Xi tour demonstrates a microcosm of Central Asian cooperation

By Rustam Makhmudov Source:Global Times Published: 2013-9-18 0:28:01

The tour of Chinese President Xi Jinping through a number of Central Asian states and the summit meeting of heads of Shanghai Cooperation Organization member states in Bishkek, Kyrgyzstan, have together marked the opening of the autumn political season in the region.

The visit by the new leader of China was hotly anticipated, as Beijing is one of the leading strategic partners and the largest foreign investor and trading partner of the Central Asian states. And today, it is impossible to imagine the regional security system without Beijing.

The results of Xi's visit showed that the Chinese strategy toward Central Asia is not yet undergoing any fundamental changes.

At the conceptual level, the fundamental principles of the foreign policy approach were reaffirmed - China will never interfere in the domestic affairs of Central Asian nations; China will never seek a dominant role in regional affairs and China will never try to nurture a sphere of influence.

It also became clear that the primary line in Chinese politics with the Central Asian states still remains the expansion of economic ties.

Beijing is using its strengths - its geographical proximity to Central Asia, strong consumer market, and persisting high demand from industry for raw materials, combined with a willingness to invest billions of dollars in lucrative overseas projects.

All this also meets the long-term interests of the Central Asian states, which need diversification of supply, solvent markets and large-scale investments to continue with their internal structural changes.

Significant outcomes of the tour included agreements with Uzbekistan and Kazakhstan involving $15 billion and $30 billion respectively.

The package of agreements with Uzbekistan provides about $7.7 billion in financing on the part of China. This actually marks the next major phase of bilateral cooperation. In the previous phase (2002-12) with the participation of Chinese investment, there were 83 projects implemented worth $6.75 billion in Uzbekistan.

The tour also further expanded the presence of Chinese companies in the Central Asian energy sector.

In Kazakhstan, the China National Petroleum Corporation acquired an 8.33 percent stake in a project to develop the Kashagan oil field for $5 billion. This agreement was a strategic breakthrough for China, given the huge oil reserves in the deposit, which are estimated at 30-38 billion barrels of oil (recoverable reserves are up to 13 billion barrels).

It should be noted that Kazakhstan plans to use Kashagan to become one of the top 10 largest oil-producing countries in the world.

Xi's visit to Turkmenistan showed that China is maintaining its role as the leading investor in a project aimed at developing Galkinish, the second largest gas field in the world, with reserves of 26.2 trillion cubic meters.

Beijing reached an agreement on the allocation of another large loan, in addition to previous loans totaling $8 billion.

Beijing also received assurances from Ashgabat that in the future it will increase the supply of gas from the previously agreed 40 billion cubic meters to 65 billion per year.

It will be boosted by both joint increases in gas production and the commissioning of new pipelines, including an additional branch of the gas pipeline from Central Asia to China.

Xi's visit more clearly laid down the basic outline of China's economic policy in the region, the backbone of which has become projects involving oil and gas exploration, construction and operations. These projects are already providing the lion's share of growth in trade between China and Central Asian exporters and, most likely, will provide that growth in the near future.

The visit also showed that China is seeking to lay a more profound basis for cooperation with Central Asian states via the interest in the Silk Road economic zone initiative expressed by Chinese leaders. It focuses on the development of a transport communications network, which will link Europe and East, West and South Asia with participation of Central Asia, thus facilitating trade and investment.

The author is a political analyst based in Uzbekistan. opinion@globaltimes.com.cn



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