The Role of Central Asia in the “One Belt—One Road” Initiative

Iran and the Caucasus 23 (2019) 283-298

Irina V. Kokushkina; Maria A. Soloshcheva St. Petersburg State University NRU Higher School of Economics, St. Petersburg

Abstract The “New Silk Road” or “One Belt–One Road” (also “Belt and Road”) is a global project ini- tiated by China, the implementation of which affects various areas of development of many states and regions of the world, including security issues, socio-cultural, political, diplomatic and civilisational aspects. A total of 173 agreements with 125 states and 29 international organisations have been signed under this initiative. The project is gaining momentum every year and attracts ever more researchers who analyse the economic, political, and cultural sides of the project and the interaction of the different countries and regions with China within the framework of this global enterprise. This article assesses the participation of five Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan) in the Chinese project and aims to define the mutual interests of the parties on the basis of economic indicators (i.e., ESI, RCA, TDC, and G-L indexes).

Keywords Central Asia, People’s Republic of China (PRC), One Belt–One Road, New Silk Road, Eco- nomic Belt of the Silk Road, Economic Relationship

INTRODUCTION On September 7, 2013, Chinese President Xi Jinping in the capital of Ka- zakhstan, Astana, proposed the idea “to join forces and on the basis of in- novative methods of interaction, to create an economic zone of the Great Silk Road, to make economic ties between the Euro-Asian countries closer” (Xi 2013). This was the first announcement of the initiative, which became widely known as the “New Silk Road” or “One Belt–One Road” Ini- tiative (hereinafter, OBOR), called sometimes also “Belt and Road Initia-

Downloaded from Brill.com09/29/2021 01:13:23PM via free access 284 I. V. Kokushkina; M. A. Soloshcheva / Iran and the Caucasus 23 (2019) 283-298 tive”. The implementation of this project affects various areas of development of many states and regions of the world, including security issues, socio-cultural, political, diplomatic and civilisational aspects. A total of 173 agreements with 125 States and 29 international organisations were signed under the OBOR initiative by March, 2019 (Xinhua 2019). The project is gaining momentum every year and is attracting ever more researchers who analyse the economic, political and cultural aspects of the project and the interaction of the different countries and regions with China within the framework of this global enterprise. Five countries of Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan) play an important role in the Chinese project. Alt- hough their economies are far from being in leading positions in the world market, the People’s Republic of China (PRC) is constantly increasing investments in this region, regarding them as important strategic partners, especially within the new OBOR initiative. In this article, the authors aim to determine the prospects of the participation of the Central Asian (hereinafter, CA) countries in the Chinese project, formulating the following objectives of the study: 1. To determine what factors influence the development of relations between the CA countries within the framework of the Chinese initiative and what interests guide them in the development of trade relations. 2. To analyse the economic indicators of the Central Asian countries and China and to determine the trends in the development of their bilateral trade relation, including the Revealed Comparative Advantage Index (RCA), the Trade Combining Density Index (TCD), the Export Similarity Index (ESI), and the Grubel and Lloyd Index(G-L). 3. To consider the interests of each of the five Central Asian countries and identify the factors determining their interests in participating in OBOR.

1. MAIN IDEAS AND FEATURES OF THE INITIATIVE 1.1. Emergence of the Concept of the New Silk Road At the end of the 20th and the beginning of the 21st century, China initi- ated the revival of the Great Silk Road (hereinafter, GSR). Why was this global economic project of the 21st century proposed not as a new initiative, but as a reconstruction of the previously existing trade route? Let us determine the historical significance of the ancient Silk Road to make it clear.

