Asia-Pacific, Economy & Trade, Global Geopolitics, Headlines, Trade & Investment

Kyrgyzstan’s Economic Nationalism Threatens to Choke Chinese Trade

BISHKEK, Nov 23 2012 (EurasiaNet) - A surge of economic nationalism is making life uncomfortable for Chinese companies working in Kyrgyzstan.

Faced with obstacles to trade and investment in the restive republic, Beijing is looking for ways to mitigate risk. Kyrgyzstan, Chinese officials know, is not the only place in Central Asia eager for business.

Case in point: Early this month, Kyrgyzstan’s parliament voted to ban Chinese trucks from entering the country. Accused of damaging roads and monopolising trucking routes, the giant lorries, typically the HOWO make, are the same types of trucks that have been plying the domestic market with cheap consumer goods and fuelling Kyrgyzstan’s re-export trade for years.

Ironically, Chinese companies paid with Chinese credit are repaving many of the highways the lorries may be forbidden from traversing.

That’s not lost on proponents of the ban, who, in addition to insisting they are protecting some 60,000 domestic truck drivers and loaders, also perceive their giant neighbour as a threat to Kyrgyz sovereignty. Temirbek Shabdanaliev, head of the Association of Kyrgyz Carriers, a lobby group that pushed for the ban, says that “parliamentary deputies showed their patriotism” with the vote.

As it stands now, the legislation has no legal force until President Almazbek Atambayev signs it. Yet such a motion would have been unlikely prior to the country’s 2010 uprising, which ushered in a more pluralistic and capricious political system, say observers.

Under ousted President Kurmanbek Bakiyev, Kyrgyzstan’s economy became hooked to re-exporting Chinese goods to other Central Asian countries. Kyrgyzstan surpassed Kazakhstan as Central Asia’s leading importer of Chinese goods in 2009, its low tariffs effectively promoting Beijing’s trade interests in the region.

Bakiyev was no great negotiator, says Shabdanaliev. According to the trucker association head, Bakiyev’s administration signed a bilateral agreement with China in 2007 that permitted Chinese lorries to weigh up to 55 tonnes, including cargo. That marginalised local drivers who often operate smaller trucks.

At the start of this year, officials cut the upper limit to 48.5 tonnes, although corrupt border officials often overlook regulations, Shabdanaliev says.

“China’s wealth is good for us. It can enrich the country,” Shabdanaliev told EurasiaNet.org. “But in bilateral negotiations we must defend our national interests. If we let our guard down time and again, there won’t be a national interest to defend.”

Parliament’s Nov. 1 action, initiated by the nationalist former speaker, Akmatbek Keldibekov of the opposition Ata-Jurt party, came just days after a brawl between Chinese workers and local residents at the Chinese-operated Taldy-Bulak Levoberezhnyi gold field. The incident forced workers to abandon the site.

Writing in the Chinese press, the head of the Chinese Chamber of Commerce in Kyrgyzstan blamed “opposition parties” for creating “an unstable and risky situation” for foreign investors. He implied politicians were stoking fear of China to further their own business interests. The Chinese Embassy in Bishkek refused EurasiaNet.org’s request for comment.

These types of disruptions have not gone unnoticed in Beijing, where officials know they have other export options, says Alexandros Petersen, a China expert and author of The World Island: Eurasian Geopolitics and the Fate of the West. Beijing is investing in road infrastructure across the region.

Petersen argues that Chinese decision makers are “hedging their bets, building the Khorgos Special Economic Zone in Kazakhstan and opening new customs houses at the Kulma Pass to Tajikistan” to diversify its trade routes into Central Asia.

Moreover, while Kyrgyzstan’s liberal trade regime and WTO membership made it a convenient entry point for goods heading toward richer and larger markets, the country remains a small market in and of itself.

Recent events may force China’s trade chiefs to wonder whether Kyrgyzstan is worth the trouble, a pertinent question in light of the two-billion-dollar-plus proposed railway linking its western Xinjiang province with Uzbekistan via Kyrgyzstan. Many in Kyrgyzstan have loudly denounced that project, too.

As the current cargo row demonstrates, China’s economic might has not translated into political leverage in Bishkek’s halls of power. But on the streets, Beijing has friends: market traders and every day consumers.

Damira Doolotalieva – head of Kyrgyzstan’s Union of Traders, which represents entrepreneurs working out of two of Central Asia’s largest markets, Dordoi and Kara-Suu – has urged Atambayev not to sign the lorry law, warning of a potential backlash: Kyrgyz trucks carry only a third as much as their Chinese counterparts can haul.

Chinese carriers are thus cheaper, she says, and the extra expense of using Kyrgyz trucks will be passed onto local consumers. “Parliament has … taken a decision that will fall on the shoulders of regular entrepreneurs and simple people,” she said.

*Editor’s note: Chris Rickleton is a Bishkek-based journalist.

This story originally appeared on Eurasianet.org.

 
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