One Belt, One Road, Many Headaches: The Economic, Political, and Social Challenges of OBOR in Central Asia
Thanks very much, I really appreciate the opportunity. It’s a great honor, and this is just a
magnificent conference that Marlene and the Program put on here every year, and this is a very distinguished panel as well. The bulk of this presentation draws upon some previews of some current research the book that I’m writing with John Heathershaw about Central Asia’s global networks and connections in which we’re examining the hidden links that Central Asia has to different legal and financial structures in the global economy .
magnificent conference that Marlene and the Program put on here every year, and this is a very distinguished panel as well. The bulk of this presentation draws upon some previews of some current research the book that I’m writing with John Heathershaw about Central Asia’s global networks and connections in which we’re examining the hidden links that Central Asia has to different legal and financial structures in the global economy .
The announcement of OBOR actually occurred during Xi Jinping’s visit to Kazakhstan in a
speech at Nazarbayev University in September 2013. A lot of different things have been written
about it. One of the most hyped quotes is from the South China Morning Post: this is “the most
significant and far-reaching project the nation has ever put forward.” It’s comprised of both a
land belt as well as a maritime belt with certain port upgrades, together fostering new links
between Europe, East Asia, Middle East, South Asia, and Eurasia. So this is all in the service of promoting “connectivity.” At the same time, new regional financing institutions have also been created, including the AIIB and the New Silk Road (NSR) fund, which is actually under the auspices of the People’s Bank. And all in an effort to fill in Asia’s $8 trillion infrastructure gap.
speech at Nazarbayev University in September 2013. A lot of different things have been written
about it. One of the most hyped quotes is from the South China Morning Post: this is “the most
significant and far-reaching project the nation has ever put forward.” It’s comprised of both a
land belt as well as a maritime belt with certain port upgrades, together fostering new links
between Europe, East Asia, Middle East, South Asia, and Eurasia. So this is all in the service of promoting “connectivity.” At the same time, new regional financing institutions have also been created, including the AIIB and the New Silk Road (NSR) fund, which is actually under the auspices of the People’s Bank. And all in an effort to fill in Asia’s $8 trillion infrastructure gap.
So we hear a lot about the US New Silk Road, and the Chinese one. What are the differences? I
think they’re pretty stark. China is actually committing hundreds of billions of dollars to this
ambitious series of projects. The US… not much at all. China is establishing new regional
funding vehicles; the US is actually kind of claiming existing projects like TAPI, and in some
ways I think unnecessarily geo-politicizing them in an effort to “populate” its own project. In my view, the Chinese projects signal China’s rise and enduring regional engagement, whereas the New Silk Road for the US is associated with its legacy and withdrawal from Afghanistan. Most regional countries have signed up to the AIIB, though. Interestingly enough, Kyrgyzstan has not.
So here are some visuals of the Silk Route, the economic belt, and what should really be
emphasized here is that Central Asia and Xinjiang are at the hub of these proposed northern
corridors, central corridors, and southern corridors. Some include China’s new Central Asia
pipelines: the oil pipeline from Kazakhstan, and the Central Asia-China gas pipeline. Here is the consolidated map that you see cited a lot and used a lot from the Wall Street Journal that
includes both the pipeline routes and the maritime and overland routes.
emphasized here is that Central Asia and Xinjiang are at the hub of these proposed northern
corridors, central corridors, and southern corridors. Some include China’s new Central Asia
pipelines: the oil pipeline from Kazakhstan, and the Central Asia-China gas pipeline. Here is the consolidated map that you see cited a lot and used a lot from the Wall Street Journal that
includes both the pipeline routes and the maritime and overland routes.
