### China and Central Asia:

Historical Links
#### Recognition of Independence and Diplomatic Relations

China recognized the independence of Central Asian states on December 27, 1991[1]. This
recognition marked the beginning of a new era in the relations between China and the
newly independent states of Central Asia. In January 1992, a Communiqué was signed to
establish diplomatic relations between China and the Central Asian states[1]. This move
was significant as it formalized the diplomatic ties between the two regions, paving the way
for future cooperation and interaction.

#### Centuries of Shared History and Interaction

The history of interaction between China and Central Asia stretches back centuries. The
Kazakh Khanates and the Kokand Khanate had the most intense relations with the Qing
Empire, which was the ruling dynasty of China from 1644 to 1912[1]. This historical
connection has played a crucial role in shaping the contemporary relationships between
China and Central Asia.

#### Economic and Cultural Links Reestablished

Following the recognition of independence and the establishment of diplomatic relations,

China and Central Asia reestablished their economic and cultural links. This included
trade, investment, connectivity, culture, security, and energy cooperation[1]. The shared
border between China and the Central Asian states, particularly Kazakhstan, Kyrgyzstan,
and Tajikistan, has been a significant factor in these interactions.

#### Border Security

The border security issue has been a dominant concern in the relations between China
and the Central Asian states since 1991[1]. Kazakhstan and Kyrgyzstan signed border
treaties with China in 1994 and 1996, respectively[1]. In 1996, China, Kazakhstan,
Kyrgyzstan, Russia, and Tajikistan concluded the "Agreement on Confidence-Building in
the Military Sphere in the Border Areas", forming the Shanghai Five[1]. The demarcation of
the border in Kyrgyzstan in 2001 triggered protests from parliamentary deputies, and the
Tulip Revolution was partially caused by the transfer of Kyrgyz lands to China[1].

#### Reactions to Border Settlements and Chinese Growing Involvement

Protests broke out in cities in Kazakhstan in spring 2016 in reaction to new legislation that
allowed for the extension of land leased to foreign companies from ten to 25 years[1]. This
move was seen as a potential threat to the sovereignty of Kazakhstan and its control over
its land. Central Asian societies have expressed insecurities about China's possible future
endeavors for land, particularly in the context of China's growing economic influence in the
region[1]. China's main goal is to retain control over Xinjiang and to get the cooperation of
Central Asian countries, fearing dreams of self-determination among Muslim minorities in
Xinjiang[1]. Central Asian countries have suppressed Uighur activism in their countries[1].

#### Shanghai Cooperation Organization (SCO)

In 2001, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, China, and Russia established

the Shanghai Cooperation Organization (SCO) with the objective of combating terrorism,
extremism, and separatism[1]. The SCO has been instrumental in promoting regional
security and cooperation among its member states. The organization has also been
involved in various initiatives aimed at enhancing border security and combating
terrorism[1].

#### Operations Against Uyghurs

Operations against Uyghurs were conducted in Kazakhstan and Kyrgyzstan in 2009[1]. This
move was part of a broader effort by China to suppress Uighur activism and maintain
control over Xinjiang. The operations were seen as a response to the growing Uighur
separatist movement and the perceived threat it posed to China's internal security[1].

### China and Central Asia: Economic Dimension

#### Oil, Gas, Uranium Reserves

China is a significant player in the global energy market, and its energy needs are met
through a combination of domestic production and imports from various sources. Central
Asia is a key region for China's energy imports, particularly oil and natural gas. The region is
home to significant oil and gas reserves, with Kazakhstan, Uzbekistan, and Turkmenistan
being major producers. China's energy needs are met through a combination of domestic
production and imports from various sources, including Central Asia.

#### China's Major Imports Are Available at Its Doorstep

China's major imports are available at its doorstep, with Central Asia being a key region for
China's energy imports. The region is home to significant oil and gas reserves, with
Kazakhstan, Uzbekistan, and Turkmenistan being major producers. China's energy needs
are met through a combination of domestic production and imports from various sources,
including Central Asia.

#### Oil and Gas Supplies to China

China's oil and gas supplies are primarily met through imports from Central Asia,
particularly Kazakhstan, Uzbekistan, and Turkmenistan. The region is home to significant
oil and gas reserves, with Kazakhstan being the largest producer in the region. China's
energy needs are met through a combination of domestic production and imports from
various sources, including Central Asia.

#### BRI and SCO

The Belt and Road Initiative (BRI) and the Shanghai Cooperation Organization (SCO) are
two key initiatives that have significant implications for China's economic relations with
Central Asia.

