The most relevant target areas for China in Central Asia are the creation of transport corridors within the framework of the "Belt and Road Initiative" and the diversification of access to resources, according to experts from the Russian Analytical Credit Rating Agency (ACRA), reports Asiaplus.tj.
In ACRA's study titled "Between East and West", it is noted that China provides external financing to achieve these goals, which is generally cheaper than market borrowing.
"For example, the Export-Import Bank of China granted Tajikistan 18 loans at interest rates of 2–2.5%, with grace periods of five, seven, or nine years and a loan term of 25 years," the study's authors cite based on data from Tajikistan's Ministry of Finance.
They emphasize that the "Belt and Road Initiative" is intended to expand China's external trade channels and further integrate it with Western markets.
"The expansion of land routes through Central Asia - a traditional transport corridor between East and West - is one of the key directions for implementing this initiative. Customs checkpoints on the border with Kazakhstan have already been expanded, and roads are being built in Kyrgyzstan and Tajikistan," ACRA analysts note.
They believe that China's growing economy needs resources found in the region: oil, gas, ores, uranium, copper, gold, and more.
However, they note that China's economic growth is slowing, and internal risks are increasing, which could lead to less stable resource demand in the medium term.
According to the study's authors, the financial dependence of regional countries on China is growing. While such dependence is still relatively low for Kazakhstan and Uzbekistan, Tajikistan is already facing difficulties in repaying its debt to China.
"In 2019, Tajikistan transferred rights to develop two gold mines to a Chinese company as part of its state debt repayment," the publication reminds.
ACRA analysts point out that China's level of engagement with the region is also increasing.
They highlight that since 2013, regular cooperation forums under the "China–Central Asia" framework have included representatives from government and business.
How China Became Tajikistan's Main Investor
"However, last year (2023), the forum was held at the level of heads of state for the first time. At this first forum in Xi'an, Chinese President Xi Jinping proposed assistance to regional countries in maintaining internal security and national defense," the study notes.
It emphasizes that the region is becoming more involved in international trade, with growing external demand for its resources (gas, oil, uranium, gold, and rare earth metals).
"To expand cooperation with China and move up the value chain, it would be logical for regional countries to establish joint ventures with China to produce higher-value-added products, as well as to gain access to technology and conduct joint scientific research," ACRA analysts conclude.
CentralasianLIGHT.org
December 20, 2024