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Wednesday, 01 October 2014

China Expands Influence in Tajikistan

Published in Field Reports
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By Oleg Salimov (10/01/2014 issue of the CACI Analyst)

Tajikistan’s President Rakhmon met with China’s leader Xi Jinping right after the recent SCO summit in Dushanbe. It was Jinping’s first visit to Tajikistan. The official meeting concluded in the signing of 16 contracts and agreements on cooperation. In general, the agreements and contracts covered three major areas, such as economy, agriculture, and banking. The leaders also signed separate agreements on extradition and exchange of convicted persons.  The connotation of the official visit is a continuation of China’s political and economic expansion in Tajikistan.

Tajikistan’s major financial achievement in the meeting between Rakhmon and Jinping was securing a grant for trade and technology development in the amount of RMB 300 million (approximately US$ 49 million) and the approval of lax export credit from China’s Ministry of Trade (the amount is yet to be announced). The RMB 300 million grant is the second non-repayable financial aid to Tajikistan after a similar RMB 150 million grant provided in 2012 by China’s then leader Hu Jintao to Tajikistan during Rakhmon’s official visit to Beijing.

According to Tajikistan’s Ministry of Economic Development, the amount of China’s total credit to Tajikistan exceeds US$ 800 million. The latest agreement between Tajikistan’s government and China’s Export – Import Bank foresees the prospect of a US$ 400 million credit from China for various developmental projects in Tajikistan. In providing development and consumer credits to Tajikistan, China pursues its own economic goals of finding and supplying new markets. The previous lax credits from China were primarily aimed at developing transportation connections between Tajikistan and China. Thus, the road from Dushanbe in Tajikistan to the Xinjiang Uighur autonomous region in China allowed for an increase in the export of Chinese goods to Tajikistan. The recent approval of lax export credit to Tajikistan is a predictable step intended to increase China’s exports even further.

In turn, Tajikistan falls greatly behind in trade turnover with China. According to Tajikistan’s Statistics Agency, the China-Tajikistan trade in 2013 reached a record US$ 682 million, with China’s share amounting to US$ 595.7 million and Tajikistan’s to only US$ 86.3 million. Tajikistan’s production industry also suffers from unbalanced trade with China. Raw materials such as aluminum, cotton, and leather are the primary export items from Tajikistan to China, whereas ready products, goods, and equipment are the main importing categories from China. This significantly undermines Tajik light and textile industry.

During his visit, Jinping announced the official construction start of Tajikistan’s part of the Central Asia – China gas pipeline. This is the fourth branch of a massive system of gas pipelines designed to supply China with natural gas from Turkmenistan. The construction agreement for the fourth branch was signed on September 12, 2013, in Bishkek at the SCO summit.

The two first branches go through Kazakhstan and Uzbekistan and deliver 69 billion cubic meters of natural gas annually (bcm/y). The third branch went into service in May 2014. It was constructed alongside the first two with a projected capability of 25 bcm/y. The fourth branch will transit 25 bcm/y from Turkmenistan to China through Tajikistan. The total length of the pipeline which also passes the territory of Uzbekistan and Kyrgyzstan is 3,700 kilometers. The length of Tajikistan’s part is 400 kilometers. China is the primary investor, constructor, and consumer of the project.

According to Saidakhmad Sharofiddinov, the head of Tajiktransgas (a state company representing Tajikistan in the project), there is no immediate plans of importing Turkmen natural gas to Tajikistan although the country desperately needs gas for its industrial and residential consumer purposes. The completion of the pipeline is expected in 2016. Putting high hopes on the pipeline, Tajikistan cherishes the idea of constructing a railroad alongside the pipeline. The realization of this idea will completely depend on China’s willingness to invest in it as Tajikistan lacks financial, technological, and other capabilities to initiate the project. 

As expected, the meeting between Rakhmon and Jinping in its form and content repeated the previous meetings of Tajik and Chinese leaders. China continues its aggressive expansion in Tajikistan’s economy through credits and grants, which serve China’s needs while simultaneously suppressing the political will of Tajikistan’s government who sees no other alternatives to China’s financial aid and investment. The presumable development of Tajikistan’s energy sector is another backdrop for the country’s economy as its industrial complex has become a passive observer in a China – Tajikistan project with China supplying material, equipment, and even the workforce for constructing energy infrastructure for its own consumption. The reluctance of Tajikistan’s government to recognize China’s one-sided approach in their bilateral relationship is increasingly hollowing out Tajikistan’s political and economic independence.

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