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china-kyrgyzstan relations

China-Kyrgyzstan Relations

Author: Dante Schulz

Feb 25, 2022

Image source: China Daily

Relations between Kyrgyz and Han Chinese populations date back over a thousand years. In the Kyrgyz epic poem, The Epic of Manas, which has been passed down by each generation, the Kyrgyz hero Manas expels the Chinese from the land after fighting alongside other Türkic tribes in several decisive victories against the Chinese imperial army. This poem is a baseline for Chinese-Kyrgyz relations today. Although Kyrgyzstan and China established bilateral diplomatic relations in 1992, tensions remain in the relationship that undermine the ability for building trust and thus solidify long-lasting partnerships.[i]

In the decade after China and Kyrgyzstan established official diplomatic ties, the two countries worked to delineate their 661-mile-long border. Relations between the two countries in the 1990s were limited, with minimal cultural exchanges and relatively little trade. Kyrgyzstan, though, was part of the Shanghai Five that later developed into the Shanghai Cooperation Organization (SCO).[ii]

Relations between China and Kyrgyzstan demonstrably began to improve after President Xi’s announcement of the Belt and Road Initiative (BRI) in 2013 and Kyrgyzstan’s declaration it would join as a partner country. Shortly thereafter, the then Kyrgyz President, Almazbek Atambayev, and President Xi met at an SCO meeting to solidify ties as a “strategic partnership.” In 2018, then-Kyrgyz President Sooronbay Jeenbekov and President Xi described bilateral relations as at their “highest level in history” and affirmed that neither country would join a multilateral organization that would subvert the other.[iii]

Economic Relations

Since signing on to the Belt and Road Initiative in 2013, 21 BRI projects totaling $2.11 billion have been implemented or are underway in Kyrgyzstan. Furthermore, China accounted for almost half of the $5.59 billion in foreign direct investment that Kyrgyzstan had attracted by the end of 2019.[iv] 

Foreign direct investment in Kyrgyzstan is mainly concentrated in mining and other extractive sectors. However, Chinese ambitions for new transit routes across Central Asia put a special spotlight on Kyrgyzstan.[v] The proposed China-Kyrgyzstan-Uzbekistan (CKU) Railway is among the most ambitious of China’s projects. The railway would connect Andijan, Uzbekistan, with Kashgar, China, via Kyrgyzstan and would shorten the transport of goods between Europe and China while also reinforcing both Kyrgyzstan and Uzbekistan’s positions in BRI projects. However, the project has stalled because Kyrgyzstan hopes to utilize the financing connected with the project to build a rail link that includes Kyrgyzstan’s northern cities as well.[vi] In addition, Kyrgyzstan authorities are looking for other sources of financing, such as Russia or Uzbekistan,[vii] to mitigate the amounts of Chinese debt being incurred.[viii]

Kyrgyzstan’s sovereign debt exposure to China is one of the highest in the Caspian region, standing at about 29.8 percent of its GDP. In February 2021, of the $5 billion Kyrgyzstan has reportedly incurred, over 40 percent of its debt was owed to China’s Export-Import Bank.[ix] Kyrgyzstan was slated to repay its debt on time, but the economic slowdown related to COVID-19-related shutdowns impeded its ability to repay its loans to China. The high percentage of Kyrgyz loans owed to China are an important factor in the two countries’ bilateral relations.[x]

Many in Kyrgyzstan remember battling frigid temperatures in January 2018 after a Chinese-repaired power plant in the country malfunctioned.[xi] In 2013, China’s Export-Import Bank and the Kyrgyz government had signed a $386 million loan agreement for the Chinese company, Tebian Electric Apparatus Stock Co. Ltd. (TBEA), to modernize the plant. Although preliminary analysis revealed that the 2018 malfunction occurred in a part of the plant not covered in the modernization efforts, TBEA came under scrutiny by local Kyrgyz for engaging in shady dealings. The fact that the deal was brokered shortly after President Xi unveiled the BRI, made it an early test of the initiative and the powerplant breakdown harmed Kyrgyz trust in Chinese investors.[xii]

Essential to avoiding getting caught in a debt trap with China is the ability to find financing from other sources. It is worth noting 84 percent of Chinese BRI investments are in countries classified as medium to high risk.[xiii] Governments and commercial entities in these countries are highly likely to prefer financing from U.S. or other western sources – if such funding is at all available.

