Dragon rises in Central Asia -- security and economic dimensions

China's aggressive actions and claims in the South China Sea on its eastern flank are being contested by its neighbors and the U.S. However, China's advance in Central Asia on its western flank looks unhindered for now, due to the geopolitical realities of the region.

Uighurs living in Turkey and their supporters chant slogans as they stage a protest in Istanbul on July 4 against what they call Beijing's oppression of Muslim Uighurs in the province.

     With the U.S. and NATO withdrawal from Afghanistan underway since last year, and the Russian economy under sanctions for its role in the Ukraine crisis, China appears comfortably placed to pursue its interests in the region.

     China's Central Asia policy is part of its "March West" strategy, at term coined by professor Wang Jisi of Peking University in 2012. Wang said that as the U.S. pivots to the Asia-Pacific, China needs to utilize its development space to the west.

     Central Asia came under Russian rule during the second half of the 19th century. China's relations with the region were interrupted due to the Soviet Union's rift with China in the 1960s, and the border between the two was heavily militarized.

On the western front

Things changed after the collapse of the Soviet Union in 1991. China took the initiative to create the "Shanghai Five" in 1996 and signed treaties with Russia, Kazakhstan, Kyrgyzstan and Tajikistan aimed at securing peaceful borders and reducing its military presence there. The Shanghai Five later became the Shanghai Cooperation Organization when Uzbekistan joined in 2001.

     Since then, China has made rapid strides in enhancing its Central Asian presence through energy pipelines, trade, investment and infrastructure development. With annual trade of $50 billion, China has emerged as the largest trading partner of the Central Asian countries overtaking even Russia, the traditional power in the region.

     China has both security and economic interests in Central Asia. China's primary security interest relates to its largest province, Xinjiang, officially the Xinjiang Uyghur Autonomous Region. Uyghur Muslims in Xinjiang have been demanding independence ever since the area once known as East Turkestan was taken over by China in 1949.

     Also called Chinese Central Asia, Xinjiang shares a 3,305km border with the Central Asian countries of Kazakhstan, Kyrgyzstan and Tajikistan. Uyghurs are ethnically and culturally Turkic in origin; they are closer to the Central Asians than to the Han Chinese, the ethnic majority in China. There have been tensions between Uyghurs and Han in China, and clashes between the two groups in the regional capital Urumqi led to the deaths of around 200 people in 2009.

Carrots and sticks

There are around 300,000 Uyghurs living in Central Asia, and China fears Xinjiang Uyghurs could use their cross-border ethnic links to strengthen their separatist movement, which could also intensify similar demands in Tibet and Inner Mongolia. To control Uyghur separatists, China has a twin pronged strategy. On the security front, it has launched a massive crackdown in Xinjiang, branding Uyghur separatists as terrorists. It also claims they have links with al-Qaida and have been trained in Afghanistan and Pakistan.

     On the economic front, China has been trying to create a "complex interdependence" between the Central Asian countries and Xinjiang, hoping to make them stakeholders in each other's economic development and stability. These growing ties are evident from the fact that around 83% of Xinjiang's foreign trade is with the Central Asian countries. Around 80% of China's trade with Central Asia passes through Xinjiang.

     Because Xinjiang is less developed than eastern China, the government believes greater prosperity in the region will cause the separatist movement to lose public support and fade away.

     China supports political status quo in Central Asian countries and shares their concerns about terrorism and Islamic fundamentalism. Political instability in Central Asia could spread to Xinjiang, which China does not want. China hopes to foster stability in Central Asian countries through trade, investment and the security framework of the SCO.

     In return, it has extracted commitments to a "One China" policy from Central Asian leaders. This means not allowing Uyghur separatists to operate from their territory and cooperating with China on counterterrorism.

Malacca dilemma

Energy is the main economic driver that attracts China to Central Asia. China's appetite for energy is growing, but around 80% of its oil and gas supplies pass through the Indian Ocean and the Strait of Malacca. These are dominated by the U.S. and Indian navies, and China remains concerned that its energy supplies could be targeted by those countries in the event of a conflict.