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The GSR was one of the greatest trade routes in history and played an important role in the development of relations between different states for more than a thousand years. From the 2nd century B.C. to the 17th century A.D. this trade route contributed to the development of world trade and the economies of individual countries, as well as processes of internationalisation and globalisation. In the course of its development, the routes of the GSR changed and expanded. There were two main routes that connected East and West: - North—from the north of China through CA, the Pamirs and the Aral Sea to the Lower Volga and the Black Sea Basin. - South—from Northern China through CA to Northern India and the Middle East (Islam 2019: 5). The trade along these corridors influenced: 1. The development of the economies of regions and individual states. The intensification of international trade contributed to the development of a number of major cities that served as transit points: Tabriz, Bukhara, Sa- markand, Khorezm, Otrar, Kashgar, Turfan, Khotan, and Dunhuang. Warehouses and hotels for merchants could be found in these cities. Thus, there appeared new trade-related specialties and new institutions responsible for the preservation of property rights of merchants. Moreover, trade in services and the process of urbanisation developed. 2. Active trade between countries led to the emergence of a system of monetary transactions that replaced the barter system that had previously existed (Latov 2010: 132). 3. While the GSR was still in existence, tax systems developed dynamically. In particular, when transporting goods across state borders, customs duties were charged (including in the Timurid era). 4. During the establishment of trade relations the rules of trade gradually formed, contributing to the development of various institutions in the world economy (and the foundations of international trade law, etc.). 5. In foreign lands, merchants tried to replicate life from back home by building temples in accordance with their religions and equipping their homes as they would in their home country. At the same time, they brought home not only unusual clothes, jewellery and household items, but also used new words and described their travels, thereby expanding the horizons of their fellow citizens. 6. Humanitarian and inter-cultural ties were established. An important factor of success was religious tolerance (when a long way from China,

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travellers met those who practised Buddhism, Judaism, Christianity and Zoroastrianism). It was necessary to be able to find a common language for everybody. 7. The history of the GSR largely developed under the influence of political factors that not only affected interregional relations, but also had geo- political significance (e.g., the fall and emergence of empires, the development of national states in Eurasia, etc.). Thus, the GSR had a significant impact on the development of not only international and regional trade, but also other types of economic relations, and political and humanitarian ties. By the 17th century, however, the GSR had ceased to exist. At the end of the 20th century, after a series of conferences, where all the advantages of the GSR were analysed, a group of countries decided to recreate the legendary route. On May 3, 1993, at a conference in Brussels, a declaration was signed on the formation of TRACECA, an international route passing from Europe through the Caucasus to Asia (Swietochow- ski/Collins 1999: 119-120). This route would run through such countries as Kyrgyzstan, Kazakhstan, Uzbekistan, Turkmenistan, Iran, Turkey, and Georgia. This transport corridor was named the “New Silk Road”. Further development of the concept of restoration of the Silk Road took place at the beginning of the 21st century: on September 7, 2013, as was mentioned, the Chinese President Xi Jinping in the capital of Kazakh- stan, Astana, proposed the idea of reviving the Great Silk Road for making economic ties between the Euro-Asian countries closer. Here, for the first time the project was referred to as “One Belt—One Road”. Its implementation in two directions included: the creation of the land route, the “Eco- nomic Belt of the Silk Road” (EBSR), and the sea route, i.e. the “21st Cen- tury Maritime Silk Road” announced in Indonesia. There are several fundamental objectives of the EBSR, which generally include the interests of the majority of the states that can participate in the project: 1. The possibility of coordinating plans and strategies for the political and economic development of countries and the creation of a programme for regional economic integration. 2. The establishment of the EBSR is proposed to contribute to the growth of mutual trade of countries by reducing or eliminating various types of trade barriers.

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3. Development and modernisation of transport links and infrastructure in the regions (Arvis/Rastogl 2014: 12). 4. The development of monetary relations between countries, namely the usage of national currencies in the calculations and the creation of regional financial institutions in order to reduce costs and risks. 5. Intensification of humanitarian contacts, promotion of inter-civilisational dialogue, and development of friendly relations between peoples (Grieger 2016). Thus, by creating a counterweight to the U.S. strategy for the organisa- tion of the Pacific Partnership in Southeast Asia, China emphasises the importance of taking into account historical traditions and the peoples’ identities.

1.2. Geography of the EBSR The EBSR includes six land corridors: China–Pakistan; Bangladesh– China–India–Myanmar; China–Central Asia–West Asia; China–Indo- china; China–Central Asia–Russia–Baltic; China– Mongolia–Russia; and three sea corridors (Liu 2018; about the sea routes, see Zhao 2015). Investments in infrastructure play a key role in the project: on the basis of already existing railways, China has created a dynamic system of regular freight trains together with European and Central Asian cities. Thus, an upgraded system of international trade began to operate along the traditional route of the Silk Road. China has been an investor in new rail links for the development of economic corridors, for example, in East- ern Europe and East Africa, Pakistan and Myanmar. Infrastructure facilities created in the framework of the initiative aim to improve local and regional linkages of countries that receive investment. In combination with the attempts of local industrialisation, reinforced by new opportunities for trade and exchange, and funded by China or otherwise, they will help to bring the local population out of the trap of isolation, poverty and marginality (Dong et al. 2019). The second international forum “One Belt—One Road” was held in Beijing on April 25-27, 2019. 37 heads of state and governments gathered in the capital of China. By the end of March 2019, within the framework of the OBOR, a total of 173 agreements with 125 countries and 29 international organisations were signed (see Map 1) (Xinhua 2019). The historical

Downloaded from Brill.com09/29/2021 01:13:23PM via free access 288 I. V. Kokushkina; M. A. Soloshcheva / Iran and the Caucasus 23 (2019) 283-298 significance and positive connotation of the project has been well “sold” to other countries, which willingly join the Chinese initiative, looking for economic well-being.

