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Six reasons for the anti-Chinese sentiment in Kazakhstan

In two of the five Central Asian countries there is so far an openly anti-Chinese sentiment - in Kazakhstan and Kyrgyzstan. As for Kazakhstan, there are at least six reasons for this, according to political scientist and Risk Assessment Group director Dosym Satpayev. The article appeared in the Russian original at forbes.kz. We translate it with the kind permission of the editors.

So far, there is an openly anti-Chinese sentiment in two of the five Central Asian countries - in Kazakhstan and Kyrgyzstan. There are at least six reasons for this in Kazakhstan.

First: historical memory. Some are looking for the roots of the anti-Chinese sentiment in the time of the war between the Kazakhs and the Djungars (China initially supported the Djungars out of geopolitical interests, but later saw them as a threat itself). Others suggest that the roots go back to when Kazakhstan was part of the Soviet Union. This in turn had a very tense political relationship with China - a peculiar "cold half-peace", which, however, broke during the Soviet-Chinese border conflict on the island of Damanski (Chinese: Zhenbao Dao) at the end of the 1960s. After that, the Soviet Union and China waged an ongoing information war against each other.

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Second: the opaque economic relations between China and Kazakhstan. Many treaties and agreements signed by both countries were never presented to the general public. In principle, this type of relationship between investors and state power has existed since the 1990s. At that time, Kazakhstan had similarly opaque connections with large western companies, especially in the mining sector, which later led to major corruption scandals. Many of the Production Sharing Agreements agreed at the time with foreign investors in the field of raw material extraction and processing are still inaccessible to the general public.

Third: There is great distrust among the Kazakh population of what the state power says or does. This also applies to cooperation with China. At the same time, there is a significant risk that high levels of corruption among Kazakh officials in relations with foreign investors will harm the interests of the state. In addition, the Chinese economy follows its own principles of action that distinguish it from Western companies. In particular, the majority of Chinese firms are directly or indirectly linked to the government, which provides them with political and financial support. The government sees Chinese companies as part of its policies that strengthen China's geopolitical and geoeconomic positions in the world. In addition, Chinese companies are particularly adapted to the corruption schemes of other countries, which explains their relatively active presence in economically weak and mostly corrupt countries in Africa and Asia. In addition, Chinese companies are not always, but to a large extent, less environmentally oriented and are often less interested in the long-term ecological consequences of their business in other countries.

Fourth: The anti-Chinese sentiment echoes the general social tensions within society. Many Kazakhs suffer from lower standard of living, lack of perspective and feeling of injustice in various areas of life. In some countries, social tensions combined with an anti-Chinese sentiment have already led to a change of power. For example in Indonesia, where President Suharto had to resign for similar reasons after more than 30 years in office. This happened against the background of a crisis in many economic sectors, a sharp drop in incomes, the rise in social tensions and the escalation of ethno-sectarian conflicts during the Asian financial crisis.

Essentially, a domino effect arises when the ineffectiveness of public administration leads to a rise in social protest. This can take several forms, including searching for internal or external "enemies". With regard to Kazakhstan, if there is a change of power, the anti-Chinese sentiment could serve as an instrument of political mobilization on the part of one or the other political player. The Kazakh elite in particular could try to use this mood in the power struggle to discredit their opponents. In addition, global experience shows that fomenting fears of an enemy, internal or external, serves as a political tool to divert attention from societal and socio-economic problems that the current government cannot effectively solve. The anti-Chinese sentiment may also be supported by other countries that see the strengthening of China's economic and political position in Central Asia as a threat to their own geopolitical interests.

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Fifth: The anti-Chinese sentiment is aggravated by the discriminatory and human rights violating policies of China with regard to ethnic and religious groups in their own country, especially in the Xinjiang region. The discovery of so-called “re-education camps” for Uyghurs, Kazakhs, Kyrgyz and other Muslims in Xinjiang led to a wave of protests, not only in Kazakhstan. At the end of 2018 and beginning of 2019 there were also the first anti-Chinese protests in neighboring Kyrgyzstan, where the anti-Chinese sentiment is apparently also based on economic reasons. Among other things, calls for better pay and better working conditions, the limitation of Chinese labor migration and the increase of the social security contributions of Chinese companies were made.

In the long term, a stronger presence of China in Central Asia could result in a new surge in anti-Chinese sentiment across the region. All states in the region are currently secular, but the increase in the number of Muslims in Central Asia could lead the region to reorient itself towards the Muslim world. This would pose new challenges for all geopolitical actors in Central Asia in the future. Relations with China could continue to deteriorate if pressure on Muslims in the Xinjiang region continues.

