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CHINA’S BELT AND ROAD INITIATIVE AND ITS IMPACT IN CENTRAL ASIA Marlene Laruelle, editor Washington, D.C.: The George Washington University, Central Asia Program, 2018 www.centralasiaprogram.org China’s Belt and Road Initiative (BRI) was announced by Chinese President Xi Jinping in September 2013 at Nazarbayev University. It is therefore natural that, for its launch, the NAC-NU Central Asia Studies Program, in partnership with GW’s Central Asia Program, seeks to disentangle the puzzle of the Belt and Road Initiative and its impact on Central Asia. Selected from over 130 proposals, the papers brought together here ofer a complex and nuanced analy- sis of China’s New Silk Road project: its aims, the challenges facing it, and its reception in Central Asia. Combining methodological and theoretical approaches drawn from disciplines as varied as economics and sociology, and operating at both micro and macro levels, this collection of papers provides the most up-to-date research on China’s BRI in Central Asia. It also represents the frst step toward the creation of a new research hub at Nazarbayev University, aiming to forge new bonds between junior, mid-career, and senior scholars who hail from diferent regions of the world and belong to diferent intellectual traditions. Central Asia Program Institute for European, Russian and Eurasian Studies Elliott School of International Afairs Te George Washington University For more on the Central Asia Program, please visit: www.centralasiaprogram.org. © 2018 Central Asia Program, Te George Washington University. All Rights Reserved. Cover design: Scythia-Print. Typesetting: Elena Kuzmenok, Scythia-Print. No part of this publication may be reproduced or transmitted in any form by any means, electronic or mechanical, including photocopy, or any information storage and retrieval system, without permission from the Central Asia Program. ISBN 978-0-9996214-0-0 Washington, D.C.: Te George Washington University, Central Asia Program, 2018 Contents Acronyms v List of Figures vi List of Tables vii Brief Sketch of Belt and Road Initiative viii Introduction. China’s Belt and Road Initiative. Quo Vadis? Marlene Laruelle x PART I. CHINA’S BRI: MEANING, OPPORTUNITIES, AND CHALLENGES FOR CENTRAL ASIA Chapter 1. Te Potential and Pitfalls of Connectivity along the Silk Road Economic Belt Sarah Lain 1 Chapter 2. China in the Heartland: Te Challenges and Opportunities of OBOR for Central Asia Paulo Duarte 11 PART II. BRI’S ECONOMIC PROJECTS FOR CENTRAL ASIA Chapter 3. China’s Conditional Aid and Its Impact in Central Asia Hao Tian 21 Chapter 4. Chinese Loans in Central Asia: Development Assistance or “Predatory Lending”? Safovudin Jaborov 34 Chapter 5. Hegemonic or Multilateral? Chinese Investments and the BRI Initiative in Tajikistan and Kyrgyzstan Alexander Wolters 41 Chapter 6. Can the Silk Road Revive Agriculture? Kazakhstan’s Challenges in Attaining Economic Diversifcation Madina Bizhanova 51 Chapter 7. China’s BRI Investments, Risks, and Opportunities in Kazakhstan and Kyrgyzstan Marek Jochec and Jenny Jenish Kyzy 67 Chapter 8. One Belt, One Road: A New Source of Rent for Ruling Elites in Central Asia? Kemel Toktomushev 77 Chapter 9. Te Importance of Anticorruption, Trade, and Investment Climate Reforms in Central Asia in the BRI Context Sobir Kurbanov 86 iii PART III. CHINA’S “SOFT POWER” TOOLKIT: THE ISSUE OF PERCEPTIONS Chapter 10. Silk Road Economic Belt: Efects of China’s Sof Power Diplomacy in Kazakhstan Bhavna Dave 97 Chapter 11. “Human Silk Road”: Te People-to-People Aspect of the Belt and Road Initiative Yelena Sadovskaya and Leah Utyasheva 109 Chapter 12. Transnational Ties and Local Society´s Role in Improving the PRC‘s Image in Central Asia Vera Exnerova 126 Chapter 13. Chinese Sof Power in Kazakhstan and Kyrgyzstan: A Confucius Institutes Сase Study Gaukhar Nursha 135 Chapter 14. Contemporary Chinese Labor Migration and Its Public Perception in Kazakhstan and Kyrgyzstan Azad Garibov 143 Chapter 15. Te Impact of Chinese Silk Road Strategy on National Identity Issues in Central Asia. A Media Review Aziz Burkhanov 153 Bibliography 162 About the Central Asia Program (CAP) 170 iv Acronyms AIIB—Asian Infrastructure Investment Bank BRI—Belt and Road Initiative CAREC—Central Asia Regional Economic Cooperation CI—Confucius Institutes CNPC—China National Petroleum Corporation CPC—Communist Party of China CPEC—China–Pakistan Economic Corridor CRBC—China Road and Bridge Corporation CSR—Corporate Social Responsibility CSTO—Collective Security Treaty Organization DAC—Development Assistance Committee of the Organisation for Economic Co-operation and Development EAEU—Eurasian Economic Union EBRD—European Bank for Reconstruction and Development EITI—Extractive Industries Transparency Initiative FDI—foreign direct investment HDI—Human Development Index ICG—International Crisis Group KISI—Kazakhstan Institute for Strategic Studies KMGI—KazMunayGas International LPI—Logistical Performance Index MFA—Ministry of Foreign Afairs MHSD—Ministry of