Map 1. OBOR agreements map (countries who signed agreements within OBOR are coloured in blue, CA countries who signed agreements—in green) It should be emphasised that the Chinese concept has as its main goal the accelerated development of the economy of China itself. Therefore, it is not by any means a charity project. By the extensive strengthening of contacts with countries along the route of the EBSR, China seeks to im- plement its foreign economic strategy, including increasing its role in regional integration. An element of the weakness of the Chinese economy during this time has been its dependence on foreign demand, since exports have always been unbalanced with respect to domestic demand. To maintain the dy- namics of the Chinese market, new investment programmes are needed that would provide new markets and activities for companies. Although China has quite a large number of partners, with the help of the OBOR, new markets in the Eurasian space for the export of Chinese goods are

Downloaded from Brill.com09/29/2021 01:13:23PM via free access I. V. Kokushkina; M. A. Soloshcheva / Iran and the Caucasus 23 (2019) 283-298 289 opening up. The PRC will strengthen and expand cooperation with many countries and create a network of mutually beneficial economic, social and political partnerships. The creation of free trade zones will greatly simplify and accelerate the work of trade mechanisms, which will also increase the capacity of the Chinese market. In China, poverty is rising from east to west. Economically unfavoura- ble regions of the country include Xinjiang-Uyghur, Ningxia-Hui, Guang- xi-Zhuang autonomous regions and Gansu and Yunnan provinces. The situation is compounded by the fact that ethnic and religious minorities in China live in these regions, some of which for historical reasons have a negative attitude to the Chinese government’s policies (Jeong 2015: 4-7). Attracting capital to these underdeveloped regions through OBOR projects may provide local people with jobs and a good level of income, which will reduce the gap in the living standards between the different regions of the country. The increase in job opportunities in Western provinces will also lead to a decrease in the flow of migrants to the over- populated megacities in China. The overall welfare of the country will eventually reduce social tensions and resolve security and terrorism issues, not only in China, but also beyond its borders (Zhou 2014: 21).

2. ANALYSIS OF ECONOMIC INDICATORS 2.1. General Information on the Trade Partnership between China and Central Asia In the 2010s, the CA region accounted for only about 0.3% of the world economy, and according to data for 2018, was about 1% of the world’s population. Nevertheless, more than 300 dissertations, articles and gradu- ation theses have been annually devoted to the participation of CA countries in OBOR in the last few years in China (CNKI 2019). Why is this region important for this project economically on the global scale? In the late 1990s, China’s investments in Central Asia did not exceed $1 billion and were limited to the oil and gas sector. Over 10 years (since 2007), the amount of investment has increased 20 times, and China has become the main investor in Central Asia (see Table 1).

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Exports of goods and GDP Easy of Imports of Exports of services Country/ Population (percentage Doing goods and goods and (Percentage indicators (mln of global Business services services of World (2017) people) indicators) Rank ($mln) ($mln) trade) Uzbekistan 32,387 0,06 76 11200 8380 0,05 Kazakhstan 18,037 0,197 28 30500 44100 0,27 Tajikistan 8,921 0,008 126 3040 939 0,005 No data Turkmenistan 5,113 0,05 available 3350 7100 0,043 Kyrgyzstan 6,201 0,009 70 5990 1920 0,011 CA 70,659 0,324 — 54080 62439 0,379 Table 1. General information on CA countries (UN Comtrade 2017) Despite the small economic development indicators (if compared to other countries), for other states, including PRC, CA is of considerable in- terest for several reasons: First, as a source of diverse raw materials: - Kazakhstan: oil, coal and ores of various metals—lead, zinc, copper, iron, gold and silver, uranium, rare earths, etc.; of the 110 elements of the periodic table, 99 are found in Kazakhstan and 60 can be extracted. - Turkmenistan: gas, oil, and metal ores. - Uzbekistan: oil, coal, gold and silver. Secondly, these countries have largely developed basic industries (created during the USSR period), such as mining, fuel and energy, metallur- gical and chemical industries. This allows investors “on the spot” to receive not only raw materials, but also intermediate products, like metals, coking coal, etc. Third, all CA countries have well-developed agriculture, which pro- duces both agricultural raw materials (Tajikistan and Turkmenistan— cotton) and high-quality food (Kazakhstan and Kyrgyzstan—grain, meat; other countries—vegetables, fruits, etc.). Fourthly, their geographical location in the centre of Eurasia allows optimum transport routes and connecting points, that is, their transit potential. Fifth, all CA countries have significant transport and communication

