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Russia’s War Could Reinvigorate China’s New Silk Road

After 10 years, China’s Belt and Road Initiative has done little to achieve its original aim of better integrating the People’s Republic’s western periphery. That might change in its second decade, with Beijing paying more attention to routes that circumvent Russia.

“Crossing the border is a huge mafan,” the truck driver tells me, using a versatile Chinese word that means trouble, or bother. He’s from Liaoning, a northeastern Chinese province, and a very long way from home. We’re at the other end of China, on the Kyrgyz side of the border with China at Torugart pass.

It’s almost 4,000 meters above sea level and there’s nothing for miles around apart from stony mountains, endless, fast-moving skies, and the occasional yurt. These border zones are remote places. The Belt and Road Initiative (BRI)’s original aim was to make this forgotten periphery central to international trade. It has since expanded to become a brand encompassing every element of Chinese foreign economic policy, but it began life as a strategic vision to connect interior China with Europe through Central Asia. Yet 10 years after newly installed Chinese President Xi Jinping launched the initiative in 2013, these borderlands still feel undeveloped.

Corruption and Queues

Crossing a border between China and its Central Asian neighbors to the West is still difficult and time-consuming. In Kyrgyzstan, there are two options: Torugart, accessible only with a special permit and after a bumpy, three-hour ride from the nearest main town; and the permit-free, but still treacherous Irkeshtam pass further south. In Tajikistan, the only crossing is Qolma pass, requiring a multi-day trip along the Pamir highway, and several difficult stretches across unpaved roads. Flatter topography makes crossing from Kazakhstan to China a lot easier, but the border is still plagued by corruption and queues.

I ask the truck driver at the border how long he might wait to cross into China. “Nothing is certain,” he replies. My driver, who also works as a guard at the border, says that trucks can wait days to cross. He tells me that most of the traffic he sees is kontrabanda, a claim that is supported by statistics. In 2022, China reported over $15 billion in exports to Kyrgyzstan, while Kyrgyzstan reported only $4 billion in imports from China. Kyrgyz customs officials blame differences in reporting methods for the discrepancy, but these differences are unlikely to account for the full $11 billion, a figure roughly equivalent to Kyrgyzstan’s entire annual GDP.

The existence of smuggling and corruption along the border in Kyrgyzstan is an open secret. Occasionally, the public gets a glimpse behind the scenes of this shadow economy. In 2021, a hugely powerful former customs official called Rayimbek Matraimov was convicted on corruption charges. He was let go after paying $24 million in compensation—by no means a paltry sum, but probably only a fraction of the bribes he had accumulated over the years.

Clothes, Shoes, Electronics

Clothing makes up the largest part of Chinese exports to Kyrgyzstan, followed by shoes and electronics. Importers escape paying the proper customs duty on these items by either recording different quantities, or registering them as a cheaper class of goods—shoes as textiles, phones as clothes, etc. These goods are then sold in Kyrgyz bazaars, but also re-exported to more lucrative markets in Russia and Kazakhstan.

The trucks that line up at Torugart pass are part of a large ecosystem of corruption—hardly a poster child for the BRI. However, this ecosystem may soon be disturbed by the arrival of a new landmark BRI project: the China-Kyrgyzstan-Uzbekistan railway. The idea of building a new railroad between China and Uzbekistan has been discussed since at least 1997, but the last two years have seen several high-level indications that the project may finally become a reality. In May last year, the president of Kyrgyzstan, Sadyr Japarov, confidently told local media that the project would start construction in 2023. As of yet, construction has not started, but a jointly funded feasibility study has been completed, and officials from all sides have kept the project in the spotlight.

The Impact of Russia’s War

But why, after years of going nowhere, did discussions start to progress last year? A major obstacle to the project’s progress in the past was the Kyrgyz insistence that the railroad take a more northern route—servicing more population centers in Kyrgyzstan, but adding to the overall transit time. Kyrgyzstan now seems to have dropped that requirement, and preliminary plans from the ministry of transport indicate that the railway will enter Kyrgyzstan through Torugart pass.

