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China in Central Asia: Is there any room for India?; by Prof. B. R. Deepak

C3S Paper No. 0140/ 2015

B R Deepak

The collapse of the Soviet Union in 1991 sent shockwaves throughout China, a time when it has not fully recovered from the ghost of Tiananmen democracy protests. Xinjiang, a Muslim dominated region, has been witnessing frenzied attacks on Han Chinese and seeking independence was the immediate concern, for it now bordered three independent countries, i.e. Kazakhstan, Kyrgyzstan and Tajikistan mostly following Islam. Its approach was inward driven primarily by security and stability concerns. The systemic collapse, also forced Deng Xiaoping to tour southern provinces in 1992, and advocate more vigorous market reforms. As further opening and reforms paid dividends and China’s economy touched $1 trillion mark in 2000, it adopted an outward approach, as the energy security became an issue for a sustained economic growth. The oil and gas rich Central Asian Republics (CARs) provided that support to China, and China in turn tried to diminish former’s dependence on Russia.

 In 2014, China’s trade with 5 CARs crossed $45 billion comparing less than $35 billion of Russia’s. It has upstaged Russia in Central Asia (CA) since 2009 in terms of trade and investment; today it controls 1/3 of Kazakhstan’s oil production. The US, that could be regarded another major player in CA has preferred China to Russia in the region even if it has upped its ante against China in the South China Sea. The US sees China’s role in CA complementing its own, i.e. reducing the Russian influence. Russia on its part has also welcomed China’s role, as it sees it an opportunity for greater economic and strategic engagement with China vis-à-vis the West that has imposed sanctions on Russia over the Ukrainian issue. China’s downstream investment, especially in refineries CARs will further reduce their dependence on Russian refined fuel, and hence the overall trade. If China has invested over $60 billion in energy related projects in CARs, it has also secured huge energy security guarantees from Russia, for example it signed a thirty-year (2018-2047), $400 billion deal with Russia in May 2014. China’s engagement with Russia and CA is likely to deepen as most of the countries have welcomed Xi Jinping’s pet project ‘One Belt One Road’ (OBOR) that intends to connect China with Europe through land and sea routes.

The US is a non player in CA as far as trade and investment is concerned; its total trade volume with CARs is merely $5 billion, chunk of which is with Kazakhstan ($2.5 billion). The US looks at the region from security prism, thanks to its involvement in Middle East and Af-Pak region. However, this approach may change owing to the entrenchment of big powers in the region. In 2004, it signed Central Asia Trade and Investment Framework Agreement (TIFA) with CARs. Moreover, in 2011 it proposed the New Silk Road Initiative by way of which Afghanistan would be connected and integrated with Central Asia, South Asia and Europe in terms of energy, transport, trade, customs and people-to-people relations, a proposal similar to China’s OBOR initiative.

In such a scenario, does India have a room for manoeuvrability in CA? Even if India does not have direct land border with CARs, India has been talking about ‘ancient roots.’ India has remained disenchanted from CA, that’s why a player at the margins. Its trade with CA stands at a poor $700 million. It appears that Modi’s foreign policy is poised to ‘go global’ and has shown interest in region’s energy, trade and investment as well as dialogue on counterterrorism etc. issues.

More importantly, as we see the congregation of major powers in the region, it is time for India to unfold a pragmatic and positive policy and be an insider rather than an outsider in the region. India would be welcomed by CARs, as they would neither like to see the Russian nor the Chinese domination in the region. If the US prefers China over Russia in the region, India will be supported both by the US and Russia, for the Indian engagement in the region will offset some of the Chinese influence, thus becoming another pillar in the region.

What are the choices before India? Can India mend and consolidate its ties with Iran to the extent of a pivot or near pivot country? Construction of the Chabahar Port need to be carried out at a feverish pace, which will serve India’s strategic as well as economic interest in the region. This would be extremely important if India wants to secure energy supplies from CARs and Russia. Both overland transportation i.e. Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI) and Iran-India-Pakistan Pipeline, and sea routes need to be explored, albeit there are concerns about the overland routes given the volatility in Af-Pak region and the morbid state of India-Pak relations.

Secondly, since China has invested heavily in upstream as well as downstream energy infrastructure in CARs, especially in Kazakhstan and Turkmenistan. China controls around 1/3 of Kazakhstan oil and most of the Turkmenistan gas exports. China is building oil and gas pipelines that will connect Xinjiang to Kazakhstan and Turkmenistan oil and gas. India may consider opening Jammu and Kashmir, especially Ladakh region for linking it to Xinjiang which would be cost effective comparing the land and sea options from the west. A similar approach could be explored through BCIM region.

Thirdly, since India has been founder member of various multilateral initiatives involving China, e.g. BRICS Development Bank, Asia Infrastructure Development Bank (AIIB), and has been admitted to Shanghai Cooperation Organisation (SCO) recently as a full member, India needs to recalibrate its inward thinking on security issues and join various initiatives such as Eurasian Economic Union mooted by Russia and ‘Belt and Road’ initiatives of President Xi Jinping, and connect its own initiatives such as ‘Connect Central Asia’, ‘Act East’, ‘Project Mausam’ , ‘Make in India’ etc. initiatives to Russian and Chinese initiatives, so as to reap maximum benefits and integrate Indian economy with our immediate and extended neighbourhood in a much better way.

Finally, India will succeed in its endeavour as an insider not as an outsider, and if it does, other much vexed issues will either find mutually agreeable solution or put to the backburner; in any case India tends to benefit.

(Prof. B R Deepak is Professor of China Studies at the Centre of Chinese and Southeast Asian Studies, Jawaharlal Nehru University, New Delhi. The views expressed are his own. He could be reached at bdeepak@mail.jnu.ac.in)

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