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During a meeting with the presidents of Bangladesh, Cambodia, Laos, Mongolia, Myanmar, and Pakistan on November 8, 2014, President Xi Jinping announced that China was contributing 40 billion dollars to establish a Silk Road Fund (silu jijin 丝路基金) to strengthen regional connectivity and enhance cooperation with neighboring countries. According to Xinhua news agency, the fund is earmarked to provide “investment and financing support [for] infrastructure, resource [development], industrial cooperation, and financial cooperation.”¹ Xi’s announcement deepens China’s commitment to enhancing economic interconnectivity across Eurasia, the Persian Gulf, and North Africa, the vision for which had been unveiled on September 7, 2013 during his state visit to Kazakhstan, where he had proposed building a Silk Road Economic Belt (sichou zhilu jingjidai 丝绸之路经济带). Xi proposed that China and Central Asia “enhance communication and … regional economic integration in terms of both policy and law.” The Eurasian landmass could serve as a strategic thoroughfare between the Pacific and Baltic oceans.² Three weeks later, before the Indonesian parliament, Xi proposed a Maritime Silk Road [haishang Sichou zhilu海上丝绸之路] for closer cooperation with the countries of Southeast Asia.³ With this array of initiatives, Xi Jinping has prioritized economic interconnectivity in Asia.

Since September 2013, the Silk Road Economic Belt and the Maritime Silk Road have served as a hallmark of the current leadership’s plans for interconnectivity across Eurasia, the Persian Gulf, Southeast Asia, and North Africa, in which China plays a pivotal role. Subsumed within the one belt, one road (yidai yilu 一带一路) blueprint is a quarter-century history of continuously deepening Chinese engagement with countries along its geographical periphery, including those of post-Soviet Central Asia: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Not only is cooperation with the Central Asian states fundamental to the Silk Road political imagery framing China’s Eurasian diplomacy, a topic that I have discussed at length elsewhere,⁴ but Chinese diplomacy towards Central Asia is also reflective of its efforts to seek new cooperation—captured in the political lexicon of multilateralism (duobian zhuyi 多边主义) and mutually beneficial cooperation (huli hezuo 互利合作)—in the unfamiliar, unipolar, post-Cold War order that had dawned in the 1990s.⁵

Since the early 1990s, Beijing has sought wide-ranging cooperation with Central Asia. Besides the steady expansion of a prominent multilateral mechanism, the SCO, China’s official trade with the region has grown a hundred-fold, from less than 500 million dollars in 1992 to more than 46 billion dollars in 2012.⁶ According to 2013 data released by the US Energy Information Administration, China was the second largest importer of oil from Kazakhstan.⁷ During Xi’s September 2013 visit, Beijing and Astana signed deals worth 30 billion dollars, whereby the former acquired an 8.3 percent share in Kashagan, allegedly the largest oilfield outside of the Middle East.⁸ Such acquisitions are noteworthy considering that China was a latecomer to the Central Asian energy market, acquiring assets only from 1997, and the pipeline from Kazakhstan was not inaugurated until 2005.⁹ (Prior to 2005, small quantities of oil had been imported by rail).¹⁰ Given that China’s influence in Central Asia had been nonexistent until the 1980s—the five republics lay on the other side of the heavily militarized Sino-Soviet border—, China’s sudden regional engagement, as well as Central Asia’s role in China’s new Silk Road initiatives, warrant inquiring how Beijing’s regional diplomacy is being received in Central Asia and why.

Perceptions are important. Those of Chinese diplomacy provide a point of comparison with global powers (Russia and the United States) and regional countries (Iran, India, Pakistan, and Turkey), all of which have economic and strategic interests in Central Asia. They are indicative, too, of how successful Beijing will be as it moves forward in realizing its vision of a more integrated Eurasia. This article unravels how China’s regional diplomacy has been perceived across Central Asia, specifically in Kazakhstan and Kyrgyzstan, both of which share extensive land borders with China (and happen to be the most well-understood in an understudied region). Here, I scale down from geo- and energy-politics to consider commercial relations between China and Central Asia. Recent years have seen extensive scholarship in the English language on Sino-Central Asian relations¹¹ (most of which remains outside the ambit of the present article due to its limited scope).

