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International online discussion with IWPR: COVID-19 and the Chinese BRI in Central Asia

On the 22nd of April, the Office of the Institute for War and Peace Reporting (IWPR) in Central Asia and CABAR.asia hosted a discussion on the COVID-19 pandemic and it impact on the Chinese BRI in Central Asia, with a particular focus on how the virus might affect the project’s implementation.

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On the 22nd of April, the Office of the Institute for War and Peace Reporting (IWPR) in Central Asia and CABAR.asia hosted an international online discussion on the COVID-19 pandemic and it impact on the Chinese BRI in Central Asia, with a particular focus on how the virus might affect the project’s implementation.

Ermek Baisalov, CABAR.asia Analytical Reports Editor, noted in his opening remarks that many are interested in the dynamics of the BRI given the coronavirus outbreak and the global economic crisis the pandemic has caused. Baisalov emphasized that discussion at the meeting should focus on issues directly or indirectly related to this topic, while also explaining various technical points. The meeting was held online and consisted of four sub-sessions on the following issues, though the sessions also touched on other, ancillary matters:

  • How will geopolitical changes influence the BRI in Central Asia?
  • How will Chinese economic ties impact the economic situation in Central Asia?
  • Is it relevant to compare political regimes in response to the pandemic?
  • What new tools will China use to promote its soft power in the wake of the pandemic?

After short introductory remarks, Baisalov turned the meeting over to his colleague at CABAR.asia, Nargiza Muratalieva, to start the first session. Muratalieva is the editor of analytical materials on the platform.

The first session focused on global geopolitical changes and their affects on promoting the BRI. The key speaker was founder and Director of Global Geopolitical Analysis, Arne Elias Corneliussen:

”Covid-19 does not change China´s underlying strategic rationale for the BRI. In fact, COVID-19 will only cement and strengthen China’s willingness to push forward with the BRI in the long-term. Global energy markets are in turmoil, and we are seeing a global economic crisis and lockdown. In existing BRI projects, which might experience the collapse of Chinese construction, infrastructure, or energy companies due to the impact of Covid-19 – either new companies will take over existing projects or in some instances projects will be further delayed or simply not resume. The lack of project funding due to the economic consequences of Covid-19 and the lack of salary for workers in some BRI projects may also cause further delays. This could impact some BRI projects temporarily as new companies take over. China may adapt its BRI strategy to meet new needs in a post Covid-19 world to rebuild economies, support local manufacturing and industrial development, especially in health care, the green economy, and other sectors.

Arne Elias Corneliussen

Russia is now at the beginning of its Covid-19 outbreak. Its numbers are rising. This may continue through fall 2020 / spring 2021 and impact Russia´s economy. But the Russian economy is stronger and more resilient than many Western analysts think despite sanctions and the impact of Covid-19. That’s why Russia will be able to come back and rebound after the pandemic. Russia’s influence in Central Asia will continue, despite Chinese infrastructural projects.

European-Chinese links will continue and will stabilise over time, although there will be some diplomatic issues (for example about how COVID emerged). The importance of the BRI for Europe will rebound. Central Asia is the geographic epicenter of the Eurasian continent and thus provides a nexus for future infrastructure & transportation corridors linking China, Russia, the Indian subcontinent, the Middle East, and Europe. Central Asia is an important epicenter in the BRI because it borders Western China. Central Asia will see economic growth over the next 2 or 3 decades through the BRI given its centrality to the project.

Russia´s Meridian Highway to connect western Kazakhstan and eastern Belarus – planned to be completed by 2024, it will likely be delayed for one to two years – is an important infrastructure connection between Central Asia and Europe as it increases overland transportation efficiency and time to market. Russia will play an important role in linking China and Europe both geographically and strategically.”

Dr. Catherine Owen

The second session continued with an emphasis on economics, with Dr. Catherine Owen, a British Academy Postdoctoral Fellow and Lecturer in International Relations at the University of Exeter, making a report. She discussed how the economic situation in China might affect BRI projects in Central Asia, offering two possible scenarios:

  1. Chinese investors will take advantage of the dire global economic situation to purchase greater amounts of failing asset prices overseas, which could lead to greater levels of engagement in Central Asia.

Evidence to support this theory: 

  • An economist at the People’s Bank of China stated that local governments were likely to respond by investing in high-cost infrastructure projects, supported by trillions of yuan in local government bonds released as fiscal stimulus. Local governments on the Chinese periphery may choose to expand already extensive cross-border cooperation with low-income neighboring countries desperate for infrastructure and investment
  • NATO warned of this last week, though there is little concrete evidence to support this claim so far.
  1. China reigns in overseas loans and development projects and turns its economic focus inward, resulting in lowers levels of engagement in Central Asia

Evidence to support this theory:

  • While it was already slowing in 2019 due to the US-China trade war,  Chinese overseas investments are predicted to slow because of low levels of liquidity and owing to mandates to channel what cash they do have into the domestic economy 
  • The restrictions on population movement across the world mean that BRI projects cannot currently take place physically.