#### BRI

The BRI is a massive infrastructure development project launched by China in 2013 to

connect China with other parts of Asia, Europe, and Africa. The project aims to create a
network of roads, railways, ports, and sea routes to facilitate trade and economic
cooperation between China and other countries. Central Asia is a key region for the BRI,
with China investing heavily in infrastructure projects in the region.

#### SCO

The SCO is a regional organization that was established in 2001 to promote economic
cooperation and security among its member states. The organization has 9 member
states, including China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. The
SCO has several objectives, including the establishment of a democratic, fair, and rational
new international political and economic order, enhancing ties in education, energy,
transport, tourism, environmental protection, and maintaining and ensuring peace,
security, and stability in the region.

#### Objectives of SCO

The SCO has several objectives, including:

1. Establishment of a democratic, fair, and rational new international political and

economic order

2. Enhancing ties in education, energy, transport, tourism, environmental protection,

etc

3. Maintaining and ensuring peace, security, and stability in the region

4. Promoting effective cooperation in politics, trade, economy, research, technology,

and culture
5. Strengthening mutual trust and neighborliness among the member states

#### Conclusion

China's economic relations with Central Asia are significant, with the region being a key
source of energy imports for China. The BRI and SCO are two key initiatives that have
significant implications for China's economic relations with Central Asia. The SCO has
several objectives, including the establishment of a democratic, fair, and rational new
international political and economic order, enhancing ties in education, energy, transport,
tourism, environmental protection, and maintaining and ensuring peace, security, and
stability in the region.

1. ### Kazakhstan
#### Chinese Involvement in Kazakhstan's Oil Production

Chinese companies play a significant role in Kazakhstan's oil industry, being involved in
more than a quarter of the country's oil production. This partnership has strengthened
economic ties between the two countries and contributed to Kazakhstan's energy sector
development.

#### Diversified Investments in Key Industries

In addition to oil, Chinese investments in Kazakhstan extend to various sectors such as

copper mines, aluminum smelters, hydropower, cement plants, and other key industries.
These investments have positioned China as the leading foreign direct investor (FDI) in
Central Asia's largest country, fostering economic growth and industrial development.

#### Kazakhstan as a Transportation Hub

Kazakhstan's strategic location has made it a vital transportation hub for China,
connecting the country to the rest of Central Asia, Europe, and the Middle East. The
country's evolving infrastructure and logistical capabilities have enhanced trade routes
and connectivity, facilitating the movement of goods and services across regions.

#### Belt and Road Initiative (BRI) Projects in Kazakhstan

Within the framework of China's Belt and Road Initiative (BRI), Kazakhstan has seen the
implementation of 51 projects worth $26 billion. These projects span various sectors,
including infrastructure, energy, transportation, and trade, aiming to enhance connectivity,
promote economic cooperation, and foster regional development. The BRI has further
solidified the economic partnership between China and Kazakhstan, paving the way for
mutual growth and collaboration.
2. ### Turkmenistan
#### China's Dominance in Turkmenistan's Natural Gas Sector

Turkmenistan has emerged as a key supplier of natural gas to China, with close
cooperation between the two countries deepening over the past decade. The China
National Petroleum Company (CNPC) secured exclusive rights to develop an onshore gas
field in Turkmenistan, leading to significant gas exports to China. The Central Asia-China
pipeline, funded by China, facilitates the direct flow of Turkmen gas to China's domestic
network, strengthening energy ties between the two nations.

#### Financial Support and Leverage

Chinese banks have extended substantial loans amounting to over $12 billion to
Turkmenistan for infrastructure projects, gas exploration, and extraction. This financial
assistance has played a crucial role in Turkmenistan's energy sector development and
infrastructure enhancement. With China being Turkmenistan's primary export market and
primary source of financing, China holds significant leverage over the country, influencing
economic policies and strategic decisions.

#### Silk Road Economic Belt Initiative (SREB) in Turkmenistan

Turkmenistan is a key participant in the Silk Road Economic Belt Initiative (SREB) under the
broader Belt and Road Initiative (BRI). The SREB aims to enhance connectivity, promote
trade, and foster economic cooperation along the ancient Silk Road routes.
Turkmenistan's involvement in the SREB underscores its commitment to regional
integration, infrastructure development, and economic growth through enhanced
connectivity with China and other BRI partner countries.