When I ask one expert, a Kyrgyz consultant who works closely with Chinese companies and prefers to remain nameless, why the railway is moving forward at this point in time, he replies, “I think we all know why.” It’s hard not to draw a connection between Russia’s full-scale invasion of Ukraine in February 2022 and the start of high-level discussions about the railway just months later. Unofficially, Moscow always opposed the idea of a China-Kyrgyzstan-Uzbekistan railroad. A new route from China to Central Asia’s largest market might provide an alternative to transit through Russia, meaning a decline in revenue and control. Now, suddenly, Moscow is on board.

One theory is that after invading Ukraine, Russia is no longer in a position to be dictating terms. But in Central Asia, stories about the decline of Russian influence still feel premature, even if that may be the trajectory. For now, trade with Russia is booming due to Western sanctions and migrants are flowing in both directions. Politically, culturally, and in the minds of Central Asian elites, Russia still looms large.           

Instead of crumbling Russian resistance, the countries involved could simply be more enthusiastic about pressing ahead with the project. Russia’s invasion of Ukraine and the resulting Western sanctions up-ended continental trade between Europe and China, the vast majority of which transits Russia. As an alternative, suppliers began eyeing what is known as the “Middle Corridor”—a route running through Central Asia and across the Caspian Sea.

The Rise of the Middle Corridor?

The Middle Corridor has been championed by countries within the region like Turkey and Georgia, who are understandably keen to promote themselves as waypoints along a potentially important trade artery. Until now, China’s interest in the Middle Corridor has been lukewarm, despite the concept fitting neatly within the larger framework of the Belt and Road Initiative.

However, the prospect of a drawn-out war in Ukraine appears to have changed Beijing’s calculus, and it seems interested in moving forward with alternative routes West to Europe and the Middle East.

Besides green-lighting the new Central Asian railway, Beijing has also shown a renewed interest in Georgia. In April, Zhou Qian, the Chinese ambassador in Tbilisi, openly stated that  “after the crisis in Ukraine, there is an increasing need to find new ways to connect Europe and Asia that do not go through Russia.” In July, China and Georgia elevated their relationship to that of a “strategic partnership.” There is even renewed discussion about Chinese interest in the Anaklia port project—a prospective deep sea port on the Black Sea that has been plagued by geopolitical intrigue and controversy.

The Middle Corridor is not an easy route. Despite being geographically short, it is a logistical nightmare. It crosses multiple jurisdictions and goods must be loaded onto ships to cross the Caspian Sea and then unloaded again in Azerbaijan. Capacity is incredibly limited in comparison to the Northern Corridor and for the route to even come close to rivalling transit through Russia, an incredible amount of investment is needed. The Chinese ambassador to Georgia was quick to point this out in his statement about the Middle Corridor’s prospects. “To be honest,” he tells the interviewer, “implementing a Middle Corridor project is really not an easy task.” Therefore, it would be a mistake to overestimate Chinese interest. However, recent developments in Kyrgyzstan and Georgia suggest that the value of alternatives to Russian transit has inched up enough to begin down the path of investment.

Who Is Going to Pay?

It is not yet clear how the China-Kyrgyzstan-Uzbekistan railway, which has an estimated price tag of $4.5 billion, will be financed. Chinese government banks aren’t the big spenders they once were, so it is unlikely that Beijing will pay for the project. The assumption is that the cost will be split three ways, but there are question marks over how impoverished Kyrgyzstan might raise the capital.

The jury is also still out on whether a new railway will make a dent in the shadow trade between China and Kyrgyzstan. Some experts think it might exacerbate the problem, making it even easier to smuggle goods and circumvent sanctions. My driver/border guard claims it will reduce the flow of kontrabanda from China to Kyrgyzstan. Either way, his job, and that of the truck driver I spoke to would be transformed by the new railway.

At the end of the BRI’s second decade, the long snaking line of trucks that so characterizes Kyrgyzstan’s land border with China may be replaced with a gleaming new track. A decade after Xi Jinping’s commitment to put Central Asia back at the center of Eurasian trade, it may be Russia’s invasion of Ukraine that finally leads Beijing to deliver.

Source: Ip Quarterly