Flurry of investment moves precede milestone China, Central Asia 5+1 summit

Flurry of investment moves precede milestone China, Central Asia 5+1 summit
Chinese President Xi Jinping and the five leaders of Central Asia gathered together prior to 5+1 talks at the summit. / CGTN, screenshot.
By bne IntelIiNews May 18, 2023

Central Asia’s five presidents converged on China's historic Silk Road city of Xian on Thursday May 18 for one-on-ones with Chinese leader Xi Jinping ahead of a milestone 5+1 summit to take place on Friday. The event is unprecedented as it brings together all of the region’s leaders in-person in China all at once. It is also notable in that it does not include Central Asia’s other big power neighbour, Russia.

The widespread assumption is that China is attempting to make inroads in trade, investment and geopolitical ties in Russia’s backyard at a time when Moscow’s attention and resources are consumed by the Ukraine war and economic and other consequences of the conflict.

At the summit, Xi is set to deliver an "important" speech. Moreover, an "important" political document will be signed, according to China's foreign ministry. Analysts expect that it might be a regional pact.

“The most important context of this summit is the Ukraine war and the region’s uncertainty with Russia’s future commitment, influence and role in the region,” Yun Sun, director of the China Program at the Stimson Center think tank in Washington, was reported as saying by CNN.

“Central Asia is always seen as Russia’s backyard, and China has been expanding its influence in the region … and there are new aspirations and directions for China-Central Asia relations – opportunities that were not present or available in the past,” she added.

Kazakh President Kassym-Jomart Tokayev was the first of the Central Asian leaders to hold a face-to-face meeting with Xi. Afterwards, a joint statement on building "enduring friendship" and sharing "weal and woe" was released.

"We have a common goal – to intensify bilateral relations," Tokayev told Xi. "We are also united by the desire to strengthen regional and international security and cooperation."

The two sides agreed to deepen cooperation in oil and uranium.

Kazakhstan, Central Asia’s biggest economy, has said it is targeting $40bn in annual two-way trade with China by 2030, up from over $31bn in 2022.

During his first day in Xian, Tokayev also attended the opening of Kazakhstan’s logistics centre at the city’s dry port. Last year, 23mn tonnes of freight were transported by rail between Kazakhstan and China, according to Tokayev. Goods transportation surged by 35% in the first quarter of this year, surpassing 7mn tonnes, Kazakh official statistics show.  

Two-way trade between China and Central Asia hit a record $70bn last year. Kazakhstan ranked first with $31bn. Kyrgyzstan followed with $15.5bn, Turkmenistan with $11.2bn (the country is the largest provider of gas by pipeline to China), Uzbekistan with $9.8bn and Tajikistan with $2bn.

In the build-up to the summit, a flurry of investment deals and potential deals between Chinese and Central Asian entities were announced.

China's Sinopec and Kazakh state-owned oil and gas company KazMunayGaz agreed key terms for a potential investment in a polyethylene plant in Kazakhstan's western Atyrau region.

Uzbekistan outlined how it has awarded contracts to a number of Chinese companies to build photovoltaic (PV) solar farms with a combined generating capacity of 4GW. CEEC Energy China is to invest $2bn to build 2GW of solar power plants across the Kashkadarya, Bukhara and Samarkand regions. A joint venture between Huaneng Renewables and Poly Technologies will develop a further 2GW of solar in the Jizzakha and Tashkent regions.

China-led Asian Infrastructure Investment Bank (AIIB) is to provide a $500mn soft loan to Tajikistan for the construction of incomplete elements of the Rogun hydroelectric power plant, part of a project that includes the world’s tallest dam. Two of the project’s six planned turbines have been launched so far. However, some estimates show Dushanbe requiring another $5bn to finish the investment.

Another announcement described how the government of Kyrgyzstan held talks with Chinese contractors over the construction of a 1GW solar farm. 

Akylbek Japarov, chairman of the Cabinet of Ministers, met with representatives of China Power International and China Railway 20 Bureau Group to discuss details of the plan, expected to be formally agreed during President Sadyr Japarov’s time at the summit. The farm is expected to be located in Kyrgyzstan’s Issyk-Kul region.

Japarov said: “This project is very important for us. Around 70% of hydropower potential of the country is untapped and the country has to import electricity at the same time.”

Kyrgyzstan, as well as Uzbekistan, are, meanwhile, are keen to obtain assurances from Beijing that the construction of the long-planned China-Kyrgyzstan-Uzbekistan (CKU) railway, which will amount to a tremendous engineering feat involving a huge amount of tunnelling through mountains in Kyrgyzstan, will start soon.

Also on the agenda at the summit is China’s plan to strengthen and expand air connections with the five Stans to the point that it can declare an “Air Silk Road.” The Civil Aviation Administration of China earlier this week said that Xian would begin a weekly flight to Dushanbe, the capital of Tajikistan, meaning the city would now be connected by air with all the Central Asian nations. The announcement came a week after a weekly China Southern Airlines flight was inaugurated between Xian and Turkmenistan capital Ashgabat. Currently, around a dozen airlines operate flights between China and Central Asian countries.

As always in economic dealings with China, Turkmenistan’s main concern at the summit will be obtaining reaffirmed commitments from Beijing that it will buy more Turkmen gas. The booking of sales will depend on the completion of the planned Line D of the Central Asia-to-China pipeline, which has been discussed for decades. China is Turkmenistan’s only major gas customer.

One big political concern for Beijing in relations with Central Asia, and also with Afghanistan, with which China has a short border, is ensuring that any instability in the region does not fuel potential militancy in its northwestern region of Xinjiang.