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China’s Financial Diplomacy Wins Influence in Central Asian Countries

Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan
Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan

This year marks the 30th anniversary of China having established diplomatic ties with five central Asian countries. In 1991, the Soviet Union collapsed, and Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan gained independence.

Three decades later, in the first week of January 2022, President Xi Jinping exchanged congratulatory messages with the presidents of the five states.

China's influence in Central Asia has grown exponentially in recent decades as the five nations seek Chinese financing for everything from infrastructure projects to educational endeavors, according to Samantha Custer, director of policy analysis at AidData, a research lab at the College of William and Mary in Virginia.

She told VOA the main goal of Chinese financial diplomacy in the region is to gain “access to energy supplies and strategic positioning for transit routes.”

Custer said the five countries are of interest to Beijing for two main reasons: First, they offer access to ready supplies of energy via oil, natural gas, or hydropower; and secondly, potential Belt and Road initiative trade routes from China to Europe and the Middle East run through them.

“In keeping with this strategy, most of China’s financial diplomacy has been focused on the energy and transportation sectors,” Custer said.

Last month, in a new report titled Corridors of Power, Custer and her coauthors analyzed how China used massive financial assistance to win friends and allies across Central and South Asia.

According to the report, the Chinese government directed $127 billion in financial assistance across 13 countries in Central and South Asia over nearly two decades. The five countries in Central Asia are among the biggest recipients of Beijing’s financial assistance.

“Kazakhstan alone attracted 26% ($33 billion) of Beijing’s financial assistance dollars,” Custer said, adding these investments were heavily focused on the China-Central Asia Gas Pipeline. “Turkmenistan was the second-largest Central Asian recipient of Chinese financing, worth $9 billion.”

Soft power investments

Even as Beijing emphasizes economics over soft power in Central Asia, it recognizes that these tools are most formidable when employed in concert, according to Custer.

“In this vein, Chinese leaders doubled down on soft power overtures via education, culture, exchange and media to foster people-to-people ties with Central Asian students and professionals over the last two decades,” Custer said, adding these efforts are important avenues to cultivate future markets for Chinese goods, services and capital in Central Asia.

In its bid to become a premier study-abroad destination for students from Central Asia, China offers less burdensome visa requirements than its competitors and financial assistance for education, according to the report.

“Kazakh and Kyrgyz students were top recipients of Chinese state-backed scholarships, and both countries received a large share of Beijing’s language and cultural promotion efforts in the form of Confucius Institutes at the university level and Confucius Classrooms at the primary and secondary school level,” Custer said.

Chinese leaders have also practiced city-level diplomacy to cultivate relationships with public and private sector leaders at the local level, according to the report.

“As a case in point: Turkmenistan’s Mary province received more money from Beijing over two decades than seven of the 13 countries in South and Central Asia,” Custer said. “Kazakhstan’s Atyrau, which received $5 billion, was the second-largest district-level recipient of Chinese state-backed financing in the entire region.”

Investing in security

China has also been investing in security in Central Asia, according to Emil Avdaliani, director of Middle East Studies at the Georgian think tank Geocase.

“Before, Russia was seen as the only and irreplaceable security provider,” Avdaliani said. “China has also penetrated the region. It operates a military base in Tajikistan, funds a new semi-military one there and has increased the number of drills with separate states in the region.”

Avdaliani said that even though China’s position in central Asian countries has evolved quite successfully, China still faces obstacles such as nationalism in the Central Asian states and political elites’ distrust of Beijing.

But the elite also sees that “the five states need China. They need investment, and in the longer run, they need China as a balancer against Russia,” Avdaliani told VOA in an email.

Beijing successfully uses this opportunity, and it is likely to continue in the future, he said.