The China-Kyrgyzstan-Uzbekistan Railway is a vital project to the BRI in Central Asia but has been shrouded in a laundry list of barriers to completion. (Cabar)

Kyrgyzstan’s actions towards foreign assets, however, could negatively affect its standing among other foreign investors and produce an increased dependence on Chinese financing and investment. Kyrgyzstan President Sadyr Japarov’s decision to revoke the mining license for Canadian company, Centerra, which operates Kyrgyzstan’s largest gold mine in the eastern portion of the country, Kumtor, could well have such effects.[xiv] Kyrgyzstan later added the former leaders of the Canadian company to its national wanted list for allegedly engaging in corrupt dealings after the Kyrgyz government assumed control of the mine.[xv] President Japarov’s administration justified the move with a report indicating that Kumtor mine had done irreparable damage to the country’s water supply and local glaciers and had increased the chance of toxic waste spillage in the event of an earthquake.[xvi] While many locals support nationalizing the mine, the rapid course of events and lack of a clear, sound legal basis for the government’s actions are likely to deter other foreign investors.[xvii] The Kumtor mine proceedings will likely have little impact on Chinese foreign investors in Kyrgyzstan, but the drama could drive away other foreign investors hoping to invest in a country with a strong rule of law.

Kyrgyzstan’s bilateral trade with China has also grown. Kyrgyz exports to China were valued at $86.4 million in 2019, ranking China sixth among its largest trading partners. Precious-metal ore comprised 30.7 percent of its exports to China. Imports from China amounted to $5.1 billion in 2019, making Kyrgyzstan China’s 56th largest trading partner. While overall bilateral trade has increased between the two countries, the immense trade deficit with China is another vulnerability for Kyrgyzstan’s economy.[xviii]

Security Relations

Kyrgyzstan has allowed several foreign militaries to use its territory in dealing with the security situation in Central Asia, including Afghanistan. The Russian Air Force has used Kant Air Base since 2003. In 2001, the United States gained permission from Bishkek to set up an air transit center at Manas International Airport for operations in Afghanistan.[xix] In exchange for the lease, the United States paid a hefty rental fee and encouraged USAID assistance projects in the country. Kyrgyzstan, however, ordered the base closed in 2014 after pressure from Moscow and a Russian promise of investment funds that then never materialized. The closure of the United States’ military facility and the significant decline of U.S. foreign aid created a void that China could and did fill.[xx]

Russia still plays a critical role in Kyrgyzstan’s security picture. Kyrgyzstan is a member of the Collective Security Treaty Organization (CSTO). Russia also maintains about 7,000 active troops in Tajikistan and at Kyrgyzstan’s Kant air base.[xxi]

At the same time, Kyrgyzstan is an active member of the Shanghai Cooperation Organization and hosted the SCO summit in 2019.[xxii] China is proving to play a greater role in Kyrgyzstan’s security agenda. For example, China’s People’s Armed Police (PAP) paramilitary unit has conducted drills and enhanced cooperation with Kyrgyzstan’s national guard unit, alongside Tajik and Uzbek counterparts.[xxiii]

The Taliban’s return to power in Afghanistan has placed the entire Caspian region on edge. Kyrgyzstan’s approach to the Taliban might be characterized as disgruntled tolerance. Kyrgyzstan has sent high-ranking officials to Kabul to meet the Taliban’s foreign minister,[xxiv] and Kyrgyzstan has been cautious of accepting ethnic Kyrgyz from Afghanistan.[xxv] Meanwhile, China has stepped up diplomatic engagements with the Taliban.[xxvi] Concern that Taliban rule could embolden violent extremist groups across the region has implications for Chinese-Kyrgyz security relations. The situation in the region, including the present level of U.S. engagement and attention, can make it easier for China to expand its military and security reach in the region.