In addition, Dr. Catherine Owen noted that talking about China as a unitary economic actor with a coherent, co-ordinated strategy is incorrect. There are numerous Chinese lenders, including banks, China-led multilateral organisations, state-owned enterprises, and wealthy individuals. Each of these have different priorities, regulations, and strategies.

Arne Elias Corneliussen and Dr. Roman Vakulchuk also made comments in this session after Dr. Owen’s report.

Dr. Roman Vakulchuk

Experts continued to discuss COVID-19 effects on BRI realization in Central Asia in the third session, with Dr. Roman Vakulchuk, Senior research fellow at NUPI (Norway), addressing risks to BRI implementation in the region:

“Future trajectories of BRI development will depend on how fast China can tackle domestic economic difficulties and mounting international pressure. The longer it takes, the consequences for Central Asia will be harder and more difficult. Some domestic issues for China will be more important than the BRI. The importance of the BRI for China may lessen, leading to delays in implementing projects; new BRI-related projects are unlikely to be launched soon. The second question is that the image of China and the BRI will depend on how China reacts to the post-pandemic situation in Central Asia.

Central Asia also will need to reconsider its approach to the BRI: focus on transparency, bankability, workforce health, sustainability, green energy. Out of more than USD 90 billion of Chinese investment in energy, less than 1% goes to green energy. A study of 261 Chinese projects in Central Asia has shown some distinct issues: it is unclear what is a BRI project is and what it is not; a bilateral approach is still widely used.

Also, it is very important to stress that Central Asia needs better coordination of BRI-related projects, with a clear need, for example, to establish a regional BRI coordination platform”.

Anton Bugaenko

Anton Bugaenko, Chief expert of the Chinese and Asian studies program at the Institute of World Economics and Politics (Kazakhstan), assessed the future of the BRI in Central Asia: “The coronavirus crisis will not lead to a global shift in priorities in the implementation of BRI. However, the epidemic will catalyze emerging processes in the framework of the Chinese initiative. Previously emerging trends will take root: the BRI will become more focused on the practical goals of China. Over the coming years, China’s resources will be diverted to rebuilding its own economy, but China will return to active investment, primarily in the resources necessary for the Chinese economy, as well as in the transfer of simple types of production to BRI countries. The countries of Central Asia will be increasingly involved in the Chinese economic orbit, but thanks to this they will be able to adapt to the new reality of the post-coronavirus world.

In the long-term, Chinese goals in Central Asia will be focused on diverting resources to its own economy and constructing its own production chains. China may continue to cooperate with Russia in the region. China also will gives Central Asia states technological solutions – they are cheaper and closer for these government’s needs, but instead Central Asia states will move to China’s technological zone. In this new cold war area this part will be most important. China will continue giving Central Asia states possible finance aid, if CA government will be unstable (as result of finance losses), because stability is the most important matter for China”.

In the fourth and final session, experts discussed China’s soft power in the new environment, a trending, hot-button issue. There are numerous ongoing discussions about China and its image in the mass media and among experts. The assessments are at times contradictory, with some discussing how China will improve its image using new mechanisms, such as medical soft power, while others stressing its worsening image on the world stage.

Temur Umarov

Temur Umarov, a sinologist and specialist in Central Asia and consultant at the Carnegie Moscow Center, made a presentation on this topic, noting that the COVID-19 outbreak had created image problems worldwide for China. Central Asia was not an exception in this regard. Umarov remarked that these problems didn’t appear out of nowhere. They were already there. The pandemic just intensified them.

“At the beginning (late January), when the epidemic was spreading mostly inside China, the damage to China was obvious. This has a lot to do with a specific feature of Chinese ’soft power’ – it heavily depends on investment and does not happen naturally”, – mentions Umarov.

With the start of its recovery, China has begun to open up again and this public policy was resumed. PRC’s diplomats across the world began translating several messages, including:

  1. those that portrayed China as a powerful state that managed to win over COVID-19;
  2. those stressing China bought precious time for the rest of the world;
  3. those questioning the origin of the virus.

Moreover, shortly after the pandemic slowed down, China launched its “mask diplomacy” to recover some of the points it lost earlier. Four Central Asian countries accepted China’s help in fighting the epidemic in different ways.

Anton Bugaenko and Dr.Owen concluded the session with brief remarks. 

After an interesting Q&A session, Anthony Borden, Executive Director of IWRR, gave a small closing speech, where he thanked the experts, organizers and other participants for taking part in the online discussion. The meeting was also attended by IWPR’s Regional Director in Central Asia Abakhon Sultonazorov; Norwegian Ambassador to Central Asia – H.E. Ole Bjornoy, as well as the general international community.

Nargiza Muratalieva, CABAR.asia analytical reports editor, closed the expert meeting, thanking all the participants for their hard work and expressing hope that this event would contribute to further research.

Meetings of experts from the Central Asian region will be continued in order to promote stability of peace and harmony in the region.

Watch the full video recording of the expert online meeting:

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