In Central Asia, China has played a critical role through sustaining an extensive commercial web that not only provides low-cost manufactured products, but also employment to hundreds of thousands of self-employed traders. While there has, at times, been wariness at China’s increasing prominence in the region, its commercial inroads—whether the import of manufactured consumer goods or multi-billion dollar investments in the energy sector—are seen as important. This conclusion is based on my reading of commercial trends over the twenty-two years since the independence of the Central Asian states. In addition, I draw from discussions with academics and members of non-governmental organizations in Kazakhstan and Kyrgyzstan, as well as over four hundred open-ended interviews with traders that I conducted in Kyrgyzstan in 2013 and 2014 as part of an ongoing project on bazaar networks across Central Asia. As I discuss, most of the merchants that I spoke with have benefited from the extension of China’s commercial web into Central Asia.

While we can look to Beijing’s Central Asian diplomacy for a general roadmap of how Beijing’s new Silk Road initiatives are likely to take shape, this has had unique modalities, which I analyze in four parts. I begin with a discussion on the geographical proximity that framed Chinese-Central Asian relations and which factors into any discussion on China’s Silk Road initiatives. Part Two presents an overview of Sino-Central Asian commercial relations. Part Three considers how China’s regional initiative is being perceived in Central Asia. Finally, in Part Four, I draw upon my own fieldwork in Central Asian bazaars to argue that China played—and continues to play—an essential role in Central Asia’s economic wellbeing.

Sino-Central Asian borderlands: The constraints and possibilities of geography

The Central Asian states are landlocked and were long auxiliary to the greater Soviet economy. These circumstances posed three challenges following independence: 1) the Central Asian economies were not comprehensive or viable independent of the greater Soviet economy. The emphasis had been on specific sectors of the economy, e.g., agriculture, land reclamation, animal husbandry, and energy extraction.¹² Also, given the widespread collapse of the manufacturing sector, imports from within the former Soviet Union disappeared; 2) following the disintegration of the Soviet Union, the subsidies, on which Central Asia has been dependent, dried up; and 3) given that the republics were landlocked, the Central Asian republics became dependent on their neighbors for exports, imports and transit trade in these new conditions.¹³

Beijing found itself at an immediate advantage, although it was cautious in ensuring that it did not appear to encroach upon Moscow’s former periphery.¹⁴ First, China shares a land border with Kazakhstan (1,533 kilometers), Kyrgyzstan (858 kilometers), and Tajikistan (414 kilometers) in the Xinjiang Uighur Autonomous Region.¹⁵ The current population of these three states is 16.8 million, 5.5 million and 8 million respectively (China does not have a border with Uzbekistan (29.8 million) nor Turkmenistan (5.1 million), trade with which has to transit at least one other country). Second, improving relations between China and the Soviet Union since 1983 had a regional dimension. Transport infrastructure was developed, goods moved increasingly freely, and there was growing people-to-people contact. Traders that I interviewed in the Kara-Suu bazaar in southern Kyrgyzstan in the summer of 2014 recalled that by the mid-1980s, Chinese manufactured goods—mostly shoes, but also fabrics, thermos flasks, and Japanese-made transistor radios—were steadily trickling into Central Asian bazaars from Xinjiang. Even before the Soviet Union collapsed, an increasing number of independent buyers from Central Asia were visiting Xinjiang for trade.¹⁶ The movement of merchants and merchandise across the border greatly expanded when the Central Asian republics became independent states.

Besides the attraction of its goods in Central Asian markets, China’s development policies during the Eighth Five Year Plan (1991-1995) advocated accelerated opening to the outside world in the wake of Deng Xiaoping’s southern tour. Renewed emphasis on building international commercial cooperation, including in the less developed northwest, created a favorable environment for cross-border commercial exchange as the Central Asian states were granted diplomatic recognition by China in the first week of January 1992.

The number of international “ports” in Xinjiang serves as an indicator of increasing connectivity with neighboring countries. First, the Urumchi airport received an international port status in 1982. One year after the independence of the Central Asian republics, Xinjiang had eleven “ports”; today, the number has increased to 27. The busiest are Khorgas (Huoerguosi 霍尔果斯) to Kazakhstan; Irkeshtam [Yierkeshentan 伊尔克什坦] and Torugart [Tuergate 吐尔尕特] to Kyrgyzstan; and Kulma [Kuolemai 阔勒买] to Tajikistan. Sharing borders with eight countries—in addition to the three Central Asian states, Afghanistan, India, Mongolia, Pakistan, and Russia—, Xinjiang is projected to allow China to commercially orient itself towards neighboring markets in Central, South, and West Asia. The leadership has encouraged Xinjiang to build commercial ties across Eurasia, and regional trade fairs, which attract delegates and businesspeople from many countries, are highlighted by the state-controlled media.¹⁷