Health and Social Development of the Republic of Kazakhstan MOC—Ministry of Commerce NDRC—People’s Republic of China, National Development and Reform Commission NGO—nongovernmental organization OBOR—“One Belt, One Road” ODA—Ofcial Development Assistance OECD—Organisation for Economic Co-operation and Development PLA—People’s Liberation Army PRC—People’s Republic of China RATS—Regional Anti-Terrorist Structure of the Shanghai Cooperation Organisation SCO—Shanghai Cooperation Organization SEZ—Special Economic Zone SME— Small and medium enterprises SOE—state-owned enterprise SREB—Silk Road Economic Belt TBEA—Tebian Electric Apparatus UNWTO—UN World Tourism Organization WEF—World Economic Forum WITS—World Integrated Trade Solution XUAR— Xinjiang Uyghur Autonomous Region v List of Figures Figure 2.1. China-North America Railway Line. Figure 2.2. China–Central Asia–Europe Railway Line. Figure 2.3. Malacca and Other Major Oil Transit Chokepoints (Million of Barrels of Oil Moved per Day), 2013. Figure 2.4. Comparison between the Oil Traditional Route (on the Lef) and the CPEC Route (on the Right). Figure 4.1. Tajikistan’s Bilateral Credits: Share from Each Country (percent), 2015. Figure 4.2. Kyrgyzstan’s Bilateral Credits: Share from Each Country (percent), 2016. Figure 6.1. Kazakhstan’s Export Composition between 1995–2015. Figure 6.2. Kazakhstan’s GDP (Black Line) Closely Follows the Price of Crude Oil (Blue Line). Figure 6.3. Employment in Kazakhstan by Sector between 2003–2013. Figure 6.4. Links Created by Kazakhstan’s Mining Sector and Agriculture in 2014. Figure 6.5. Breakdown of Transport-Related Challenges Faced by Agricultural Producers (percent). Figure 6.6. Key CAREC Projects by Corridor. Figure 6.7. TRACECA Road and Rail Routes in Kazakhstan. Figure 6.8. SREB Economic Corridors. Figure 6.9. China’s Connection to the Trans-Siberian Railroad. Figure 6.10. SREB Southern Route and Its Branches. Figure 7.1. Te Belt and Road Initiative Participating Countries. Figure 8.1. Tajikistan’s Bilateral Credits: Share from Each Country (percent), 2015. Figure 8.2. Kyrgyzstan’s Bilateral Credits: Share from Each Country (percent), 2016. Figure 9.1. China’s Stock of Outward Direct Investment to Central Asia. Figure 9.2. Selected Worldwide Governance Indicators: China vs. Central Asia. Figure 9.3. Logistical Performance Index, China and Central Asia, Country Rankings, 2016. Figure 9.4. Doing Business Rankings, China and Central Asia, 2017. Figure 9.5. Ease of Trading Across Borders in Europe and Central Asia. Figure 13.1. Pictorial Representation of the Article’s Conceptual Approach. Figure 13.2. Embedded Multiple-Case Study Model Showcasing the Contextual Basis of Current Research. Figure 13.3. Dynamics of Confucius Institutes Branches Attendees (Registered Students at the Beginning of Each Study Year). Figure 13.4. Do You Take Part in Additional Courses (Other than Language) Provided at CI? Figure 13.5. What Is Your Main Reason for Studying at a Confucius Institute? Figure 13.6. Confucius Institutes’ Organizational Structure. vi List of Tables Table A. Cumulative China Aid by Central Asian Countries (2010–2014). Table B. China’s Loans as Reported by Kyrgyzstan, Kazakhstan, and Tajikistan (in US$, million). Table C. Gross Infow of Foreign Direct Investment (FDI) (in US$, million). Table D. China’s Projects and Labor in Central Asia. Table E. China’s Trade with Central Asia (in US$, million). Table 4.1. Share of Chinese Loans in the External Debt Burden of Selected Central Asian Countries (in US$, million). Table 7.1. Gross FDI Infows to Kazakhstan. Table 7.2. Foreign Direct Investment in Kyrgyzstan. Table 11.1. Key Indicators of the Human Development and Human Capital in China, Kazakhstan, Kyrgyzstan, and Tajikistan in 2015 (unless otherwise stated). Table 11.2. Chinese Labor Force in Kazakhstan, Kyrgyzstan, and Tajikistan, 2010–2016 (number of people). Table 11.3. Kazakhstan’s Students in China in 2009–2015. Table 11.4. Tourism to and from Central Asia and China in 2010–2015. Table 11.5. China-Kazakhstan Tourism between 2000 and 2013. Table 11.6. Visa Regimes in China, Kazakhstan, Kyrgyzstan and Tajikistan in 2017. vii Brief Sketch of Belt and Road Initiative Table A. Cumulative China Aid by Central Asian Countries (2010–2014) Country US$, million Kazakhstan 6,756.2 Uzbekistan 1,998.2 Kyrgyzstan 2,143.6 Tajikistan 717.2 Source: AIDDATA, china.aiddata.org Table B. China’s Loans as Reported by Kyrgyzstan, Kazakhstan and Tajikistan (in US$, million) 2013 2014 2015 2016 2017 (Jan-Aug) Kyrgyzstan total debt 758 1,116 1,296 1,483 1,639 Loans from China 3,159 3,437 3,601 3,743 3,985 Loans from China 24 32 36 40 41 (in percent, total) Kazakhstan total debt 148,753 157,062 153,456 163,758 167,890* Loans from China 15,840 15,969 13,248 12,589 11,975* Loans from China 11 10 9 8 7 (in percent, total) Tajikistan total debt 2,188.5 2,095.9 2,194 n/a n/a Loans from China 915 915 1,080 n/a n/a Loans from China 42 44 49 n/a n/a (in percent, total) *Data for the second quarter 2017.
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