So what are the drivers of OBOR? I think we can separate these out into geopolitical and
domestic. A lot of emphasis has been placed on the geopolitical the strategy of binding regions and states, as Beijing seeks to create a China-oriented regional community. Some talk about the need to put accumulated foreign reserves to better use than “idle investments,” the internationalization of the renminbi, and the emergence of the “Xi Jinping doctrine” formalizing China’s arrival as a leading power in global governance, rule-making, and agenda setting.
domestic. A lot of emphasis has been placed on the geopolitical the strategy of binding regions and states, as Beijing seeks to create a China-oriented regional community. Some talk about the need to put accumulated foreign reserves to better use than “idle investments,” the internationalization of the renminbi, and the emergence of the “Xi Jinping doctrine” formalizing China’s arrival as a leading power in global governance, rule-making, and agenda setting.
But there are also important domestic drivers that don’t get as much attention. One is the
Xinjiang issue, the need to maintain Xinjiang as a developmental center and the notion that
infrastructure investment and development will equal political stability, both in Xinjiang and
Xinjiang’s neighbors—that the more connected Xinjiang is, the more economic opportunity
Xinjiang has, the less likely that you’ll see flare-ups of separatism there.
Xinjiang issue, the need to maintain Xinjiang as a developmental center and the notion that
infrastructure investment and development will equal political stability, both in Xinjiang and
Xinjiang’s neighbors—that the more connected Xinjiang is, the more economic opportunity
Xinjiang has, the less likely that you’ll see flare-ups of separatism there.
Another factor is slowing Chinese growth rates and domestic over-capacity. This is a huge issue now. As we get to the world of 6% growth as opposed to 11% growth, China faces cement, steel, and machine-building large overcapacity; where’s the surplus going to go? It’s going to go into some of these projects in Central Asia. Competition amongst individual Chinese regions to be nodes in these new hubs is growing to the point where some regions send negotiators to Central Asia to actively campaign for these different routes. This mirrors some of the earlier competition among eastern Chinese coastal cities.
Domestic drivers are critical as well, if not more. Just two specific examples of companies that I
wish to flag here. First, the Xuzhou Construction Machinery Group. It’s just announced that
over the last two years, as the economic slowdown has been happening in China itself, it has
been ramping up its operations in Central Asia. They estimate about $490 million worth of
contracts and investments that the company plans to make in the region. There’s also UnionPay, provider of payment systems, as China targets the Kazakh and Central Asian market for the use of its financial products as an alternative to the Western payment systems. So there’s a lot of different kinds of domestic interests, not all necessarily in infrastructure-building, and perceptions that the Central Asian market can help pick up the slack of the downturn in China.
wish to flag here. First, the Xuzhou Construction Machinery Group. It’s just announced that
over the last two years, as the economic slowdown has been happening in China itself, it has
been ramping up its operations in Central Asia. They estimate about $490 million worth of
contracts and investments that the company plans to make in the region. There’s also UnionPay, provider of payment systems, as China targets the Kazakh and Central Asian market for the use of its financial products as an alternative to the Western payment systems. So there’s a lot of different kinds of domestic interests, not all necessarily in infrastructure-building, and perceptions that the Central Asian market can help pick up the slack of the downturn in China.
I now would like to get into some of the problems that I see with the OBOR, hence the kind of
cheeky title I have, “One Belt, One Road, Many Headaches” because I think that these don’t get
enough attention as we emphasize China’s aspirations in the region. The first question I ask is
a lot of OBOR’s premise is on the idea of building hardware but the question is, is evelopment a hardware problem or a software problem? Is it about the physical infrastructure that is needed, or is it about how that investment will be used and what types of governance choices are made in domestic contexts?
cheeky title I have, “One Belt, One Road, Many Headaches” because I think that these don’t get
enough attention as we emphasize China’s aspirations in the region. The first question I ask is
a lot of OBOR’s premise is on the idea of building hardware but the question is, is evelopment a hardware problem or a software problem? Is it about the physical infrastructure that is needed, or is it about how that investment will be used and what types of governance choices are made in domestic contexts?
http://www.asiapacificmagazine.com/one-belt-one-road-many-headaches-the-economic-political-and-social-challenges-of-obor-in-central-asia/
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