The current situation in Eurasia is complex and changeable, with rising security risks, a dangerous economic environment, and many uncertain factors, which have put the “One Belt, One Road” initiative facing new tests and pressures. However, there are “opportunities amid crises”. China and regional countries are constantly exploring new space for cooperation, new logistics channels are being rapidly built, and new settlement methods are improving day by day. The spirit of win-win cooperation and a shared future embodied in the “Belt and Road” initiative has been accepted by countries in the region. In line with the actual needs and interest demands of various countries, this creates new opportunities for all parties to promote the construction of the “Belt and Road” with high quality.

This year marks the tenth anniversary of the Belt and Road Initiative. Over the past ten years, with the joint promotion of China and Eurasian countries, the “One Belt, One Road” initiative has taken root and blossomed in Eurasia, achieved fruitful results, and has become a popular international public product and international cooperation platform.

In recent years, against the backdrop of the century-old changes in the world that have accelerated and the international situation has entered a period of turbulence and transformation, the situation and pattern in Eurasia have experienced unprecedented complexity and change since the collapse of the Soviet Union. Relations between major powers have become unprecedentedly tense and regional security risks have risen. The economic development environment has reached a new high and the economic development environment has become more dangerous, causing China and Eurasian countries to jointly build the “Belt and Road” and face new tests and pressures.

First, the negative impact of geopolitical factors is highlighted. In the context of intensified confrontation between major powers in Eurasia, the United States, on the one hand, is stepping up efforts to contain and weaken Russia, and on the other hand, it has never forgotten to suppress China. The United States has always forcibly attached a geopolitical label to the “One Belt, One Road” initiative. After the Ukraine crisis broke out, the United States became more vigorous in calling the “One Belt, One Road” initiative a “geopolitical tool” and stepped up its pursuit of related cooperation. The joint construction of the “Belt and Road” by Asian countries poses tremendous pressure.

Secondly, connectivity construction faces huge challenges. The Russian railway network is a necessary place and a key component of the Eurasian Continental Bridge and the New Eurasian Continental Bridge. Ukraine and Belarus are located at strategic transportation hubs and are important hubs for the extension of the Silk Road Economic Belt to Europe. The above three countries It carries the main transportation route from China to Europe. Affected by factors such as war and sanctions, the “Ukrainian line” of China-Europe freight trains has been suspended. The route to Europe via Ukraine has been rerouted. The lines transiting Russia and Belarus are also facing potential risks. Some of the development achievements of China-Europe freight trains in recent years have been met with uncertainty. Impact, high-quality promotion of the “Belt and Road” transportation connectivity construction is facing new challenges. In addition to railway transportation, road transportation, sea transportation, and air transportation are also blocked to varying degrees, and the logistics chain between Asia and Europe needs to be reorganized.

Thirdly, foreign investment and trade are encountering more uncertainties. In the early stages of the Ukraine crisis, factors such as the closure of some ports, rising oil prices, depreciation of the ruble, and financial sanctions pushed up freight rates between Europe and Russia and exchange rate risks in cross-border settlements. Risk aversion among foreign trade entities increased, and transaction willingness declined. China and Eurasia The country’s trade volume once fell. As the crisis becomes protracted, international trade faces the risk of host country-based policies and protectionism. People’s livelihood and employment problems in some countries are becoming increasingly serious, exacerbating protectionism in the Eurasian region, stimulating and breeding extreme nationalism in the region, thus jeopardizing the implementation of the “One Belt, One Road” project.

Despite geopolitical turmoil and the impact of the epidemic, China’s economy has always maintained vitality and has become a strong driving force leading global and regional economic recovery. The joint construction of the “Belt and Road” between China and Eurasia can be described as “an opportunity amidst crisis.”

In 2022, the import and export volume between China and the “Belt and Road” partner countries will reach 13.83 trillion yuan, a year-on-year increase of 19.4%, accounting for 32.9% of China’s total foreign trade value. The joint construction of the “Belt and Road” between China and Eurasia has also ushered in many new opportunities and favorable conditions. New cooperation spaces are constantly being discovered, new logistics channels are being rapidly built, and new settlement methods are improving day by day.

First, China has maintained high-frequency interactions with leaders of Eurasian countries. In September 2022, President Xi Jinping went to Samarkand to attend the SCO Summit and pay state visits to Kazakhstan and Uzbekistan. In May 2023, the heads of state of China and the five Central Asian countries gathered in Xi’an to hold the first China-Central Asia Summit. China will also hold the third “Belt and Road” summit forum this year.

