China Lays Out Ten Cooperation Points With Central Asian Nations

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The China Plus Central Asia C+C5 Forum: Statements and Analysis

By Chris Devonshire-Ellis

China’s Foreign Minister Wang Yi has been attending the third China + Central Asia (C+C5) Foreign Ministers’ Meeting in Nur-Sultan, Kazakhstan, hot on the heels of his trip to the Pacific Islands. The C5 include Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.

Central Asia has become of increasing strategic importance to China as a result of the Russia-Ukraine conflict, which has pinched direct supply chain routes between China and the EU. Alternatives now need increased investment into Central Asia, with Russia also being a beneficiary and co-partner in this strategy. Bundled in with this East-West connectivity is Afghanistan, whose very position in Central Asia could enable it to become a massive transit hub, with significant opportunities for each of its neighbouring countries – China, Tajikistan, Uzbekistan, Turkmenistan and Iran – to participate in a reconstruction bonanza supported by both Chinese and Islamic finance. Yet much remains to be done to secure the country following decades of war and a potentially unstable Taliban Government.

Wang said that the most important task of the current C+C5 meeting is the unanimous agreement to establish the heads of state meeting mechanism of China + Central Asia (C+C5). The meeting also adopted four outcome documents, including the Joint Statement on China + Central Asia (C+C5) Foreign Ministers’ Meeting, the Roadmap for the Implementation of the Consensus Reached at the Virtual Summit between China and Central Asian Countries, the Initiative on Deepening China + Central Asia (C+C5) Connectivity Cooperation, and the Data Security Cooperation Initiative of China + Central Asia (C+C5). We can examine these as follows. My comments follow underneath each subject:

Mutual Cooperation

Wang: The first is to uphold the principle of mutual respect, good-neighborliness and friendship, solidarity in trying times, mutual benefit and win-win results, and commit to building an autonomous, peaceful, prosperous and cooperative Central Asia.

CDE: This innocuous phrase has deeper significance in terms of calling for collaboration, and especially in terms of infrastructure and development finance. China stated it was prepared to invest US$400 billion in Islamic nations over the next decade, Central Asia will receive a large chunk of this. However, like all infrastructure projects, China will ultimately wish to see a return on that investment.

BRI Cooperation & Finance

Wang: The second is to continue to build high-quality Belt and Road cooperation, expand all-round cooperation, explore ways to promote financial cooperation, and further expand the local currency settlement scale.

CDE: Note the term ‘expand the local currency’. This is a reference to China (and Russia) both wishing to ditch the US dollar in regional trade and to revert to local currencies, probably by setting the RMB as a base currency and pegging Central Asian currencies and potentially the Ruble to this. There are issues: Central Asian currencies have in the past been volatile, whereas the Russian Ruble is currently the world’s best performing currency and the Chinese RMB the world’s best performing major economy currency. Achieving regional currency stability is a core aim.

Regional Transport Connectivity

Wang: The third is to deepen the cooperation of connectivity, ensure the safe and stable operation of the China-Europe freight train, promote customs clearance facilitation, improve the “green lanes” for cargo, and accelerate the resumption of flights to ensure the complete industry chain and the continuous supply chain.

CDE: There are several aspects to this, not least the China-Europe rail freight issue. With the previous Kazakhstan-Russia rail route to Europe now cut off, rail freight must now pass either China-Kazakhstan-Europe or China-Uzbekistan-Turkmenistan to Europe. Both use Caspian Sea Ports to access Azerbaijan’s Baku port, additional rail connectivity across Georgia and Turkey, to Black Sea Ports with the southern EU. These routes exist and are operational today, however bottlenecks exist that will take some time to clear.

There is additional capacity also coming in time as China has commenced work on the CKU railway which runs via Kyrgyzstan to Uzbekistan, although this will take several years to complete.

These routes require complex operational planning to obtain maximum efficiency, which is why Wang also noted ‘customs clearance facilitation’, a reference to new digital blockchain usage being introduced across Central Asia. This has already begun with the first blockchain transit cargo directly from China to Azerbaijan delivered in March.

In terms of flights, this is both a reference to covid opening up, but also a reference to the upgrading of existing and development of new airports throughout the region. China and Russia will be co-partners in much of this – for example they recently agreed to finance and build 116 regional airports in Iran alone.

Central Asian Security

Wang: The fourth is to maintain security in traditional and non-traditional areas in a coordinated manner, cooperate to fight the three forces of terrorism, separatism, and extremism and ensure food security.

CDE: Much of this will be coordinated via the Shanghai Cooperation Organisation (SCO), which has a specific regional basis and includes all of these countries, with securing Afghanistan a priority. I previously discussed the role of the SCO along the Central Asian BRI here.

Regional Health Silk Road

Wang: The fifth is to continue to work together to fight the pandemic, actively carry out cooperation in vaccine and drug research and development, establish the China-Central Asia health industry alliance, and set up a Chinese traditional medicine center in Central Asia.

CDE: China has been very active in Central Asia during Covid with the provision of Sinopharm vaccines, at a time when the West was seen to be hoarding supplies and wanting to resale at high prices. That has gained it, and to a lesser extent Russia (who also provided Sputnik V vaccines but in lesser quantities), a degree of trust that the West, and the United States in particular, has lost within the region.

