that the Chinese have."

Not everyone in Central Asia is happy about China's interest in the region. There is a latent fear, especially in the countries bordering China, that Beijing is hungry for land. And if that is the case, even a small immigration of Chinese to the region would swamp the local populations. Although it is vast in territory, for example, Kazakhstan's population of some 14 million people represents just over 1% of China's 1.4 billion people.

The charge is dismissed out of hand by Beijing officials. But Murat Auezov, a former Kazakh ambassador to China, was less than diplomatic when expressing his concerns. "I know Chinese culture. We should not believe anything the Chinese politicians say," Auezov said. "As a historian, I'm telling you that 19th-century China, 20th-century China and 21st-century China are three different Chinas. But what unites them is a desire to expand their territories."

Swanstrom was more optimistic. For now, Russia continues to enjoy a decisive cultural and economic advantage in Central Asia. But he argued that breaking this monopoly could serve the Central Asians well.

"It doesn't necessarily have to be a zero-sum game, but from the Central Asian states, there's also interest in decreasing the Russian influence and to have Chinese influence - maybe even Indian influence and American influence and European influence," Swanstrom said. "They have realized over the years that it's not good to have one dominant power in the region. They don't want it to be the Chinese or the Russians. They're trying to diversify the influence over the region, and they are very conscious about the fact that neither the Russians nor the Chinese would be the perfect actor to dominate the region."

The battle for oil
China is reaching out to Central Asia to feed its growing appetite for energy resources. Although some projects have languished for years, a new pipeline project from Kazakhstan may turn into China's first major Central Asian energy route. China is making inroads into Central Asia as its need for energy imports keeps climbing.

Spurred by an economy that grew by nearly 10% in the first half of the year, China has been seeking new oil sources in the region and around the world. China's oil imports have already soared by 34% this year. China has been an oil importer since 1996, but its recent economic boom has pushed it past Japan to make it the world's second-biggest oil consumer, behind the US. High demand has driven the country's state-owned oil companies into foreign markets that seemed too distant only a few years ago.

Under the Chinese government's "go west" policy, state companies have revived projects in Kazakhstan that have languished since 1997, when China National Petroleum Corporation promised to invest $9.5 billion in pipelines and oil fields thousands of kilometers from home.

Robert Ebel, who directs the energy and national security program at the Center for Strategic and International Studies in Washington, said the reason for China's involvement in Central Asia is prompted both by its higher domestic demand and its need to reduce the risk of relying on the Middle East.

"I think [China] sees that its requirements are going to be met in the future only through imports, and so they're just reaching out to wherever they can - whether it's Azerbaijan, or Syria or Russia or Central Asia, or Venezuela - to diversify these sources of imports, not only to diversify their sources of supply but how the oil gets to China," Ebel said.

Ebel said that Central Asia offers China land routes that reduce the vulnerability of depending solely on ocean transport. But so far, the returns from Central Asia have been small. For now, Kazakhstan is the only Central Asian country that exports oil to China. Kazakh oil shipments to China, which are sent by rail, account for less than 1% of China's imports. But that could soon change thanks to an agreement in May to build a 1,000-kilometer oil pipeline from Kazakhstan's central Karaganda region to western China.

Tomorrow: Other perils: Droughts and militants

Copyright (c) 2002, RFE/RL Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave NW, Washington DC 20036. Radio Free Asia contributed.

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