Second, the economic ties between China and the Eurasian region have been continuously strengthened, and the space for cooperation has become broader. In 2022, the trade volume between China and Eurasian countries will grow steadily, with China’s imports and exports to the five Central Asian countries, Russia, and Belarus increasing by 45.4%, 29.3%, and 33% respectively year-on-year. Many new growth points and highlights have emerged in the economic cooperation between China and Eurasian countries, especially in the fields of food trade, e-commerce, automobile manufacturing, clean energy, information technology, biotechnology and other high-tech industries. Mutually beneficial cooperation is developing rapidly.

Third, thanks to flexible adjustments, the operation of China-Europe trains has shown strong resilience. After the conflict broke out, Chinese cities opened new northern routes into Europe that bypassed Ukraine. There will be 16,000 trains operating in 2022, a year-on-year increase of 9%.

Fourth, the trend of local currency settlement promotes the process of RMB internationalization. European and American countries have unprecedentedly dropped a “financial nuclear bomb” on Russia and removed some of its banks from the SWIFT system, which has brought difficulties and obstacles to cross-border settlement with Russia. Expanding cross-border settlement channels, avoiding the risk of financial sanctions, expanding the scale of local currency settlement, and establishing and improving a non-US dollar diversified payment system have become a strong consensus and practical demand between China and Eurasian countries. Against this background, RMB internationalization is facing new opportunities. The local currency settlement between China and Russia has achieved leaps and bounds, covering about 50% of the trade volume in 2022. In the future, China and Russia will also try to switch to local currency settlement in natural gas exports to China. In addition, the RMB has become a safe-haven currency recognized by Eurasian countries.

High-quality joint construction of the “Belt and Road” is a major strategic deployment to implement high-quality development of China’s economy. The Eurasian region is not only China’s peripheral region and strategic depth, but also a key area for China to connect the world westward and improve the level of openness in China’s central, western and northeastern regions. .

The “Belt and Road” initiative transcends the Cold War mentality and adheres to the principle of extensive consultation, joint contribution and shared benefits. It contains the spirit of win-win cooperation and a shared future, and has been accepted by regional countries that cherish their own sovereignty and independence. The cooperation direction of the “One Belt, One Road” initiative is highly consistent with the actual needs and interests of all countries. Its core focus is development issues, and seeking development in the changing situation is the top priority of Eurasian countries and the greatest expectation of the people. Under the new situation, stronger political mutual trust and stronger consensus on cooperation will create new opportunities for high-quality and sustainable promotion of the “Belt and Road” construction.

Source: SHM News

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Amid Russia’s sanction-induced reorientation of its supply chains and the conflict in Ukraine, central Asian countries have seen surging overland opportunities.

Reporting on its first half performance, Kazakhstan’s KTZ Rail said volumes had increased by a whopping 86% year on year, as shippers sought alternative connections between China and Europe, with exports up 250%.

Much of the growth has been driven by a remodelling of supply chains from Russia towards the Middle Corridor.

Described by Kazakh president Kassym-Jomart Tokayev as the world’s “main connecting link”, it joins China, Central Asia and Europe via the Caspian Sea, South Caucasus and Turkey.

Indeed, this week China and Kazakhstan entered into an agreement that would see 26.8m tonnes travel through the corridor, increasing to 27.8m tonnes next year.

Alongside bolstering Asia-Europe connectivity, the deal is also expected to cement further gains in Kazakhstan’s export economy, with a spokesperson for the rail operator suggesting it would generate a 25% bounce this year alone.

Recent rail successes along the route are also leading to growth in other overland services, with Ceva launching a new China-Kyrgyzstan-Uzbekistan trucking connection.

MD of Greater China Joanna Zhu said: “We are expecting more regular TIR operations on this new route with around 100 trucks every month.

“We will continue to optimise ground and rail product portfolios to open direct routes while strengthening intermodal capabilities. We will develop more tradelanes from China to the west and enhance trade resilience along the corridor.”

TIR, or International Road Transport, is a routing removing the need for customs checks at each border point and is seen by the IRU as essential in reducing delays. Its chief representative of East and South-east Asia, Yan Zhou, described the Ceva route as of “strategic importance”.

But Ceva is also keeping a firm eye on the rail developments, including the China-Kyrgyzstan-Uzbekistan rail project due for completion in 2025, creating the shortest link between the Asian giant and both Europe and the Middle East.

Source: The Load Star

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The president highlighted the dynamic regional cooperation and the global role of the Central Asian countries, which create new opportunities to expand cooperation

Jeddah: President Kassym-Jomart Tokayev of the Republic of Kazakhstan stated that his country has adopted a visa-free entry system for the Gulf Cooperation Council (GCC) countries in order to ensure sustainable growth and prosperity.

The Kazakh president indicated that the tourism industry is one of the fastest growing sectors in the region’s economy, expressing his readiness to develop the mutual promotion of cultural, educational, environmental, sports, and commercial tourism.

