Institute for a Greater EuropeB3W vs BRI: is it too late to counter China’s economic ingress into Central Asia?
Abstract
China is seizing the spotlight in Central Asia's geopolitical grail for all the right reasons. China’s economic footprint in the region is coupled with a paradigm shift based on the evolving foreign policies of great powers that have jolted the regional chessboard with a "renewed great game". The prominent economic strategy laid down by Beijing through its ambitious Belt and Road initiative has rung alarm bells in the West, thereby leading towards the launch of Build Back Better World (B3W) by G7 countries. Although the B3W does not explicitly aim to counter China’s BRI in Central Asia, parallels can be drawn based on massive investments under the plan for the developing world. Therefore, it is important to decipher whether the B3W will be able to challenge the BRI in Central Asia or not.
Central Asia: Russia’s Soft Underbelly
Since the disintegration of the Soviet Union, the Central Asia Republics (CARs), once a Russian domain, have diversified their relations with global actors based on their need to secure economic incentives. Such a quagmire for investment has been acclaimed by China, the US and the EU member states. However, policy shifts, most notably the US foreign policy toward CARs, are pushing the region’s middle-income economies to drift into the Chinese orbit.
Given that China has been investing heavily in CARs, this has created a trade dependence between them, making it difficult for other competitors to find areas of economic ingress. For instance, in the cases of Kyrgyzstan and Uzbekistan, the external debt to China is 40% and 50%, respectively.[1] As is the case with other regional players, they have been subject to trade dependence on China, which is viewed by some scholars as part of China’s Pax Sinica in Central Asia
Moreover, CARs are at the receiving end of billion-dollar Chinese investments. It is observable from each member state's economic profile. For instance, Kazakhstan, the buck of the belt of BRI, is expected to receive $34.12 billion of Chinese investment.[2] Beijing has also been able to retain a share of 13% and 24% of gas and oil production from Kazakhstan, respectively.[3] In Kyrgyzstan, China provides one-third of FDI[4] through development projects that include BRI. [5]
A similar situation exists in Tajikistan, Turkmenistan, and Uzbekistan.[6] Although Uzbekistan is economically less vulnerable than other regional countries, China is still one of the largest creditors to the country[7] and is home to several infrastructural plans proposed under the BRI.[8] Therefore, such a level of dependence of regional actors on China makes it a reason why CARs will find it difficult to effectively play a balancing role between China’s BRI and the US-backed B3W’s in the regional chessboard – if B3W can facilitate the economic needs of CARs.
Build Back Better World (B3W)
Moving forward, the launch of the $40 trillion G7 version of BRI, B3W, has allowed policy pundits to draw parallels between the two projects.[9] B3W is a value-driven partnership between the G7 countries to help the developing world by investing in bilateral and multilateral initiatives in climate, digital technology, gender equality, security and equity. Even the project itself has been rebranded by the launch of the Partnership for Global Infrastructure (PGII). The US has realised that it needs to invest more in infrastructure projects around the world, for which it has named different projects in which it intends to invest.[10] So, while the formal narration of the B3W via PGII is an important development, it poses less of a challenge to China in Central Asia.
Having said that, the aim of the project seems to be a zero-sum game on the political front, but in reality, it presents rather a positive-sum game for BRI. However, the steps under the projects are somewhat aimed at providing an alternative to BRI that may raise eyebrows in Beijing, but it does not seem to be the case in Central Asia, at least.
Cooperation in the proposed areas under B3W will be welcomed by CARs, but it is not enough to shape Central Asia’s foreign policy direction away from China. Unless B3W can prioritise economic incentivisation, the initiative remains confined[11] to a squabble vis a vis BRI that is funding major transport, real estate, energy and other infrastructural projects.[12]
Furthermore, projections for such plans have been aggravated by the skewness of regional economies amid COVID-19. Thus, making CARs believe in the future of BRI is its future.[13] As a result, the prospects of US rollback in its former backyard through B3W are further diminished. Even amid COVID-19, China, while supporting the regional economies to effectively manage the crisis, kept pushing CARs to view BRI as the solution to the economic downfall they observed because of the pandemic.
US Reductionist Policy
In addition, the prospects for the B3W are linked to US foreign policy towards Central Asia, which has used the region as a strategic backyard during its time in Afghanistan. As per the United States Strategy for Central Asia 2019-2025,[14] Washington aims to link Central Asia, with Afghanistan, and for that, the stability of Afghanistan is important. However, if the US is out of Afghanistan, then the possibility of regional integration under the previous policy needs to be revisited. Until then, the ground is open for great powers to scramble for regional influence,[15] most notably China for its already laid economic plans for the region.[16]
It was perceived that the Biden administration might show a shift from the policies of its predecessor, Donald Trump, yet Biden seems to follow in the same footsteps as the previous administration in Central Asia. Washington’s recent Interim National Security Strategic Guidance reflects Biden’s way of dealing with the world.[17] The document, although it mentioned the challenge to the US from China in different regions, makes no mention of Central Asia. As a result, the current positioning of Central Asia in US counter-China policy is highlighted.
Other than the US, the EU itself has been reluctant to provide long-term economic investment for the region. This is evident from the EU’s Central Asia strategy,[18] where it questions the transparency, economic viability, uncontrolled debts, and other related concerns linked with China’s BRI in Central Asia.[19] However, the same report claims that the EU does not have the “same financial resources to invest in Central Asian infrastructure as China." [20]Therefore, the EU has been more prone to cooperation with China in Central Asia so as to manage its concerns related to Chinese investments under BRI in the EU—the final destination of BRI.[21] The EU-China connectivity platform was launched in 2015 to find lock jams and their possible solutions.[22] Having said that, the EU will refrain from openly challenging BRI in Central Asia as the US might expect EU members to react.