Leaning on China? Sino-Central Asian trade and its modalities

At the end of 1992, following the first year of independence, China’s trade with the Central Asian republics was 469 million dollars, 369 million dollars of which was bilateral trade with Kazakhstan, half of whose imported consumer goods were from China.¹⁸ By 1996, trade had crossed 750 million dollars, by 2000, it exceeded one billion dollars, and by 2003, it had crossed the 3.5 billion dollar mark.¹⁹ Three complexities are subsumed within this trade data: 1) the majority is bilateral trade between China and Kazakhstan, much of which is in the energy sector as China seeks to diversify its oil procurement.²⁰ In addition, these figures include investment by the Chinese government and Chinese state enterprises in infrastructure development (an unspecified amount of which circulates back to China through procurement or deployment of Chinese technicians and laborers); 2) official trade figures are inaccurate regarding consumer goods imported by self-employed traders. This trade is characterized by a high degree of informality as the value and volume of trade is underreported. In 1998, Liu Qingjian estimated that undocumented trade could be as high as the documented trade.²¹ In 2013, a study released by the IMF estimated that the informal economy as a percentage of GDP was 26 percent in Kyrgyzstan, 35 percent in Kazakhstan, and 33 percent in Tajikistan.²² As I note in the following section, marketplace activities in Central Asia—dealing largely in goods imported from China—are substantially underreported; and 3) as an extension of informality, trade figures are also inaccurate insofar as the eventual destination of the merchandise may be a third country. Not only is the 2012 China-Kyrgyzstan volume of 5.16 billion dollars likely to be an underestimation,²³ but the majority of goods entering Kyrgyzstan’s wholesale markets are destined for markets in Kazakhstan, Tajikistan, and Uzbekistan, and even for Russia.

Incomplete as they might be, official data are evidence of China’s sharply increasing commercial footprint in Central Asia (and the decline of Central Asia’s reliance on Russia and other former Soviet states). For example, in 2012, 28 percent of Kazakhstan’s imports were from China as opposed to 11 percent from the Ukraine (Russia was not among the top three). In neighboring Kyrgyzstan, 55 percent of the imports were from China as opposed to 17 percent from Russia. The figures from Tajikistan were illustrative of a similar trend: 41 percent of imports from China versus 16 percent from Russia.²⁴ Since independence, the economic viability of Central Asia rests on the export of energy in Kazakhstan and Turkmenistan (including to China), trade in manufactured goods with China for Kazakhstan, Kyrgyzstan, and Tajikistan, and, although not relevant to this discussion, labor migration to Russian from Kyrgyzstan and Tajikistan.

Stops along the Silk Road: The view from Central Asia

The majority of Central Asian citizens benefit from Beijing’s regional engagement, although, at the far end of the spectrum, there is some caution regarding the influx of Chinese citizens or ecological changes stemming from Chinese business practices. In geopolitical terms, China counterbalances Russian and American influence in Central Asia. Chinese investment and commercial engagement offer an alternative to investment from and commercial alignment with Moscow and Washington, and to a lesser extent, Istanbul. Counterbalance is not a zero-sum game. It leads toward diversification of investment and cooperation, and moves the Central Asian states away from dependency on a single country. Academics and policy makers with whom I speak in Central Asia are clear about its pragmatic advantages. Being able to build close cooperation with Beijing allows states to exercise autonomy from Moscow, to which Central Asia was subordinated since the mid-nineteenth century, as well as from Washington, whose foreign policy objectives may not find support at the regional level and are sometimes viewed with unease. Likewise, while all the Central Asian republics besides Tajikistan have Turkic–majority populations, the republics did not wish to become satellites of Turkey following independence.

