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Grand Silk Road scheme faces barriers

By Olim R. Alimov Source:Global Times Published: 2013-12-27 0:13:01

Illustration: Liu Rui/GT

Chinese President Xi Jinping's September speech at the Nazarbayev University in Kazakhstan was an introduction to a major foreign policy rooted in historical precedent, based on domestic realities and aimed at achieving a grand economic goal.

In his first official visit to Central Asia as the head of the second largest economy in the world, Xi did not hesitate to outline his ambitious plan of revitalizing the Great Silk Road.

It is a speech that promptly drew high praises from China's friends as well as attracting criticism from traditional antagonists. Most importantly, this initiative sparked vibrant discussions and debates on its meaning and objectives.

However fresh the initiative is, China has gradually been laying the necessary building blocks for many years. Starting with the resolution of the border issues with its four neighbors, Russia, Kazakhstan, Kyrgyzstan and Tajikistan, and following with massive investment projects in Central Asian states that resulted in stronger strategic relations, China has breathed new life into the economies of struggling western neighbors after its new founded sovereignties.

Xi's September trip to Central Asia and his announcement could not have had a better timing, especially when a large number of the infrastructure projects are already under China's belt thanks to the large influx of cash into the region.

Roads, electric power lines, natural gas pipelines, oil upstream and downstream projects and other significant investments to national and regional economies were spearheaded by China. Therefore, China was confident this initiative would meet with an overwhelming positive acceptance. What not to like in an initiative that would open a path for your national products to reach the seaports and Chinese products transit your country? In theory, it is a win-win scenario.

In practice, however, there are many unanswered questions and difficult barriers that China faces before and during the implementation of the initiative. Here, I would like to point to some major issues that need to be addressed.

One of the most important challenges to Xi's initiative will be binding China's, Central Asian countries' interests together with that of the Russians.

Not all is smooth in the relations between some of the Central Asian states. Russia's influence, although culturally and economically still significant, is gradually diminishing. However, Russia remains the only arbiter in the region. China knows that a Silk Road Economic Belt without Russia is, plain, simple and impossible.

For the initiative to have a long and sustainable future, Central Asia needs stability. One of the biggest threats remains the Afghan issue, especially with the withdrawal of NATO forces next year. Tajikistan and Uzbekistan are the most vulnerable states in the region. China has a very difficult task in not only drawing Afghanistan into the project, but convincing US and Pakistan to contribute to the political stability and internal security of a very fragile country.

The issue of who and how will finance projects under the initiative is of concern to many. Over the past decade, many Central Asian countries have received favorable credit lines from China on a number of projects. That, in large part, burdened some of the countries' national budgets by coming close to or exceeding the borrowing limit set by the International Monetary Fund. Already, global financial institutions are at odds with Tajikistan and Kyrgyzstan over their appetites for credit. It is obvious that a greater influx of cheap money will put these countries into a predicament and shift the initiative into neutral. A common solution needed to be found through a development of an unambiguous financial mechanism with efficient instruments.

And although Chinese officials and experts state that the initiative will complement rather than compete with regional organizations, there are views that this project may overshadow them.

Just last month, at the annual Prime Ministers' Meeting of the Shanghai Cooperation Organization (SCO), Chinese Premier Li Keqiang proposed to set up a fund for all SCO members, observers, and dialogue partners, possibly hinting at the inability to agree on the SCO development fund. China needs to walk a fine line, avoid stepping on anyone's foot and strive for organic collaboration with the relevant parties.

Russia and Central Asia are the first frontiers for the Silk Road initiative. However, how and when does China plan to involve other stakeholders? Who will stay out and will not have a piece of the pie? These and other integral questions should be on the Chinese leaders and expert communities' mind.

The author is an Independent observer based in Beijing. opinion@globaltimes.com.cn

Posted in: Viewpoint