Conclusion
The era of a renewed great game in Central Asia has observed a rise in full-spectrum US-China strategic competition for influence, and B3W unwraps another chapter in it. B3W can, in the future, lead to the possible matching of BRI investment, ceteris paribus. However, any estimation, for now, will be overstretched, especially in Central Asia. Pro tem, considering the weak economic trajectory of CARs, China has somewhat found an agreed strategy with regional actors, thereby leaving less space for the US and the EU to fill. As for her, as per Gen. Liu Yazhou, Central Asia is “the thickest piece of cake given to the modern Chinese by the heavens.”[23]
[1] (2019). K-News. “Is China moving from economic expansion in Tajikistan to military-political?”. 16th August. https://knews.kg/2019/08/16/kitaj-ot-ekonomicheskoj-ekspansii-v-tadzhikistane-perehodit-k-voenno-politicheskoj/
[2] “China Global Investment Tracker”. American Enterprise Institute. https://www.aei.org/china-global-investment-tracker/
[3] “Kazakhstan”. Crude Accountability. https://crudeaccountability.org/kazakhstan/
[4] (2020). 24.kg. “33 percent of direct investments in Kyrgyzstan are attracted from China”. 10 February. https://24.kg/ekonomika/143108_33protsenta_pryamyih_investitsiy_vkyirgyizstan_privlekayut_izkitaya/
[5] Elena Kuzmina. (2019). Eurasia.Expert. “Struggle for investments and gray imports: relations between Kyrgyzstan and China”. 10 July. https://eurasia.expert/investitsii-i-seryy-import-otnosheniya-kyrgyzstana-i-kitaya/
[6] Zhang, R. (2021). South China Morning Post. “China looks to Turkmenistan for more gas as it cuts Australian supplies”.12 May. https://www.scmp.com/news/china/diplomacy/article/3133084/china-looks-turkmenistan-more-gas-it-cuts-australian-supplies
[7] Hashimova, U. (2019). “Uzbekistan Increasingly Turns to China for Development Loans”, Eurasia Daily Monitor, Volume: 16 Issue: 118 September 4. https://jamestown.org/program/uzbekistan-increasingly-turns-to-china-for-development-loans/
[8] Limanov, O. (2020). Cabar Asia. “Uzbekistan-China Relations During the COVID-19 Pandemic”. 1 June. https://cabar.asia/en/uzbekistan-china-relations-during-the-covid-19-pandemic
[9] “FACT SHEET: President Biden and G7 Leaders Launch Build Back Better World (B3W) Partnership”. The White House (2021). 12 June. https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/12/fact-sheet-president-biden-and-g7-leaders-launch-build-back-better-world-b3w-partnership/
[10] “FACT SHEET: President Biden and G7 Leaders Formally Launch the Partnership for Global Infrastructure and Investment”. The White House (2022). 26 June. https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/26/fact-sheet-president-biden-and-g7-leaders-formally-launch-the-partnership-for-global-infrastructure-and-investment/
[11] Caroline Crystal. (2021).CFR. “The G7’s B3W Infrastructure Plan Can’t Compete with China. That’s Not the Point”. 10 August. https://www.cfr.org/blog/g7s-b3w-infrastructure-plan-cant-compete-china-thats-not-point
[12] “Investments in the Belt and Road Initiative”. Green-BRI. https://green-bri.org/investments-in-the-belt-and-road-initiative-bri/
[13] Furqan Khan (2020). Central Asia Program. Post-COVID-19 Central Asia and the Sino-American Geopolitical Competition. 20 October. https://centralasiaprogram.org/post-covid-19-central-asia-sino-american-geopolitical-competition
[14] United States Strategy for Central Asia 2019-2025: Advancing Sovereignty and Economic Prosperity (Overview)”. US Department of State (2020). 5 February. https://www.state.gov/united-states-strategy-for-central-asia-2019-2025-advancing-sovereignty-and-economic-prosperity/
[15] Sabine Fischer and Angela Stanzel. (2021). “Afghanistan: The West Fails – a Win for China and Russia?”. Stiftung Wissenschaft und Politik. https://www.swp-berlin.org/publications/products/comments/2021C50_MoscowBeijing_Afghanistan.pdf
[16] Bonnie S. Glaser and Andrew Small (2021). GMFUS. “China’s Goals after the U.S. Withdrawal from Afghanistan”. https://www.gmfus.org/news/chinas-goals-after-us-withdrawal-afghanistan
[17] Biden. J. (2021). “Interim National Security Strategic Guidance”. The White House. https://www.whitehouse.gov/wp-content/uploads/2021/03/NSC-1v2.pdf
[18]Martin Russell (2019). “The EU's new Central Asia strategy”. EU. https://www.europarl.europa.eu/RegData/etudes/BRIE/2019/633162/EPRS_BRI(2019)633162_EN.pdf
[19] “Connecting Europe & Asia: The EU Strategy”, EEAS. Europe. (2019) 29 September. https://www.eeas.europa.eu/eeas/connecting-europe-asia-eu-strategy_en
[20] Martin Russell (2019). “The EU's new Central Asia strategy”. EU. https://www.europarl.europa.eu/RegData/etudes/BRIE/2019/633162/EPRS_BRI(2019)633162_EN.pdf
[21] EU-China FDI: Working towards more reciprocity in investment relations
[22] Kim. J, et.al. (2021) “China–EU Connectivity in an Era of Geopolitical Competition”. SIPRI. https://www.sipri.org/publications/2021/sipri-policy-papers/china-eu-connectivity-era-geopolitical-competition
[23] JOHN Garnaut, (2010). “China must reform or die”. The Sydney Morning Herald. https://www.smh.com.au/world/china-must-reform-or-die-20100811-11zxd.html