His remarks came while delivering his speech at the GCC-Central Asia Summit, which was hosted in Jeddah today.

President Tokayev expressed his gratitude and appreciation to the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, and His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, the Crown Prince and Prime Minister, for hosting the summit.

He also expressed his pride in participating in the summit, which highlights the strong bonds of brotherhood and friendship between the GCC and Central Asian countries through unity and mutual support.

President Tokayev praised the excellent organization of the summit, with the participation of royal and presidential highnesses, and highlighted the advancement of multi-dimensional cooperation and strong, harmonious relationships.

He commended the support of active political dialogue and the development of trade and economic cooperation.

President Tokayev emphasized the importance of strengthening cultural and human ties that align with the countries’ views on sustainable development issues and ensuring global security and peace. He noted that the historical ties, shared spiritual values, bonds of friendship, and brotherhood form a solid foundation for these relationships.

He stated that Kazakhstan places exceptional importance on today’s meeting and that the Arab Gulf countries, with their significant political influence and important economic and investment potential, are among its most important partners in many key areas.

The president highlighted the dynamic regional cooperation and the global role of the Central Asian countries, which create new opportunities to expand cooperation.

He commended the effective and active growth of trade between Central Asian countries and the GCC member states in recent years and looked forward to increasing mutual trade and activating investment cooperation.

Kazakhstan can increase its exports to the Gulf countries by approximately 100 products worth around $350 million, he said.

Source: Zawya News

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Uzbekistan’s independence was recognized by China in December 1991 and diplomatic relations between the two sides were established in January 1992. In the joint statement of establishing diplomatic relations in January 1992, the relations of more than three decades between the two countries, the promotion of friendship and cooperation in 2000, the 2005 partnership treaty, the 2012 joint statement, the 2013 agreement, the Comprehensive Strategic Partnership in June 2016, the visits of political officials, and the economy of the two countries have all been well documented, while the signing of over 100 bilateral agreements has further strengthened their economic cooperation.

In 2015, Uzbekistan became a partner of the Belt and Road Initiative (BRI) and joined the Asian International Investment Bank (AIIB).

China’s Goals and Opportunities
From 1992 to 2019, the trade volume between China and five Central Asian countries has increased 100 times. Shavkat Mirziyoyev, Uzbekistan’s President, participated in the Belt and Road Forums in 2017 and 2019. During the visit of Chinese President Xi Jinping to Uzbekistan in September last year, the two countries signed additional cooperation documents in various fields.

In line with its independent foreign policy and economic goals, China is expanding and deepening BRI cooperation in Uzbekistan. In the first meeting of the heads of C+C5 countries, China also asked Uzbekistan to deepen industrial cooperation, investment, and win-win cooperation in BRI and to increase regional industrial development in sectors such as digital economy, energy, and agriculture.

China by using the BRI, seeks to expand transportation and logistics infrastructure, trade links, prosperity, new opportunity for stability and growth, investment, technology and new markets, exports, industries, industrial promotion, green and digital economy, reducing electricity shortage, and increasing exchanges.

In a way, China’s interaction with Uzbekistan is an alternative to Russian and maritime routes, regional hydrocarbon and mineral resources, export markets, loans, and investments in the local economy. In addition, China’s foreign aid primarily focuses on its Asian neighbors, such as Uzbekistan. This aid is based on China’s national goals and is a form of South-South cooperation that serves the strengthening of BRI.

In the China-Central Asia-West Asia BRI Corridor, two of the BRI routes pass through Uzbekistan, which will connect the country to China and Iran faster than the previous, Soviet-era alternatives. Route 3 is the Kazakhstan, Uzbekistan (Tashkent, Samarkand, Navi), and Turkmenistan Corridor, while Route 4 is the Kyrgyzstan, Uzbekistan (Andijan, Pap, Tashkent, Samarkand, Navi) and Turkmenistan-Iran Corridor.

Additionally, all four corridors of the “China-Central Asia” gas pipeline pass through Uzbekistan. Apart from the 25-year bilateral contract for the sale of natural gas, a fifth route to transfer gas from Turkmenistan to Uzbekistan is also being considered.

Companies such as Power China entered the Uzbekistan market in 1999. But now the companies involved in BRI have a much more colorful role in Uzbekistan. Beijing, and the BRI is the largest source of foreign investment in Uzbekistan. Since 2017, China has invested more than US$10 billion in Uzbekistan.

More than 120 companies registered in Uzbekistan are 100% Chinese capitalized, while the number of enterprises with Chinese capital participation – Joint Ventures – has exceeded 2,000.