Downloaded from Brill.com09/29/2021 01:13:23PM via free access I. V. Kokushkina; M. A. Soloshcheva / Iran and the Caucasus 23 (2019) 283-298 291 networks (e.g., road networks, road infrastructure, etc.) created in the period of the USSR within the unified transport infrastructure of these countries (Tang 2018). For China, CA is primarily a source of raw materials. In addition, it is a vast market for goods. At the same time, China, buying raw materials, sells products with high added value to CA (e.g., machines, modern equipment, electronic products, weapons, etc.). For the purchase of these products China gives loans. Thus, the PRC “binds” itself to CA countries and increases their technological and financial dependence on its economy. China is actively building infrastructure facilities in CA and investing significantly in the development of transit routes for the implementation of future transportation on land along the EBSR. Since 2015, Chinese companies have been able to deliver goods to Iran via CA using their railway network. Thus, China is much more active and successful than other countries trying to “bind” the economies of the CA countries to its economic system by: - issuance of soft loans ($30 billion by 2016); - construction of infrastructure facilities; - increasing the amount of direct investment; - increasing exports of Chinese goods. One may have already heard the expression that the CA is already half “in the belly of the Yellow Dragon”. According to various forecasts, at about 2025 (and maybe even earlier) China may become the absolute leading economic partner of all the countries of CA (Čufrin 2012). At the same time, it should be noted that the concept of OBOR, while maintaining a balance of economic and political interests, can also balance these interests in the Russia – CA – China triangle by complying with the provisions of the declaration on the coupling of Eurasian integration and EBSR (2015).

2.2. Role of Individual CA Countries in EBSR and their Relationship with China

Country/ Imports from PRC Total trade with PRC indicators (2017) ($mln) Exports to PRC ($mln) ($mln) Uzbekistan 2 749,42 1 471,45 4 220,87

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Kazakhstan 11 564,44 6 378,69 17 943,13 Tajikistan 1 301,38 46,74 1 348,12 Turkmenistan 368,12 6 575,13 6 943,25 Kyrgyzstan 5 336,81 87,06 5 423,87 CA 21 320,17 14 559,07 35 879,24 Table 2. Trade between CA and PRC (National Bureau of Statistics of China 2018) For China, a key role in the project is played by Kazakhstan, which accounts for more than 50% of the total GDP of CA (Izimov/Muratalieva 2018: 135). In 2016, Kazakhstan ranked 16th in the world in terms of GDP out of a total of 191 countries. Moreover, this country accounts for 91.5% of China’s total direct investment in the countries of the Eurasian Union (Arvis/Rastogl 2014). What determines the leading role of Kazakhstan in the CA component of the Chinese initiative? First, Kazakhstan has the shortest transport corridor to Europe. Secondly, Kazakhstan is rich in raw materials and qualified personnel. Thirdly, it is a country with a stable political climate and a favourable investment market. For Kazakhstan, China, in turn, is the main export market. In addition, cooperation with Kazakhstan will allow China to establish political and economic relations with other Turkic-speaking countries. Kazakhstan is an important geostrategic partner with which China is actively developing relations. China is constantly increasing investments in this country; Kazakhstan exports to China chemicals, oil and other raw materials, including food. Kazakhstan is rich in natural resources, which China needs, so the scope for the development of trade is quite wide. Since 2005, China is the owner of PetroKazakhstan, the largest oil com- pany of the former USSR. Furthermore, in 2009, China acquired a share in MangistauMunaiGas (Šibutov 2012). China invests in energy projects and infrastructure and is one of the three main importers into Kazakhstan. The reason why Kazakhstan is interested in China is also quite obvi- ous. The country is landlocked, and China, on its border, is a market for raw materials produced in Kazakhstan, a political ally and a source of investment in infrastructure that will eventually reduce the cost of delivery of export and import products both from China and from many other countries along the EBSR.

