January was supposed to be the month when Chinese citizens would be welcomed into Central Asia’s largest states like never before. One hundred million Chinese tourists now travel abroad annually; Kazakhstan and Uzbekistan want a piece of that action.
Instead, the Central Asian republics are tightening entry restrictions in attempts to keep out the coronavirus, which was first identified in Wuhan in early January. Flights connecting the region with China have been cancelled; borders are essentially closed to Chinese citizens.
So it is only on paper, then, that since January 1 Chinese nationals have enjoyed visa-free travel to Uzbekistan and an expanded visa-free regime for those transiting Kazakhstan.
In 2019 alone, Uzbekistan welcomed 54,000 Chinese tourists. This year, Tashkent had hoped to double that figure, the deputy chairman of Uzbekistan’s state tourism committee, Ulugbek Azamov, told China’s Xinhua state news agency on January 11.
To accompany these tourists, more direct flights were planned before the outbreak of coronavirus. A direct air route linking Chengdu and Tashkent was launched on January 10. On January 6, Kazakhstan’s SCAT airlines introduced yet another direct flight to China, and reintroduced a route that had been suspended in mid-2019, when it was too hard for Chinese customers to get visas.
The coronavirus may also further delay construction of Tajikistan’s parliament, a $350 million gift from China. Plans are moving forward, an official said in Dushanbe on January 31, yet the Chinese workers who would do the actual work would need to be checked for the illness.
Chinese investors can’t get into Uzbekistan fast enough. In 2019, 531 new Chinese companies were registered in the country, bringing the total to 1,652 (compared with 1,828 Russian companies), reported state news agency Xinhua on January 14. A new economic cooperation office, staffed by Chinese officials, has opened within Uzbekistan’s Ministry of Investments and Foreign Trade – the first of its kind in Central Asia – reported state news agency China News Service on January 19. (Whereas neighbors like Kyrgyzstan and Tajikistan have established bilateral trade ties with particular Chinese provinces, this is the first state-to-state bureau to be permanently staffed in Central Asia.)
To further boost business, and internationalize the renminbi, the Chinese Commerce Ministry announced on January 21 that it had opened its first yuan-denominated loan service at Uzbekistan’s National Bank for Foreign Economic Affairs. Backed by a fund worth $72 million, the service allows Uzbek businesses to borrow yuan at fixed rates, encouraging trade while avoiding costly conversion fees (and dollar clearing networks). Uzbekistan becomes the 24th country with offshore renminbi clearing rights.
Commercial projects in brief:
- Almost 80 percent of Turkmenistan’s natural gas exports are sold to China. And Beijing wants more. The first gas pipeline from Turkmenistan to China began operating in 2009; two more branches were opened soon after. Those three transit Uzbekistan and Kazakhstan, where gas is also added. A fourth, much shorter line – “Line D,” which would transit Uzbekistan, Tajikistan and Kyrgyzstan – was originally supposed to begin operations in 2016. On January 23, China News Service said contractors working for the China National Petroleum Corporation had completed the first Tajik section of Line D, one of 42 tunnels that must be drilled through the mountains. (Tajik media, quoting a local official, said the tunnel was 99.8 percent complete.) Line D, which is now scheduled for completion in 2022, would add 30 billion cubic meters to the existing 50 bcm capacity of the Central Asia-China pipeline system. And it would be the only segment to pump exclusively Turkmen gas.
- Further south, in the Tajik president’s hometown of Danghara, Chinese investors have completed construction of a $90 million oil refinery, Tajik officials announced on January 30. The plant, built by Dong Ying Heli Investment and Development, a partner of state-run energy giant China National Petroleum Corporation, was originally supposed to open in 2015. It is unclear where the refinery will source crude oil, a resource Tajikistan is not known to have in abundance.
- On January 14, China Oil HBP Group, which is controlled by the Changsha government, signed a $242 million deal to build a gas processing plant for Kazakhstan’s Kashagan field, reported Eastmoney citing business wire China Fortune Media Group.
- China is not only eyeing traditional energy projects. On January 20, Zhejiang-based Risen Energy completed a solar energy station in Chulakkurgan, Kazakhstan, which was financed by the European Bank for Reconstruction and Development.
- In Tajikistan, Sinohydro Bureau 16, a subsidiary of state-owned Power China, closed a $138 million deal to modernize the Nurek hydropower station, the company’s website said.
- In January, a diverse set of Chinese-funded factories opened or broke ground. Shaanxi-based Xiangsheng Group commissioned Uzbekistan’s first Chinese cement factory in the Fergana region on January 12, fulfilling a $113 million promise signed last summer. Xiangsheng plans to expand cement production to five more Uzbek provinces.
- Uzbek media reported on January 12 that Jiangxi-based Hengbang Textile Central Asia had begun construction on a $30 million textile manufacturing plant in the Namangan Free Economic Zone. The plant plans to recycle excess fabric into yarn. Meanwhile, Sinotruck invested $12.1 million to form a local joint-venture, Podrobno.uz reported. And a group of Uzbek IT entrepreneurs visited China to explore collaboration with Chinese giants such as Alibaba and Tencent.
Trade in foodstuffs
As Beijing diversifies food imports amid its trade war with Washington, it continues to expand purchases from neighboring countries. On January 2, China eased customs regulations on soybean imports across from its northern border, including its frontier with Kazakhstan.
At the same time, the first batch of Kazakh flaxseed arrived in Lanzhou on January 12, reported the Gansu Daily, followed by the first Kazakh beef in Beijing on January 20, the Kazakh Foreign Ministry announced. (Kazakhstan had previously exported beef to China, but this suggests the cuts of meat had never reached the capital. The hope is for the beef eventually to be exported to Southeast Asia.)
And finally, Turkmenistan, which has faced chronic food shortages in recent years, is offering up something sweet. Taze Ay, a Turkmen ice cream company, began Chinese-bound shipments in January via the China-Kazakhstan-Turkmenistan rail, according to a terse press release from the Chinese Commerce Ministry.
Niva Yau researches China in Central Asian affairs at the OSCE Academy in Bishkek.