China’s counter-balancing role is most evident in Kazakhstan, the richest of the states (2012 GDP 202 billion dollars). Between 2000 and 2011, Chinese FDI in Kazakhstan was reported at 9 billion dollars, probably a considerable underestimation.²⁵ Officially, Chinese investment in Kazakhstan is welcome (although, in the 1990s, Central Asia and the Caspian were touted as having vast energy resources, actual investment—as opposed to pledges—was slow to be forthcoming). In fact, the Chinese were among the earliest large investors in the country, with the majority of funds channeled through state-owned enterprises. In 2013, this began to change as investment diversified with the announcement of a 1.7 billion dollar loan for the national welfare fund, in addition to pledges to help manage water resources, facilitate mineral extraction—uranium, copper, gold, nickel—and build a south-north high-speed rail link between Almaty and Astana.²⁶

Neighboring Kyrgyzstan, poor with no significant energy resources (2012 GDP 6.5 billion dollars) has likewise actively sought Chinese investment, which to date is about 1.3 billion dollars. Recent Chinese pledges of up to 3 billion dollars, including building a gas pipeline from Turkmenistan that would transit Kyrgyzstan and improve the transport infrastructure, have been welcomed by President Almazbek Atambayev.²⁷

If Chinese investment in Central Asia’s natural resources has not triggered popular narratives of Chinese appropriation of the region’s natural wealth, what of views concerning the arrival of Chinese people themselves, whose numbers have soared both for trade and transit to a third country? The limited empirical information from Kazakhstan reflects two waves of Chinese migration: 1992-1994, when it allowed visa-free entry to Chinese citizens and from 1999 with China’s Go Global Strategy (zuochuqu zhanlue 走出去战略). In the first wave, the Kazakhstan Border Services estimated that between 150-200 Chinese entered the country daily, most to sell Chinese manufactured products. The tide of migrants to Kazakhstan slowed after a visa regime was put in place.²⁸ In the second wave, many who came to Kazakhstan did so for infrastructure development related to investments in the energy sector. There is no consensus on the number of Chinese in Kazakhstan; numbers range between 29,000 in 2006²⁹ to 300,000 in 2009.³⁰ While there has been talk of a Chinese influx, it is not indicative of large-scale anti-Chinese sentiment. Turkey, in fact, remains the largest supplier of outside labor to Kazakhstan.³¹ Empirical studies on local attitudes towards Chinese migration—the large majority of which tends to be temporary (less than 500 have acquired permanent residence since 1992)—concluded that the citizens of Kazakhstan were indifferent to Chinese migration, although there is evidence to suggest that as the Chinese presence is increasing, it may lead to a cautious attitude towards the country and the Chinese people.³²

In Kyrgyzstan, too, there are widely varying estimates—between 80,000 and 300,000 in a country of 5.5 million—for the number of Chinese.³³ Furthermore, in 2011 and 2012, Kyrgyzstan saw riots against Chinese mining practices, sternly reported in official Chinese media. “Blind investment choices, irresponsible investment competition, the country’s disorderly mining industry and resistance from locals … trap many foreign countries working in this country in an unstable and risky situation,” commented Li Deming, the head of the Chinese Chamber of Commerce in Kyrgyzstan, in the Global Times following protests against the Fujian Zijin Mining Group in 2011 and 2012. Although there may be an underlying anti-Chinese sentiment, it is not possible to untangle it from local grievances in the wake of ecological transformations that accompany mining practices. In fact, unrest against the Chinese mine was overshadowed by prolonged unrest in 2013 against the Canadian Centerra Gold, in which over fifty people were wounded and a state of emergency was declared in the Jalal-Abad region in southern Kyrgyzstan.³⁴

The Central Asian bazaar as a weathervane?

Central Asian perceptions of China are echoed in the Central Asian bazaar, as seen in upwards of four hundred interviews conducted in Kyrgyzstan as part of ongoing research on commercial networks and mobility in greater Central Asia. The bazaar typology is complex: it encompasses not only quantity and variation of merchandise sold in a particular place (bazaars are assumed to have wider variety than a market), but the relative degree of informality in commerce (in a bazaar, prices are not marked, bargaining is commonplace, and businesses are not formally audited), and also cultural elements. One hears statements such as: “the bazaar is a part of our culture,” or “bazaars have been around since the advent of Islam.” In Central Asia, bazaars are in contrast to markets or plazas that tend to focus on particular merchandise, have marked prices, and are more closely regulated. They usually operate in structures specifically built for that purpose; many bazaars, by contrast, operate out of shipping containers, underscoring the transitory process that led to their emergence.

