It is just a tiny grocery store in a decrepit, Khruschev-era five story apartment block in Bishkek, the capital of Kyrgyzstan but it is flooded with shoppers, 24 hours a day. Located just off the busy Oruzbekov Street, surrounded by poplars and oaks, Dostyk (‘Friendship’) is run by Bakyt Akylbekov, a bearded, broad shouldered man in his 60s.
Bakyt has run the business since the Gorbachev era of the late 1980s green lighted the first private stores. From there, the proprietor witnessed the break-up of the Soviet Union, the Kyrghyz independence declaration, two coups, three popular revolts and a ‘colour revolution.’
Now, Dostyk’s days are numbered.
Bakyt had rented the annex for decades until the new owner wanted to renovate the entire property. That’s when the Chinese showed up.
The “generous” Chinese offered to renovate the premises as long as they could open a travel agency in Dostyk’s wing.
Bakyt was helpless in the face of the “confident and arrogant Chinese with pockets full of money,” he said. He is bitter about these ‘guests from the east’ and he is not alone.
The Downside of Investment
In September, Bishkek shopkeepers and farmers tried to protest. They were quickly dispersed by China-friendly authorities, while local media maintained a blackout of the event for protest is not the official narrative of the Chinese influx.
That narrative was visible on October 1, when thousands of Chinese across Central Asia not to mention many millions beyond celebrated their National Day by organising parades, concerts and festivals. One event, at Kyrghyz National University, included music, concerts and film screenings.
And at the 2nd Belt & Road Initiative (BRI) Forum that ran from April 25-27 in Beijing, Chinese and Central Asian leaders were all smiles. They talked about progress and development and indeed, there are plentiful examples of major Chinese Investments across the region.
No one mentioned simmering anti-China sentiment. But on the ground in the ‘Stans, that force is emerging in anger, protest and violence.
Angst is fuelled by multiple issues: unfulfilled hopes, debt traps, excessive deployment of Chinese capital and labour and a belief that Beijing is prioritising its own interests.
Yet another bone of contention was Beijing’s treatment of its Muslim minority in Xinjiang a minority many Central Asians feel an ethnic and religious kinship with.
Great Expectations Unfulfilled
When, in 2017, the leaders of Kazakhstan, Kyrgyzstan and Uzbekistan arrived in Beijing for the BRI Summit, they hopefully presented long lists of potential projects to their hosts.
The Kyrgyz President talked about ‘the importance of expanding fibre-optic communication lines from China to Europe via Kyrgyzstan, e-commerce and the creation of logistics centres.’
The Uzbek leader urged: ‘The creation of interconnected industrial techno-parks, scientific and innovation clusters, and free economic zones along the Silk Road Economic Belt.’
The Kazakh leader asked his Beijing hosts for technological and scientific development and agricultural assistance. And all three begged for the China-Kyrgyzstan-Uzbekistan railway to be integrated into the BRI, via connections to ports in Pakistan and Iran.
Two years later, none of these projects exist beyond paper the wish lists represented wishful thinking.
The rail project has been stalled for years. Construction on pipe-line ‘D,’ which would have been the fourth in a network connecting Turkmenistan to China, via Uzbekistan, Kyrgyzstan and Tajikistan, was halted indefinitely earlier this year.
The train station in the Silk Road City of Samarkand. Both Uzbekistan and Kyrgyzstan are begging Beijing to finance the connection of their railway systems as part of BRI.
Take the planned light-rail system in the Kazakhstan capital Nur-Sultan, one of the most high visibility Chinese projects in the country. It has been shelved, leaving concrete columns snaking through the capital as the only signs of a $1.9 billion rail system that was supposed to start operations in 2020.
China Development Bank halted lending last year after the collapse of the bank where the funds it had offered were deposited. Now Kazakh officials lament they have to borrow domestically to complete the project. In the meantime, glitzy, high-tech Nur-Sultan is left without a mass-transit system.
This points to the trend of Central Asian countries formerly firmly under Moscow’s control increasingly gravitating toward cash-rich Beijing. Cheap and quick Chinese financing looks tempting but it comes at a price. Many local politicians and journalists, who used to hail BRI’s impact on the region, now talk of high-level corruption generated by the yuan.
They also talk of the so-called ‘debt-trap’ policy pursued by Beijing.
A Widening Debt Trap
A 2018 report , published jointly by Nomura Research Institute and the IMF affiliated Center for Global Development, or CGD, listed Kyrgyzstan and Tajikistan among eight countries which might be hit by ‘debt distress.’
According to the report, China holds 41 % and 53 % of these countries’ debt, respectively. Moreover, the CGD and Nomura found that 80% of the increase in Tajikistan’s external debt from 2007 to 2016 is owed to China.
From 2008 to 2017, the debt owed by the Kyrgyz Government to China’s Eximbank exploded from $9 million to $1.7 billion equivalent to 24% of GDP.
Kyrgyzstan owes a total of $4 billion in foreign debt a heavy burden given an annual GDP of $7 billion. And unlike Kazakhstan, the mountainous Tajikistan and Kyrgyzstan are resource-poor and can’t use energy to repay Beijing.
Roughly half of Tajikistan’s $2.9 billion external debt is about $1.38 billion and is owed to China. The CGD estimates a higher number: 53% of Tajik debt is held by China.
Huge sums borrowed from Beijing have not only been used to build roads and tunnels: a new, $230 million parliament building is angering locals as a vanity project, and the largest theatre in Central Asia is being built in the capital.
The country has been forced to offer Beijing assets to pay back $300 million in debt. Tajikistan has transferred ownership over a lucrative gold mine to Beijing.
In 2011, Tajikistan ceded land in exchange for debt relief . And in 2012, 1,500 Chinese farmers were bought in to cultivate rice on 2,000 hectares significant space in a mountainous country where only 6% of land is farm-able.
Chinese Money, Goods, Labour
In sync with BRI, China’s labour and capital is spilling into the capital poor and underpopulated Stans. This dynamic is inevitably engendering a belief that Beijing has a secret agenda gradually taking over the vast steppes and mountains not only economically and culturally, but also via population influx as happened in neighbouring Xinjiang and Tibet.
Take the border crossing/trade-and-shopping emporium of Khorgos, on the China- Kazakhstan border.
Despite in fact, because of the popularity of Chinese shops and cheap goods there, many Kazakhs are suspicious and fear that their own shopkeepers are under threat.
On the Chinese side, flooded with Central Asian shoppers security staff man mall entrances while police patrolling inside wear anti-riot jackets.
There is outrage that Central Asian BRI projects largely use Chinese expatriate labour. This is especially the case in Kyrgyzstan, where the government has long been accused of downplaying Chinese labour migration.
Bishkek only recently admitted that more than 35,000 Chinese citizens arrived in the country in 2018 most as construction workers on BRI projects.
Tajikistan has also kept silent on BRI Chinese labour migrant numbers. According to official data, only 6,500 Chinese migrant workers are there. Unofficial figures suggest that the number could have soared to 150,000.
In richer Kazakhstan, too, there’s anger. Last year, according to some figures , more than 30,000 Chinese migrants came to Kazakhstan, many of them as construction workers on BRI funded projects.