Bilateral agreements for the implementation of more than 150 joint projects are either to be implemented in the future or are ongoing. Significant Chinese companies such as Huawei, ZTE, and China’s Eximbank all operate in Uzbekistan.

China’s BRI has invested in Uzbekistan in sectors such as industries, raw materials, energy, infrastructure, telecommunications, advanced technology, construction of thermal power plants and upgrading of hydroelectric power plants, development of digital and fiber optic infrastructure, and 5G.

Chinese companies under the BRI are also active in the sectors such as renewable energy resources, and mining of Uzbekistan, especially in the cement sector and numerous factory projects, special economic zones, free trade zones, industrial parks (SEZs), building materials, chemical and chemical industry companies, agriculture and logistics, and textiles.
Cooperation between the BRI and the development strategy of “New Uzbekistan” for 2022-2026 has also been taken on by Beijing.

From China’s pespective, Uzbekistan is a considerable power in the heart of Central Asia with an increasingly strong role. The annual business volume is moving towards the goal of US$10 billion dollars. More attention has been paid to the China-Kyrgyzstan-Uzbekistan road corridor and the China-Kyrgyzstan-Uzbekistan railway. In mid-September 2022, the representatives of these three countries signed a memorandum of cooperation for the implementation of the China-Kyrgyzstan-Uzbekistan railway or CKU project.

The volume of trade between Uzbekistan and China has increased 140 times in the last 30 years. Bilateral trade increased by 20% to nearly US$9 billion in 2022.

Uzbekistan’s Objectives and Opportunities

With a relatively young population of about 37 million, Uzbekistan is the largest consumer market in Central Asia and a major regional agricultural and manufacturing exporter.

Since the introduction of the BRI project in 2013, Uzbekistan has become a significant Central Asian partner of China. The structure of Uzbekistan’s foreign policy changed with Shavkat Mirziyoyev coming to power and presenting a program of fundamental reforms.

Tashkent also supports the One China principle, Beijing’s interests in Taiwan and Xinjiang. Uzbekistan’s integrated program for development in various fields has strengthened strategic cooperation with China in the form of the Belt and Road Initiative.

China and Uzbekistan do not have a common border, but Uzbekistan’s location on the BRI route has also made Tashkent pay attention to partnering with China, solving geographical challenges, and becoming a regional transportation hub.

The BRI is in line with Uzbekistan’s plan for the future development of trade and transport routes. In this regard, the plan “Development Strategy of New Uzbekistan for 2022-2026” pays attention to the deep economic relations with China. From Uzbekistan’s point of view, by BRI, Uzbekistan can be balanced against Russia’s demands and could be the geographical axis of connecting China, South Eurasia, South Asia and the Middle East, the Caspian Sea, Persian Gulf ports and the Black Sea. Also, the completion of the BRI projects will greatly increase the trade, investment, and GDP of Uzbekistan, and the competitiveness of Uzbekistan’s exports.

Challenges and Prospects

Investors in Uzbekistan scan face confusing regulations, misinterpretations of regulatory laws, reduced benefits, restrictions on law enforcement, policy uncertainty, an extensive government presence in the economy, and arbitrary interpretation by different regions in Uzbekistan.

Religious groups such as Hizb ut-Tahrir and the Islamic Movement of Uzbekistan, and the Islamic State in Khorasan, have a more negative attitude towards China. The entry of BRI is not without cost. Relying too much on China can be seen as creating risk and a perception that cheaper products will lead to eliminating local companies and creating more demand for imports from China. In 2020, China’s loans to Uzbekistan increased to US$3 billion. There are also some fears about the sustainability of the BRI’s medium-term debt, the so-called “debt trap” and financial risks in some of the BRI’s infrastructure investments, such as the US$8 billion cost of projects like the CKU.

However, the BRI also presents more opportunities for Uzbekistan. China plans to increase trade with the five Central Asian countries to US$70 billion by 2030. Uzbekistan’s future potential for continued BRI inclusion is significant, with Uzbekistan signing BRI infrastructure related contracts worth US$16 billion with China in 2022. By using the BRI, Uzbekistan is diversifying its infrastructure network and reducing delivery times to the country by approximately 15%. With the BRI and cooperation program 2022-2026, Uzbekistan can increase export routes and the increase the volumes of Chinese tourists.

The Belt and Road Initiative in Uzbekistan is being seen overall as an important contribution to reaching the national GDP goal of US$100 billion in GDP, doubling exports to more than US$30 billion dollars by 2030, and diversifying the economy. In this regard, many in Uzbekistan and China hope that the construction of the China-Kyrgyzstan-Uzbekistan (CKU) railway will create more important business and economic opportunities, and will shorten access to the Persian Gulf, the Caucasus, Turkey, the Middle- East, and Southern Europe.

Source : Silkroadbriefing

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