China extends its debt tentacles in Central Asia

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China’s influence has quietly expanded into a more pervasive way in Central Asia. Since 2000, Beijing has expanded its lending activities in Central Asia. Valerio Fabbri, writing on Geopolitica.info, said this policy was carried out within the framework of the Shanghai Cooperation Organization (SCO).

At the SCO summit held in Tashkent in 2004, China announced that it would allocate $900 million in loans to member countries. This figure was raised to USD 10 billion at the SCO summit in 2009. Since then, Central Asian countries have continued to borrow from China. According to experts, Beijing has other motives for lending to Central Asian countries: First, it is gaining a share in the vast Central Asian markets and access to their energy resources. Second, Beijing gets contracts for projects awarded to Chinese companies.

Thus, part of the funding allocated goes back to the country. Third, Beijing forces these countries to toe its line on contentious issues in international forums, Fabbri added. For example, Central Asian countries do not support Turkish tribes whose rights are violated in China, and they do not vote for anti-Chinese motions in international organizations.

China’s loans have specific purposes. Beijing only offers loans for projects that allow the expansion of markets for Chinese products and the transfer of wealth. In Central Asia, it mainly provided loans for oil and gas transportation, development of energy resources, mining activities and infrastructure projects. A mandatory requirement of the loan is to allow Chinese companies to participate in these projects, Fabbri reported.

The three Chinese credit institutions that offer loans in Central Asia are the People’s Bank of China, the Export-Import Bank of China and the China Development Bank. The main recipients of loans from these banks are Kazakhstan and Turkmenistan, the two most oil and gas-rich Central Asian countries. It is not surprising that Beijing also seeks to exploit a country’s economic vulnerabilities.

In fact, Kazakhstan’s non-repayment of loans has led to an increase in China’s share of the country’s oil industry over the years. For example, when Kazakhstan was facing an economic crisis, China allocated 5 billion dollars of financing to this country, and about 3.5 billion dollars of this amount was spent to settle the debt of technical equipment purchased from China in previous years, Geopolitica.info reported. .

However, in the recent past, economic relations between Kazakhstan and China have come under severe strain. In September 2021, Beijing created serious obstacles for the import and export of goods from Kazakhstan. This had a negative impact on the economy of Kazakhstan. In order to avoid any further deterioration of the economic situation, Kazakhstan wants to diversify its import-export operations and plans to access European markets via Azerbaijan, Fabbri said.

In the case of Turkmenistan, the non-repayment of the loan led the country to cede a share to China in its gas production industry. Beijing now exploits and transports part of the gas from Turkmenistan to China. In Tajikistan and Kyrgyzstan, two poor countries in Central Asia, power plants and railways have been built thanks to loans received from China.

However, Bishkek and Dushanbe have encountered serious difficulties in repaying their debt. Kyrgyz President Sadyr Japarov reportedly said that due to rising foreign debt, Kyrgyzstan was in danger of losing its independence. Incidentally, its debt to China is around $2 billion. China holds more than half of the public debt of Tajikistan and Kyrgyzstan. Although Central Asian countries do not repay their loans, Beijing does not stop financial cooperation with these countries. On the contrary, it plans to allocate loans again.

Today, not only Kyrgyzstan, but almost all Central Asian countries are facing serious difficulties due to their debts to China. A small country like Tajikistan owes China more than a billion dollars and Uzbekistan owes 16% of its income. Moreover, Kazakhstan is among the countries that constantly owe China money. These have been perpetuated by China’s strategy of making these countries dependent on it and of capturing the market of these countries under the pretext of financial assistance.

Moreover, Central Asia is central to China’s foreign policy, not because of expansionist ambitions, but because it is an extension of the domestic challenges in Xinjiang. In order to create a solid economic environment to support Xinjiang, Beijing has transformed Central Asia through infrastructure projects. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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