Local Reactions to Chinese Involvement

Kyrgyz demonstrators have been the most steadfast in the region in opposing Chinese business ventures. In February 2020, about 1,000 Kyrgyz protesters staged rallies outside of the Naryn Free Economic Zone that was arranged to be leased by a joint Kyrgyz-Chinese venture for 49 years and would have been the site of a logistics center.[xxvii] Nearby residents feared that their land could be confiscated for the project. The protests caused massive backlash. and China pulled out of the agreement. Moreover, frustration lingers against China from the power plant dysfunction during the 2018 winter in Bishkek, which is used as justification for further dissatisfaction.[xxviii]

Kyrgyzstan has also witnessed an uptick in anti-Chinese demonstrations against mass internment of ethnic minorities in Xinjiang as well as because of economic fears. In December 2018, about 150 members of the Kyrgyz nationalist group, Kyrk Choro, rallied outside the Chinese embassy to demand explanations for the arrest of ethnic Kyrgyz. In addition, the group called for Kyrgyzstan to expel Chinese nationals staying in the country illegally.[xxix] Growing anti-Chinese sentiment has threatened the Kyrgyzstan/China business climate for China and could imperil relations with Beijing.

Still and regardless of Kyrgyzstan’s close cultural ties to Moscow and the profound Russian influence that still looms over the country, compared to Russia, China is viewed more favorably in local Kyrgyz media. In a study analyzing local Kyrgyz news articles, coverage about China was identified as overall more positive than coverage about Russia in almost all media outlets. This is mainly attributed to media stories covering Chinese economic ties and their likely impact in Kyrgyzstan. However, when broken down, Russia receives more positive political and cultural coverage than China, while perceptions regarding Chinese political news tend to shift towards the negative.[xxx]

Supporters of former Kyrgyz President Almazbek Atambayev gather after Atambayev became embroiled in controversy following corruption allegations involving a Chinese company. (Euractiv)

Conclusion

Kyrgyzstan continues to struggle with both clamping down on anti-Chinese sentiments and attracting Chinese investors to the country. Despite public antipathy and a long history of resisting Chinese ambitions, today’s Kyrgyzstan has managed to form positive relations with China. To maintain its relationship with Beijing while also ensuring economic stability, Bishkek should diversify its local economy. Kyrgyzstan’s domestic economic development is heavily dependent on its mining and extractive sector. While this sector has proved lucrative in attracting foreign direct investment, it leaves the country susceptible to external shocks and could create a dependence on a single country for investment. Kyrgyzstan should promote its small and medium-sized enterprises, service sector, and energy sector to foreign investors to bolster the resilience of its economy.[xxxi]

Bishkek could also introduce a visa-free regime for Chinese tourists. Kazakhstan has instituted a similar policy, simplifying visa processing for tour groups from China and permitting Chinese tourists to remain in the country for under 72 hours without acquiring a visa.[xxxii]  Kyrgyzstan’s proximity to China and its vast landscape offer a unique opportunity to attract Chinese tourists to the country and boost its economic growth as well as diversify its economic productivity. Former President Jeenbekov noted the importance of simplifying visa proceedings for Chinese citizens, but proposals to do so have yet to materialize.[xxxiii]

Lastly, Bishkek should seek additional investment partners. Kyrgyzstan is developing an out-sized dependence on China for investment and trade. This leaves the Kyrgyz economy vulnerable to fluctuations in the local Chinese economy. Kyrgyzstan should seek additional investment and trade partners to offset its dependence on China. In the past, Kyrgyzstan has signed an infrastructure loan agreement with Saudi Arabia,[xxxiv] secured development assistance from the EU,[xxxv] and received a $200 million line of credit from India.[xxxvi] Multiplying the number of partners Kyrgyzstan has will boost its economic resilience and cushion any economic blow from China. At the same time, Washington and other western capitals should up their own efforts and building commercial ties with Kyrgyzstan and provide a viable alternative to Chinese capital.

 

[i] Ide, S. C. (2011, Summer). Kazakhstan and China: Kyrgyz Views on a Giant Neighbor. Northwestern University Undergraduate Research Grant Program. https://www.files.ethz.ch/isn/146235/Kyrgyz-China%20Relations.pdf.

[ii] (2021, August 27). China and Kyrgyzstan: Bilateral Trade and Future Outlook. China Briefing. https://www.china-briefing.com/news/china-and-kyrgyzstan-bilateral-trade-and-future-outlook/.

[iii] Hedlund, S. (2019, April 11). China finds investment in Kyrgyzstan a risky necessity. Geopolitical Intelligence Services. https://www.gisreportsonline.com/china-finds-investment-in-kyrgyzstan-a-risky-necessity,economy,2843.html.