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2012 marked the 20th anniversary of the official establishment of relations between China and Kazakhstan. Large-scale joint projects in the field of culture have begun and scientific contacts have expanded: projects for the interaction of talented youth, media and volunteer programmes, events, years of culture, cultural festivals, film festivals, tourism promotion weeks etc. have created a favourable background for the development of joint projects. China has begun annually to allocate 10,000 government scholarships for students from the countries along the EBSR and made obtaining visas easier. Moreover, mutual assistance has increased in attempts to neutralise epidemics and prevent AIDS, cancer, and malaria (Tursynbayeva 2018). By increasing soft power in Kazakhstan, China is enhancing the dependence of this country’s economy and strengthening its own political influence in the region. For Uzbekistan, China is the second largest importer. According to data for 2017, China exported to Uzbekistan products worth 2.75 billion dollars; the cost of imported goods, mainly gold and energy, amounted to 1.47 billion. Relations between the states are developing dynamically in the spirit of strategic partnership, as evidenced by the joint treaty of friendship and cooperation and the declaration on the development and deepening of bilateral agreements in September 2013. Of the 582 Chinese- Uzbek joint enterprises, more than 80 were established solely on the basis of Chinese investment (Kurbonov 2018). China has always had good relations with Kyrgyzstan characterised by both trade and economic and political dialogue within the framework of international organisations. China imports coal and other minerals from Kyrgyzstan, being the main importer of the country. Joint projects under the EBSR include, first of all, the development of infrastructure that will reduce the cost of coal supply. However, bilateral relations between China and Kyrgyzstan can hardly be called balanced: Exports to Kyrgyzstan are 500 times higher than imports, amounting to 5.34 billion as of 2017, with total trade amounting to $5.42 billion. Kyrgyzstan’s public debt to China is $1.8 billion (Jiang/Wang 2018: 129-130). To date, China and Tajikistan have signed about 200 agreements in the field of trade, health, agriculture, education, etc. The total amount of trade is small, with Tajikistan occupying last place in China’s trade with Central Asia with $1.35 billion. As in the case of Kyrgyzstan, Tajikistan’s imports

Downloaded from Brill.com09/29/2021 01:13:23PM via free access 294 I. V. Kokushkina; M. A. Soloshcheva / Iran and the Caucasus 23 (2019) 283-298 from China significantly exceed exports: $1.3 billion and $0.05 billion, re- spectively. Tajikistan imports consist mainly of electrical equipment, ma- chinery and other household goods. Tajikistan, like other CA countries, exports raw materials to China, such as aluminium, cotton, leather, etc. As of 2018, PRC was carrying out more than 50 large and medium-sized projects, mainly in the field of mining and processing of minerals and the development of agriculture and infrastructure. More than half of the Tajiki- stan's foreign debt ($1.2 billion) belongs to China. Experts note that a significant amount of multimillion-dollar investments back to China are already in the early stages of their implementation and are spent on the wages of Chinese workers, as stipulated in the terms of the contracts (Zaxvatov 2014). Relations with Turkmenistan are developing in a different manner.1 China’s share of exports from the country is 68% ($6.6 billion in monetary equivalent). Being the main supplier of gas to China, Turkmenistan is not among the number of countries that have signed with China agreements on cooperation in the framework of the EBSR. Moreover, Turkmenistan hardly imports any Chinese goods. Of the $6.94 billion total trade imports from China, it accounts for only $0.37 billion. Summarizing the above, let us note that in general, trade with all five CA countries accounts for a very small share of the Chinese economy (only about 0.87%). This is less than, for example, the volume of trade with Iran, which is 0.9% of China’s trade turnover. At the same time, Cen- tral Asia is an important geostrategic partner, as it supplies the raw materials necessary for the development of the backward western regions of China, represents a market for industrial products and serves as a transit zone for trade with countries in the Middle East.