Sixth: Many are concerned about negative fiscal precedents in Central Asia. Kyrgyzstan and Tajikistan are debtors from China. The former finance minister of Kyrgyzstan, Adilbek Kasymaliev, even proposed last year not to take out any more loans from the China Exim bank. Debts to this financial institution amount to 44.8 percent of the total foreign debt of Kyrgyzstan. For comparison: In 2010 Kyrgyzstan's debt to China was only 5.7 percent (150 million US dollars) of the total national debt. In order to diversify the debt and reduce possible risks, the Kyrgyz government introduced a “debt brake” in spring 2018. The debts to a creditor may now not exceed 50 percent of the general debt burden. However, only China is approaching this limit.

According to the Tajik Ministry of Finance, the total of the country's external debt in the second half of 2019 is approximately $ 2.9 billion. The largest lender in Tajikistan is the China Exim Bank with 54.1 percent of the total, the Asian Development Fund (11.8 percent) and the Islamic Development Bank (5.8 percent). The rating agency Fitch Ratings even predicts a slowdown in the growth of the Tajik economy in connection with the high external debt and the fragile banking sector. According to the agency, Tajikistan's future economic prospects will depend on working with China to ensure debt sustainability, as it accounts for most of Tajikistan's external debt. Analysts believe Tajikistan's leadership may seek an agreement with China on debt restructuring. However, it is unclear what kind of consideration China expects. Some experts believe that "We are talking about expanding access to Tajikistan's raw materials, transferring control stakes in strategic companies, or transferring certain transport routes through Tajikistan to China's control."

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In contrast to Kyrgyzstan and Tajikistan, which have very limited financial resources, Kazakhstan is not a poor country. This can be seen, for example, in how many billions of dollars the government's National Fund has invested in bailing out Kazakhstan's banking system or how many billions of tenge from the pension fund have been used to finance various ineffective projects. This money could be spent for the benefit of the population with the help of democratic control and transparency mechanisms that make corruption more difficult and weaken the dominance of government officials in power. And this is only a small part of what is known as the “black hole of the Kazakh economy”.

Although Kazakhstan has sufficient financial resources in the National Fund that could be used as investments in strategic projects, the country has nonetheless taken out small loans from China. However, this requires professional risk management on the part of the government to assess all actual and potential negative or positive effects of their use, not only on the country's economy but also on the government's reputation.

On the one hand, cooperation with China in the gas and oil sector, for example, leads to the increased use of alternative transport routes for energy resources in Kazakhstan, which in turn reduces dependence on Russia. Kazakhstan's direct access to the gigantic and rapidly growing Chinese energy market through the construction of oil and gas pipelines allows one to hope for substantial profits in the future. According to expert estimates, the Chinese market absorbs about a third of the world's oil supply growth. In May 2003, following the European and American strategy, China began to build strategic oil reserves. According to forecasts, the OPEC countries will supply around 66 percent of China's oil imports and the post-Soviet countries around 20 percent by 2025.

On the other hand, China's economic cooperation with Kazakhstan is entirely subordinate to the development of the Chinese economy. The growing domestic demand of the Chinese People's Republic for energy increases Kazakhstan's dependence not only on the western, but also on the Chinese economy. However, the question arises here: who is to blame for the fact that almost thirty years after the collapse of the USSR, Kazakhstan is still dependent on the commodity trade and that its budgets are dependent on the global economy of commodity prices? It is unlikely that China, the United States, or Russia are responsible.

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Without a doubt, Kazakhstan is only one piece of the puzzle in the global game for China. The aim of China is to strengthen its own economic and political position. China's investment policy in Kazakhstan does not differ from that in other regions of the world, be it Africa, Latin America or the Middle East. It is always based on the strict defense of national interests. Kazakhstan has no economic leverage to put pressure on China, which weakens the country's position in the negotiation process from the start. As for China, it has quite a few such levers - economic as well as political. The only way to balance China and the interests of other geopolitical players and not to put everything on one card economically is to continue diversifying trade with other countries.

There is an expression: the success of any partnership is based on six pillars - the first pillar is fate, the other five - trust. The geographical fate and at the same time the challenge for Kazakhstan is that it is neighbors of two large, ambitious geopolitical actors - China and Russia - in which the confidence of the Kazakh people is falling rather than rising. At the same time, Kazakhstan's most important task is to derive more advantages than disadvantages from its neighborhood with China.

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Last but not least, that depends on a clearly developed strategy for cooperation with China - in the short, medium and long term and taking into account all possible problems and advantages. In order to increase the public's confidence in the state's policy on cooperation with China, it is necessary to first examine all contracts and agreements that have been signed with China and which arouse the greatest suspicion among the population. This is particularly important with regard to the identification of risks to the national interests of Kazakhstan.

In principle, this affects the affairs of all foreign investors in Kazakhstan. In addition, it is important to remember that the ultimate threat is less China's economic expansion than corruption in Kazakhstan, which enables the conclusion of treaties that are detrimental to the country and that undermine Kazakhstan's economic security. Because every investor plays according to the official and unofficial rules of the country in which he is located. And if these rules are to the detriment of Kazakhstan, then local officials are more to blame than investors.

Forbes.kz

Translated from the Russian by Julia Schulz

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