[iv] (2021, August 27). China and Kyrgyzstan: Bilateral Trade and Future Outlook. China Briefing. https://www.china-briefing.com/news/china-and-kyrgyzstan-bilateral-trade-and-future-outlook/.

[v] Sharifli, Y. (2021, February 10). Win-Win or Zero-Sum Game: Relationship of China and Kyrgyzstan. Modern Diplomacy. https://moderndiplomacy.eu/2021/02/10/win-win-or-zero-sum-game-relationship-of-china-and-kyrgyzstan/.

[vi] Saparov, J. & Ibraimov, B. (2021, January 13). China-Kyrgyzstan-Uzbekistan railway remains uncertain. The Third Pole. https://www.thethirdpole.net/en/regional-cooperation/china-kyrgyzstan-uzbekistan-railway-remains-uncertain/.

[vii] Rickleton, C. (2021, May 17). China-Kyrgyzstan-Uzbekistan railway: Who is going to pay? Eurasianet. https://eurasianet.org/china-kyrgyzstan-uzbekistan-railway-who-is-going-to-pay.

[viii] Dzamukashvili, S. (2021, August 10). Future of China-Kyrgyzstan-Uzbekistan railway remains uncertain. Emerging Europe. https://emerging-europe.com/news/future-of-china-kyrgyzstan-uzbekistan-railway-remains-uncertain/.

[ix] Standish, R. (2021, February 27). How Will Kyrgyzstan Repay Its Huge Debts To China? Radio Free Europe Radio Liberty. https://www.rferl.org/a/how-will-kyrgyzstan-repay-its-huge-debts-to-china-/31124848.html.

[x] Van der Kley, D. (2020, October 2). COVID and the new debt dynamics of Kyrgyzstan and Tajikistan. Eurasianet. https://eurasianet.org/covid-and-the-new-debt-dynamics-of-kyrgyzstan-and-tajikistan.

[xi] Putz, C. (2018, January 30). Bitter Cold Hits Bishkek, Chinese-Repaired Power Plant Breaks Down. The Diplomat. https://thediplomat.com/2018/01/bitter-cold-hits-bishkek-chinese-repaired-power-plant-breaks-down/.

[xii] Higgins, A. (2019, July 6). A Power Plant Fiasco Highlights China’s Growing Clout in Central Asia. New York Times. https://www.nytimes.com/2019/07/06/world/asia/china-russia-central-asia.html.

[xiii] Devonshire-Ellis, C. (2020, July 2). 84% of China’s BRI Investments Are in Medium-High Risk Countries. Silk Road Briefing. https://www.silkroadbriefing.com/news/2020/07/02/84-chinas-bri-investments-medium-high-risk-countries/.

[xiv] Eshaliyeva, K. (2021, June 22). Kumtor: the gold mine that could make or break Kyrgyzstan. Open Democracy. https://www.opendemocracy.net/en/odr/kumtor-gold-mine-could-make-or-break-kyrgyzstan/.

[xv] (2021, September 17). Kyrgyzstan Adds Former Leaders of Canada’s Centerra Gold to Wanted List. Radio Free Europe Radio Liberty. https://www.rferl.org/a/kyrgyzstan-centerra-kumtor-wanted-list/31465100.html.

[xvi] Moran, R. (2012, January 31). Kyrgyzstan: Independent expertise exposes damage done by Kumtor gold exploitation. Bankwatch Network. https://bankwatch.org/press_release/kyrgyzstan-independent-expertise-exposes-damage-done-by-kumtor-gold-exploitation.

[xvii] Pikulicka-Wilczewska, A. (2021, July 9). Kyrgyzstan moves to nationalize gold mine run by Canadian company. Al Jazeera. https://www.aljazeera.com/news/2021/7/9/kyrgyzstan-moves-to-nationalise-gold-mine-run-by-canadian-company.

[xviii] OEC. China/Kyrgyzstan. https://oec.world/en/profile/bilateral-country/chn/partner/kgz.

[xix] Daly, J. C. K. (2019, April 8). In “Great Game Lite,” Russia and China Compete for Influence in Kyrgyzstan. Eurasia Daily Monitor, 49(16). https://jamestown.org/program/in-great-game-lite-russia-and-china-compete-for-influence-in-kyrgyzstan/.

[xx] Hedlund, S. (2019, March 14). China finds investment in Kyrgyzstan a risky necessity. Geopolitical Intelligence Services. https://www.gisreportsonline.com/china-finds-investment-in-kyrgyzstan-a-risky-necessity,economy,2843.html.