2.3. Compatibility Indexes of the Economies of CA and China According to information from the U.N. Commodity Trading Database, the total amount of exports and imports between CA and China increased from $81.02 billion in 2007 to $199.83 billion in 2017. The average annual growth rate was 9.5%. The volume of imports from CA countries increased from $59.73 billion in 2007 to $100.32 billion in 2017, with an aver-

1 About Turkmenistan’s attitude to OBOR, see Shi 2016.

Downloaded from Brill.com09/29/2021 01:13:23PM via free access I. V. Kokushkina; M. A. Soloshcheva / Iran and the Caucasus 23 (2019) 283-298 295 age annual growth rate of 5.3%, and the amount of exports increasing over the same period from $21.29 billion to $99.51 billion, showing an increase of 16.7%. This steady growth suggests the constantly growing complementarity of the trade between China and CA. China is steadily increasing its role in the foreign trade of the CA countries. The share of trade with China in CA increased over last 10 years from 4.3% to 24.9%. PRC became the main trading partner of CA, while Rus- sia’s share fell to less than 10% (UN Comtrade 2017). When assessing the prospects for the development of trade relations between two countries or regions, two factors are usually examined: indicators of competition and indicators of trade complementarity. The most well-known methods used to assess the potential of trade between states and regions include the Revealed Comparative Advantage Index (RCA), the Trade Combining Density Index (TCD), and the Export Similarity In- dex (ESI). The ESI shows how similar countries and regions are in terms of exports. The lower the index, the more compatible the economies. From 2007 to 2017, this index between China and Central Asia declined steadily, showing a drop from 29 to 20 points (out of 100) (Jiang/Wang 2018: 129- 130). It is small in itself, which indicates low competition of the compared economies. In addition, it decreases from year to year, which means not only a decrease in the areas of competition, but also an expansion of the scope of possible cooperation. The RCA denotes the ratio between the export share of a specific commodity over the total export of commodities of a specific region or country and that of a specific commodity over the total export of commodities of the world. If the ratio is over 1, it means that a specific commodity of that country has revealed a comparative advantage, and vice versa. A study of the RCA index between CA and PRC was conducted by Chinese scientists Jiang Yu-ning and Wang Ya-li in 2018, taking into account the UN Comtrade SITC system of classification of goods and services (Standard International Trade Classification, Revision 3). Analysis of trends for 2007-2017 confirms that China dominates the exports of ma- chinery and transport equipment (i.e., capital-intensive production), while the main share of exports of CA countries is fuel and raw materials (i.e., resource-intensive production), which also indicates the comple-

Downloaded from Brill.com09/29/2021 01:13:23PM via free access 296 I. V. Kokushkina; M. A. Soloshcheva / Iran and the Caucasus 23 (2019) 283-298 mentarity of economies (Jiang/ Wang 2018: 133). Last years, the PRC began to intensify the import of food from CA. The experts’ analysis of the TDC index shows that China’s dependence on trade with Central Asia is gradually falling, and CA, on the contrary, is increasingly dependent on China (Tang 2018: 19-20). In the publications of Chinese analysts between 2016 and 2019, we can also find detailed calculations of the indexes for estimating the level of in- tra-industry trade of Grubel-Lloyd (G-L). The results show that the complementarity in the field of resource-intensive production (primary prod- uct trade) is relatively low, while the index of labour-intensive production that requires investment is high (see, e.g., Jiang/ Wang 2018: 131-133). Re- search reveals the expansion of space for potential cooperation in the production of industrial goods.

CONCLUSION The multi-faceted development of China’s cooperation with the CA countries is a prerequisite for the implementation of the OBOR mega-project. The analysis of the economic indicators shows that economic cooperation and trade growth are beneficial both for China and CA countries, as the indicators of competition in the field of foreign trade are low and tend to decrease. At the same time, the index of complementarity in foreign trade is high and shows potential growth. CA countries export mainly resource-intensive production, and import capital-intensive and labour-intensive production, in which China is specialised. Among the other factors determining the strategic role of the CA countries in the Chinese initiative, the most important are: - the need to develop infrastructure to reduce the cost of transit to the Middle East and, in the future, to Europe; - the need for the development of the poor western regions of China bor- dering on CA: providing these regions with raw materials and markets; - possibility to export Chinese labour force within the framework of infrastructure development projects; - strengthening of the PRC’s political influence on countries with Turkic- speaking populations and their assistance to its antiterrorism policy; and - the possibility of ensuring stability and regional security through the implementation of projects of the initiative.

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The aim of OBOR is that this Chinese mega-project will be the driving force for the development of trade and economic, cultural and other humanitarian ties between China and Europe and will involve in this process all countries located along the EBSR, as occurred earlier on the Great Silk Road, but with the new force of the new millennium. Countries entering into OBOR certainly receive benefits from participating in the projects by intensifying their foreign trade and receiving soft loans and investments. On the other hand, China, investing in multi-mil- lion projects, returns a significant part of the funds due to the conditions of use of their technologies and their labour force.

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