3### Tajikistan:
Economic Cooperation with China
#### Foreign Direct Investment (FDI) and Joint Ventures

- Tajikistan heavily relies on China for foreign direct investment (FDI), with more than half of
its FDI coming from Chinese sources. Projects in Tajikistan span various sectors from
cotton to cement production, showcasing the diverse economic cooperation between the
two countries. Notably, the country's largest gold mining company operates as a Tajik-
Chinese joint venture, highlighting the depth of economic collaboration.

#### Infrastructure Development and Energy Projects

- A critical 400-megawatt coal-fired power plant in Dushanbe, the nation's capital, was
constructed by a Chinese firm to address power shortages during winter when
hydroelectric plants run dry. China has also funded strategic power lines connecting the
southern and northern regions of Tajikistan, enhancing energy infrastructure. Furthermore,
Chinese companies have invested in silver, zinc, and lead production, contributing to the
country's mining sector.

#### Sovereign Debt and Border Negotiations

- China holds nearly 50% of Tajikistan's sovereign debt, indicating a significant financial
relationship between the two nations. Notably, during negotiations to demarcate the
common border, parts of Tajik territory were handed over to China, sparking public
attention and raising questions about the implications of such agreements on national
sovereignty and territorial integrity.

4### Kyrgyzstan:
Economic Collaboration with China

#### Infrastructure Development and Investment

- China is actively involved in financing a $400 million overhaul of a power plant in

Kyrgyzstan's capital, along with several crucial power grid and road projects. Chinese firms
are engaged in gold production and exploration, contributing to the country's mining
sector. Additionally, two Chinese-backed refineries process imported crude oil in
Kyrgyzstan, enhancing the country's energy infrastructure.

#### Financial Support and Funding

- China has extended significant financial support to Kyrgyzstan, providing close to $2

billion in loans and over $300 million in grants, making China the primary funding source
for the country. This financial assistance has played a vital role in supporting infrastructure
projects, economic development, and industrial growth in Kyrgyzstan.

5### Uzbekistan:

Economic Partnerships with China

#### Infrastructure Development and Connectivity

- A Chinese company has constructed a railway link connecting Uzbekistan's agricultural

base in the remote Fergana valley with the rest of the country, improving transportation
and connectivity. This new link eliminates the need for rail traffic to pass through Tajikistan
and may potentially form part of a longer rail corridor from Uzbekistan to China, via
Kyrgyzstan, enhancing regional trade and connectivity.

#### Industrial Investments and Energy Projects

- Chinese companies are actively involved in Uzbekistan's chemical industry and the
expansion of fertilizer plants, contributing to industrial growth and economic
diversification. The China National Petroleum Corporation (CNPC) is engaged in
redeveloping parts of Uzbekistan's Dengizkul natural gas field and constructing a gas
processing plant, further strengthening energy cooperation between the two countries. The
cooperation between CNPC and Uzbekneftegaz signifies deepening ties in the energy
sector and mutual economic development efforts.

Challenges

Terrorism and Political Instability

Terrorism and political instability have been primary sources of concern for Central Asia,
which has been described as a "chessboard of rivaling great powers"3. The US withdrawal
from Afghanistan left a power vacuum, further clouding the region's future with
uncertainty3.
Economic Vulnerabilities
Central Asian economies face challenges such as devaluation of local currencies, rising
prices and inflation, business stagnation, and rising unemployment, which can lead to
social tension4. The region is also vulnerable to external factors and needs to foster
internal growth drivers5.
Lack of Access to the Sea
Being landlocked, Central Asian countries risk falling behind coastal countries by 20% on
average if they fail to create effective freight transit systems and fully integrate into the
world market5. Expanding and improving road and railway infrastructure is crucial5.

Opportunities

Regional Cooperation
The first response to the economic crisis has been an increasing trend towards regional
cooperation, which could lead to the development of a regional, inclusive, and mutually
beneficial recovery agenda4. Coordinated development of infrastructure creates synergetic
benefits and helps save on costs5.
Attracting Investment
Attracting private savings and further developing financial services can contribute to
reliable sources of economic growth5. Sustainable development requires a balanced
approach to attracting external funding through strengthening domestic savings and FDI in
non-commodity sectors5.
Strategic Location
Central Asia's strategic role in Eurasia will increase, as well as its importance to
neighboring countries and economic partners5. The region's geographical proximity
encourages deeper infrastructural cooperation5.In summary, while Central Asia faces
significant challenges related to security, economy, and environment, it also has
opportunities to foster regional cooperation, attract investment, pursue green
development, and leverage its strategic location for economic growth and integration.