[xxi] Standish, R. (2020, May 28). China Seen As Rising Military Power In Central Asia, Foreshadowing Future Friction With Russia. Radio Free Europe Radio Liberty. https://www.rferl.org/a/china-seen-as-rising-military-power-in-central-asia-foreshadowing-future-friction-with-russia/30639964.html.

[xxii] (2019, June 14). Kyrgyzstan Hosts Shanghai Cooperation Organization Summit. Radio Free Europe Radio Liberty. https://www.rferl.org/a/kyrgyzstan-hosts-shanghai-cooperation-organization-summit/29999408.html.

[xxiii] Standish, R. (2020, May 28). China Seen As Rising Military Power In Central Asia, Foreshadowing Future Friction With Russia. Radio Free Europe Radio Liberty. https://www.rferl.org/a/china-seen-as-rising-military-power-in-central-asia-foreshadowing-future-friction-with-russia/30639964.html.

[xxiv] Toktomushev, K. (2021, October 7). Afghanistan under the Taliban: China, Russia, and the Shanghai Cooperation Organization. China US Focus. https://www.chinausfocus.com/peace-security/afghanistan-under-the-taliban-china-russia-and-the-shanghai-cooperation-organization.

[xxv] Pannier, B. (2021, October 1). Kazakhstan, Kyrgyzstan Open Channels With The Taliban. Gandhara. https://gandhara.rferl.org/a/kazakhstan-kyrgyzstan-taliban/31487601.html.

[xxvi] Lee Myers, S. (2021, July 28). China Offers the Taliban a Warm Welcome While Urging Peace Talks. New York Times. https://www.nytimes.com/2021/07/28/world/asia/china-taliban-afghanistan.html.

[xxvii] Putz, C. (2020, February 20). Kyrgyz-Chinese Joint Venture Scrapped After Protests. The Diplomat. https://thediplomat.com/2020/02/kyrgyz-chinese-joint-venture-scrapped-after-protests/.

[xxviii] Putz, C. (2018, January 30). Bitter Cold Hits Bishkek, Chinese-Repaired Power Plant Breaks Down. The Diplomat. https://thediplomat.com/2018/01/bitter-cold-hits-bishkek-chinese-repaired-power-plant-breaks-down/.

[xxix] Wood, C. (2018, December 29). Why Did Kyrgyz Stage a Protest Outside the Chinese Embassy? The Diplomat. https://thediplomat.com/2018/12/why-did-kyrgyz-stage-a-protest-outside-the-chinese-embassy/.

[xxx] Owen, C. (2018). Making Friends with Neighbors? Local Perceptions of Russia and China in Kyrgyzstan. China Quarterly of International Strategic Studies, 4(3), 457-480. DOI: 10.1142/S2377740018500185.

[xxxi] Temirbek, A. & Perrin, A. (2019, September 17). ADB Grant to Support Reforms Aimed at Diversifying Kyrgyz Republic’s Economy. Asian Development Bank. https://www.adb.org/news/adb-grant-support-reforms-aimed-diversifying-kyrgyz-republics-economy.

[xxxii] Talant, B. (2018, October 12). Kyrgyzstan: Talk of visa waiver for Chinese tourists sparks ire. Eurasianet. https://eurasianet.org/kyrgyzstan-talk-of-visa-waiver-for-chinese-tourists-sparks-ire.

[xxxiii] Masalieva, J. (2019, March 14). President Jeenbekov intends to achieve simplified visa regime with China. 24.kg. https://24.kg/english/111830_President_Jeenbekov_intends_to_achieve_simplified_visa_regime_with_China_/.

[xxxiv] Ibid.

[xxxv] Ibraghimov, S. (2021, December 21). The EU must protect its investment in Kyrgyz democracy. Euronews. https://www.euronews.com/2021/10/21/the-eu-must-protect-its-investment-in-kyrgyz-democracy-view.

[xxxvi] (2021, October 11). India agrees to USD 200 million Line of Credit to support development projects in Kyrgyzstan. The Economic Times. https://economictimes.indiatimes.com/news/economy/finance/india-agrees-to-usd-200-million-line-of-credit-to-support-development-projects-in-kyrgyzstan/articleshow/86932816.cms?from=mdr.


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