China in new ‘Great Game’ over Central Asian riches

  • the focus is energy supplies:China needs them, Russia wants to control their distribution, and Western powers want to ensure they are not monopolized by Moscow or Beijing.

KHORGOS, Kazakhstan: The driver of the 18-wheel tractor-trailer from China idling at the Kazakhstan-China border said apples were the cargo he brought to Almaty, Kazakhstan’s booming commercial centre. For Kazakhs, there’s a tart irony in the shipment.

Almaty’s region is where the first apple trees were found and the first apple orchards planted. The city was a centre of the Soviet Union’s s fruit industry. Its very name means “Father of Apples.”

In the past few years, Chinese fruit, vegetables, TV sets, T-shirts and tires have flooded markets along the old Silk Road in former Soviet Central Asia. Each day, all along the Chinese border, hundreds of tractor-trailers rattle west.

These goods are the most visible sign of Beijing’s growing power here as China, Russia, the United States and others compete for financial and strategic advantage on the borders of some of the world’s most turbulent countries, Iran, Afghanistan and Pakistan. It’s a struggle in which China seems to be gaining the upper hand.

At stake are oil, hydropower sources, strategic metals, pipelines, transit routes and access to markets. The chief prize is energy supplies: China needs them, Russia wants to control their distribution, and Western powers want to ensure they are not monopolized by Moscow or Beijing.

China today is reaching deep into Central Asia to tap oil and gas reserves, using pipelines and investments to challenge Russia’s monopoly on gas shipments and to thwart Moscow’s hopes of controlling a bigger share of the region’s oil.

In recent years, China and Russia have forged a strategic alliance, as part of a group called the Shanghai Cooperation Organization, to squeeze the United States out of Central Asia, after the US established military bases here. They have largely succeeded.

However, friction is developing between the two neighboring giants. And given China’s 1.3 billion people and its economic strength, it seems certain that Russia, with its dwindling population and economy based narrowly on energy, will increasingly be on the defensive.

Nowhere, perhaps, is China’s presence more starkly evident than at Khorgos, straddling the Kazakh-China border.

Central Asia, which includes Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan, was long regarded as the middle of nowhere, caught between Russia, China, Siberia and Afghanistan’s Hindu Kush mountains.

The region emerged from isolation about 200 years ago as Russian imperial troops and British spies competed for influence in a rivalry that Rudyard Kipling called “The Great Game”.

In today’s Great Game, Russia finds itself struggling to shore up its influence through arms sales and energy contracts, dominance of mobile phone and TV networks, and shared language and culture, as well as the Kremlin’s pledges of billions in fresh investment.

Above all, Moscow wants to preserve its monopoly on distributing Central Asian gas and its major role in other energy sectors. To this end, President Vladimir Putin proposed at an October regional summit in Tehran that all the Caspian Sea states have a veto on any new pipelines crossing the sea bed, apparently so Moscow can block plans to connect Kazakhstan’s and Turkmenistan’s rich oil and gas fields to the west, bypassing Russia.

But Moscow’s dominance of the region’s energy reserves is eroding. Despite Russian pressure, both Kazakhstan and Turkmenistan have welcomed discussion of a trans-Caspian pipeline, and Putin’s proposal was met with silence.

Twice in the past two years, Turkmenistan has signed contracts to ship natural gas west through Russian pipelines, only to turn around a month later and, in effect, promise to ship the same gas east to China.

After the Soviet collapse, Russian goods vanished For China, with its appetite for raw materials and its awakening as a world power, Central Asia is the Wild West: a land of opportunity, a reservoir of resources and a corridor to the Middle East’s oil fields and Europe’s wealthy shopping districts.

China has been moving in quietly and steadily since the mid 1990s, when trucks loaded up on scrap iron, steel and copper at derelict Soviet factories and carted the metals back to China for recycling.

In the 1990s, China did relatively little trade with Kazakhstan, Central Asia’s economic motor, an oil-and gas-rich nation of 15.2 million larger than Western Europe. But by 2006, China ranked third behind Germany and Russia in Kazakhstan’s US$35.6 billion (euro24 billion) export market and second after Russia in the nation’s US$22 billion (euro15 billion) import market.

The tiny, mountainous nation of Kyrgyzstan imported almost nothing from its giant neighbor to the east. By 2006, 57 per cent of Kyrgyzstan’s imports came from China, and only 15 per cent from Russia.

In 2003, Beijing predicted a 30-to 50-fold increase in its trade with Central Asia within a decade.

China’s growing clout makes many Central Asians anxious.

But China knows much of its future energy supply is here. The state-owned China National Petroleum Company bought PetroKazakhstan in 2005 for US$4.2 billion (euro2.9 billion), then China’s biggest foreign acquisition. In July 2006, the CNPC and Kazakhstan’s Kazmunaigaz completed a US$700 million (euro477 million), 597-mile (962-kilometer) oil pipeline across Kazakhstan to Alashankou in northwest China.

The pipeline, designed to supply up to 15 per cent of China’s oil needs, will serve the major new Chinese refinery in Karamay, to open in 2008. By some estimates, one-sixth of Kazakhstan’s oil production will someday be pumped to China.

Turkmenistan in August started building a 4,350-mile (7,000-kilometer) natural gas pipeline through Kazakhstan to northwest China. When completed in 2009, the pipeline is expected to provide China with 30 billion cubic meters (1.1 trillion cubic feet) of natural gas a year. Cheap Chinese goods have turned many poor Central Asians into consumers. But some experts say dependence on Chinese products slows the growth of local industries.

Tajikistan, with a per capita annual gross domestic product of just US$1,300 (euro886), desperately needs investment. Saifullo Safarov, deputy director of the Center for Strategic Research in Tajikistan, said without Chinese money, his country can’t exploit its mineral wealth.

In July, the Chinese Zijin Mining Group bought 75 per cent of Tajikistan’s Zerafshan Gold Company, once controlled by a British company, and in late September it claimed to have increased the mine’s production by 50 percent. Despite China’s economic onslaught, Russia retains enormous influence.

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