     India has also expanded the scope of its Malabar naval exercise with the U.S. and invited Japan to participate in this year's exercise. In all probability, China will see this as an effort to check its moves in the Indian Ocean.

     To reduce its overwhelming dependence on maritime routes, China is buying energy from Myanmar, Russia and Central Asia. Central Asian natural gas also allows China to lessen its dependence on coal, which helps it cut greenhouse gas emissions and tackle climate change. So this is a win-win situation for both sides, involving minimum risks and maximum gains.

     Two major pipelines are in operation between China and Central Asia at present. The first is the Central Asia-China gas pipeline, or the Turkmenistan-China pipeline, which spans Turkmenistan, Uzbekistan and Kazakhstan before crossing into China. In 2012, China imported 21.3 billion cu. meters of natural gas from Turkmenistan -- more than half its total natural gas imports that year.

     The second pipeline is the Kazakhstan-China oil pipeline, China's first direct oil pipeline from Central Asia. It runs along the Caspian shore of Kazakhstan to Xinjiang in China and has an annual capacity of 14 million tons per year.

     Experts are already talking about China's plans to secure its energy supplies with an overland energy corridor connecting China to the Gulf states via Central Asia. China has pipelines in Central Asia but it lacks one linking Central Asia and the Middle East. China's future energy policies may explore this possibility.

New Silk Road

Chinese manufacturing is under strain due to falling demand from the West. The Central Asian countries are an attractive export destination for China under these circumstances, and China has launched its $40 billion New Silk Road initiative to transform the idea into reality. This also gives the country a chance to hedge against the U.S.-led Trans-Pacific Partnership, which it thinks of as a strategy to contain its economic rise.

     The road will start from province of Xi'an and pass through Xinjiang, Kazakhstan, Uzbekistan, Tajikistan, Iran, Turkey and Russia before reaching Europe. China is also building a Chongqing-Xinjiang-Europe railway line that will reduce the time it takes for Chinese ships to reach Europe by 20 days. At present, China trades with Europe via the Indian Ocean-Gulf of Aden-Suez Canal route, which takes 36 days. The new overland route will take just 16 days and bypass the Indian Ocean.

Implications for Japan and India

China's growing presence in Central Asia will have a negative impact on Japan and India. Media reports suggest China made economic assistance to Central Asia conditional on those countries opposing Japan's bid for a permanent seat on the UN Security Council.

     For India, China remains a competitor for Central Asian energy resources. China signed a $5 billion deal on the Kashagan oil project with Kazakhstan, which had been slated to go to India in 2013. Media reports suggest China's is pitching the idea of a new gas pipeline from Turkmenistan to China via Afghanistan and Tajikistan. Such a project could undercut the TAPI pipeline involving India.

     China has been increasing its footprint in Nepal, Myanmar, Bangladesh, Sri Lanka, the Maldives and Pakistan. If we add Central Asia, China's "string of pearls" strategy becomes a full necklace encircling India. This has major security implications.

The catch

China's growing profile in Central Asia is likely to raise eyebrows in Russia, which sees itself as the security provider in the region. That is why Russia has been upgrading its security presence in Central Asia. There are also fears of Chinese expansionism and domination in Central Asia, sparking anti-China protests in Kyrgyzstan. Opposition leaders in Tajikistan highlight "land grabs" by China in the country.

     Central Asian countries want to avoid overdependence on China and encourage other powers in the region to balance China through multivector foreign policies.

     This is where an opportunity lies for nations such as India and Japan to increase their presence in Central Asia, as they can help these countries overcome obstacles to their development and balance the Chinese presence in the region.

Raj Kumar Sharma is a university grants commission senior research fellow at the Center for Russian and Central Asian Studies, School of International Studies, Jawaharlal Nehru University, New Delhi.