Afghanistan

Wang: The sixth is to coordinate positions on the situation in Afghanistan in a timely manner, promote peaceful reconstruction in Afghanistan, support Uzbekistan in hosting the fourth Foreign Ministers’ Meeting Among the Neighboring Countries of Afghanistan and the High-level International Conference on Afghanistan Issue, and maintain regional security and stability.

CDE: Afghanistan is key to the stable development of Central Asia, and both China and Russia will be watching carefully for signs of any subversive American influence in the region. The SCO is a paramount force here, as is the developing of energy supplies into Afghanistan to power reconstruction and manufacturing. (The US built very little infrastructure in Afghanistan during their 20-year occupation). The TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline is open, although not yet at full capacity, and provides Afghanistan with much needed energy as well as transit income. A major issue is getting energy and supplies into the country, with both needing to be addresses. Rail lines to Kabul, the capital, are being considered from Pakistan to the East, while Turkmenistan has built rail to Afghanistan’s western border with the idea being to extend that to Herat, Afghanistan’s traditional industrial hub.

Uzbekistan to the north has also signed off on the planned Trans-Afghan Railway which will run north-south across Afghanistan from Uzbekistan to Pakistan’s Gwadar Port on the Arabian Gulf. When completed, this will give both landlocked Afghanistan and Uzbekistan direct access to seaports and markets in the Middle East and South-East Asia.

“One Country One Workshop”

Wang: The seventh is to deepen cooperation in education, science and technology, arts, sports, tourism, poverty reduction and other areas, and promote work on the “One Country, One Workshop” and the mutual establishment of cultural centers.

CDE: The “One Country One Workshop” concept is the coordinated idea of individual nationally developed, yet regionally coordinated manufacturing hubs so that infrastructure and other projects can be coordinated to the best of each countries resources and capabilities to cut down on wastage. China has a significant Muslim population of about 40 million and sees the co-development of regionally managed Islamic tourism as a growth market.

A Central Asian Green Environment

Wang: The eighth is to promote green and sustainable development, share experience and technology in environmental protection, and build a beautiful home featuring harmonious coexistence between man and nature.

CDE: China has committed to the development of green and low-carbon technologies and also sees this as a growth market with hi-tech capabilities. Beijing is keen to demonstrate it can keep up with promises made as concerns various environmental commitments and especially when measured against the United States and EU. It can probably do so – with future EU energy supplies having to be shipped across the Atlantic from US fracking operations, neither the United States nor the EU are likely to be in any position to dictate green tech standards any time soon. China’s use of green technologies in developing Central Asia have a specific political agenda as well as an environmental one. There is more on China’s ‘Green Belt & Road Initiative’ here.

The Global Development Initiative

Wang: The ninth is to continue to support each other on issues related to each other’s core interests, jointly implement the Global Security Initiative and the Global Development Initiative, and make contributions to global governance.

CDE: The Global Security Initiative has been the focus of critical and negative Western media. A Xi Jinping initiative, it calls for upholding the principle of indivisible security, build a balanced, effective, and sustainable security architecture, and oppose the building of national security on the basis of insecurity in other countries. It also emphasizes the sovereignty and territorial integrity of all nations, as well as their right to choose their own development paths and social systems. In the West this is seen as a pushback against US geopolitical interests and as being specifically targeting the ‘Indo-Pacific Alliance’ and the Pacific QUAD security network.

The Global Development Initiative (GDI) is another project introduced by Chinese Premier Xi Jinping and calls for international cooperation along a multitude of global problems including healthcare, the environment, the protection of natural resources, and the development of inclusive digital technologies. The GDI is supported by the World Economic Forum. More details on its component parts can be found here.

C+C5 Cooperation

Wang: The tenth is to continue to improve the C+C5 cooperation mechanism, actively carry out exchanges and dialogues in the fields of political parties, economy and trade, investment, think tanks and at the sub-national levels, and fully release the cooperation potential among the six countries.

CDE: These are C+C5 institutional issues which will formulate, manage, and direct the future activities of the C+C5 grouping.

Summary

The C+C5 is already supported by the Shanghai Cooperation Organisation in terms of security and trade. The trade aspect also includes the Eurasian Economic Union (EAEU) which includes Russia as well as C+C5 members Kazakhstan and Kyrgyzstan, while Uzbekistan is an observer nation and expected to join the block soon. Interestingly, China has a Free Trade Agreement with the EAEU but has not yet agreed tariff reductions. When it does, regional China-Central Asian trade will significantly increase. While at its core is the issue of Afghanistan, the C+C5 is intent on becoming an institutionalized regional voice. While the C5 already have their own dialogue arrangements with Russia – which also includes infrastructure developments and trade, the China format allows them some ability to compare as well as cooperate. Given the issues between Russia and the European Union right now, winners will be China and the C5 states.

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About Us

Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. The firm assists British and Foreign Investment into Asia and has 28 offices throughout China, India, the ASEAN nations and Russia. For strategic and business intelligence concerning China’s Belt & Road Initiative please email silkroad@dezshira.com or visit us at www.dezshira.com

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