Dordoy bazaar in northern Bishkek (population 846,259) is the largest bazaar in Kyrgyzstan. At a June 2013 interview, the head of the Dordoi traders association estimated that the bazaar had 20,000 outlets and employed approximately 60,000 individuals, making it one of the largest bazaars in Asia. Kaza-Suu bazaar, located in Kara-Suu twenty-five kilometers outside of Osh (population 232,685), is the second largest in Kyrgyzstan. There are about 7,000 outlets where approximately 15,000 people find employment, as estimated by the bazaar director in the summer of 2013. A World Bank study in 2010 estimated that the combined turnover of Dordoi, Kara-Suu, and Medina, a wholesale cloth market, was between 8 and 10 billion dollars.³⁵

Dordoy and Kara-Suu bazaars factor into any discussion on China’s new Silk Road initiatives for two reasons. First, about 80 percent of the goods sold in these markets are manufactured in China. They are imported by self-employed merchants operating individually, or in small, personalized networks. The second reason these bazaars are important is because over the last decade, Kyrgyzstan has emerged as the hub of Chinese imports into the region as a result of the country’s lax import laws and the ease of reexporting the merchandise across the former Soviet Union. Based on my interviews, about 80 percent of the merchandise being sold in these wholesale bazaars originates in China, making China essential to Central Asia’s commercial landscape. While some of the traders with whom I spoke relied on the Internet or Skype to order goods from China, others told me that they made as many as 12 trips a year to China, “because handbag designs change so regularly,” as one seller explained.

Traders downplayed difficulties they faced at borders; on the contrary, a recurrent theme was ease of mobility. They reported a high degree of trans-cultural trust in Dordoi and Kara-Suu bazaar. Only three sellers said that they felt the need to go personally to China to ensure that lower-cost merchandise was not substituted for what they had ordered; otherwise, the reason for traveling was to survey the market. When I asked the head of the Dordoi traders association about Chinese sellers in the Dordoi bazaar, she responded: 1) Dordoi was open for business for all nationalities—Central Asians, Afghans, Russian, Turkish people, and Chinese—; and 2) Of the 20,000 outlets in Dordoy, less than one-thousand were owned by the Chinese.

There was no indication amongst merchants whom I interviewed that Chinese imports had destroyed local manufacturing. After independence, Kyrgyzstan’s economy found itself in a free fall; this decline resulted from the severing of ties with the greater Soviet economy,³⁶ and was not a result of Chinese goods entering the republic. The economically disenfranchised became shuttle traders—the figure of half-a-million shuttle traders in the mid-1990s was accepted as a reasonable estimate (besides China, India, Pakistan, Thailand, Turkey, and the United Arab Emirates were popular destinations). For Russia, the figure of shuttle traders is much higher, estimated between 10 to 30 million for the same period, many of whom were transiting through Central Asia to reach China.³⁷ “Everyone was trading,” a Bishkek university professor emphasized, as he recalled how able-bodied men and women shuttled between China, Central Asia, and Russia. The volume underscores the fact that people were trading to survive. This explanation is still given for the decision to enter the bazaar. There are limited opportunities otherwise. Even in today’s resource-rich Kazakhstan, outwardly modernizing at a breakneck speed, itinerant trading provides livelihood for many, as evidenced by the hundreds of traders from Kazakhstan who come to Dordoy daily to shop and self-import goods.

Conclusion

In the aftermath of the Cold War, Central Asia emerged as a new arena for China to extend its diplomacy. Besides a high profile multilateral initiative—in which it sought to work alongside Russia—, Central Asia was of strategic importance for China due to its location and energy resources. Since the Central Asian republics became independent, China has counterbalanced Russia and the United States, although this is not to insinuate that Beijing, Moscow, and Washington were locked in a zero-sum Great Game over a hapless Central Asia. China’s ability to build inroads—evidenced by increasing trade between China and the region (much of which goes unreported), extensive investments in infrastructure, and imports of energy—may be a good indicator of where China hopes to see its new Eurasian diplomacy heading as it broadens the Silk Road rubric to include parts of Europe, North Africa and the maritime trade routes, binding China to the Indian Ocean and Southeast Asia.

The achievements of Chinese diplomacy cannot necessarily be duplicated along the Silk Road Economic Belt and the Maritime Silk Road. China’s diplomacy in Central Asia was unique due to an extensive shared land border. Improving relations with the Soviet Union in the 1980s allowed both sides to promote trade as a confidence building measure. In the 1990s, China sought closer economic ties with Central Asia at a time when Beijing was concentrating on modernizing its own western regions after a decade of intensive industrialization in the coastal areas. Most critically, Chinese engagement with Central Asia came at a time when it was badly needed by the post-Soviet republics. Any discussion of future Chinese engagement in Central Asia—and how it may be received—is underscored by the fact that the Central Asian states are now heavily dependent on China for their economic well-being.