Impact of «One Belt, One Road» initiatives to the economy of Central Asian countries

Abstract

One Belt – One Road” – the Chinese initiative to create the Silk Road Economic Belt (SREB) and the Maritime Silk Road (MSR) was first announced by the Chairman of the People Republic of China Xi Jinping during his official visit to Kazakhstan and Indonesia in 2013. The main goal of “One Belt – One Road” initiative lies in the exploration, formation, and promotion of a new model for international cooperation and development through strengthening of current regional bilateral and multilateral mechanism and structures of collaboration with the participation of China based on maintenance and development of the spirit Ancient Silk Road. Central Asia for many centuries was a dynamic center linking regional and international communities via the historic Silk Road. Nowadays Central Asia is tremendously important for China for several reasons. Firstly, Central Asia is the gate for China to the West. All land routes which going from China to Europe or South Asia passing through Central Asian countries. Secondly, three of Central Asian countries share a border with China. There are traditional -cultural links between peoples on both sides of the border. Lastly, Central Asian countries are rich in natural resources especially in hydrocarbon reserves which is more important for the lifeline of the Chinese economy. Connectivity and trade with Central Asia are considered necessary for development and stability of Chinese foreign policy. Corresponding author: Imomov Imomnazar Email address for corresponding author: imomnazartajdip@gmail.com First submission received: 20th March 2018 Revised submission received: 20th June 2018 Accepted: 26th June 2018 Introduction Nowadays, China is experiencing an economic growth very fast in world history. Still, it’s unclear that with which model Chinese are developing and going ahead. It’s the daily question between scholars and analytics. So, “One Belt – One Road” is supposed to be an answer for the future of Chinese long-term development goals. Chinese President Xi Jinping launched the “One Belt – One Road” (OBOR) initiative in Nazarbayev University, in Kazakhstan 2013. One of the biggest stories in Asian business is China’s One Belt, One Road initiative, an economic and diplomatic project that could transform trade. The implementation of Chinese initiative should help increase trade and investment in the countries along the Belt and Road. The Belt and Road run through the continents of Asia, Europe, and Africa, connecting the East Asia economic circle at one hand and developed European economic circle at the other, and encompassing countries with huge potential for economic development. “One Belt – One Road” is the first ambitions and megaproject which connecting the people of Asia to the Europe and Africa within economic trade tradition and cultural ties which the world history never experienced it before. “We can Use the innovative model of collaboInternational Journal of Business and Economic Development, Vol. 6 Number 2 July 2018 www.ijbed.org A Journal of the Academy of Business and Retail Management (ABRM) 30 ration to build the New Silk Road economic belt together so that we forge closer economic ties between Europe and Asia and deepen our mutual collaboration to experience even greater development. This great project benefits everyone along this road. (Xi Jinping’s speech at Nazarbayev University, Astana 2013)”. According to the official data, more than 65 countries of the world are involved in «One Belt One Road» project including new economy, developing and developed countries. «One Belt One Road» covers 30% of global economic capacity, 55% of the world GDP, about 70% of the world population and about 75% of the world global energy resources. One Belt – One Road’s map Source: Reuters During four year of implementation, the project has received the remarkable result. The Chines high-level official visits more than 25 countries, participating in the dialogue and strengthening bilateral relations. Currently, more than 30 countries signed an agreement on “One Belt – One Road” project with China. In May 2017 in Beijing held an international summit by “One Belt – One Road” in which the heads of 30 states and governments as well as 1200 delegation from different countries of Asia, Europe, North America, Latin America and Africa participated. The parties discussed the real ways of promoting project «One Belt One Road “One Belt – One Road” and shared the mutual benefit from international cooperation and strengthening international cooperation. Summit helped for signing contracts for the implemenInternational Journal of Business and Economic Development, Vol. 6 Number 2 July 2018 www.ijbed.org A Journal of the Academy of Business and Retail Management (ABRM) 31 tation of 76 major projects based on investment, infrastructure, political communication, barrier-free trade, financial integration and ensuring the connection between people. According to the Ministry of Commerce of China, direct investment from China to the countries which involved in «One Belt One Road» (almost 65 countries) increased sharply from $ 200 million in 2003 to 14.53 billion US dollars in 2016. After announcing «One Belt One Road» initiative signed contracts for more than 126,03 billion dollars. This mega-investment and ambitious project will have the significant impact on the nations through which it crosses. At the “One Belt – One Road” Summit which held in Beijing, Xi Jinping mentioned that over the past three years, Chinese investments in the countries that joined the “One Belt – One Road” amounted to about $ 50 billion. In the coming years, it is planned to increase this amount to $ 150 billion. “One Belt – One Road” contains about 900 different infrastructure projects including roads, railways, ports, power stations, and bridges in more than 60 countries. For the implementation of this projects, expert is estimating amounts from $ 2 to $ 3.5 trillion. Everyone is thinking that nowadays, for many countries located on the ancient Silk Road, particularly landlocked Central Asia, a historic «One Belt One Road» trade system appears to be the only alternative for their prosperity and development. Despite increasing economic, political and cultural cooperation between China and Central Asia, the role of Central Asian countries in this project is still under consideration and under-researched. The following questions remain unaddressed: what’s the benefit of the “One Belt – One Road” project to the economy of Central Asian states? How to implement this project in the region for the stability, development, prosperity, and integration of Central Asia? What specific threats exist in the «One Belt, One Road» to the economy of Central Asia in its contemporary stage? China and Central Asia from Silk Road to “One Belt – One Road” Looking at the political map of the world its seems that Central Asia is in the center of the world and it has several advantages and disadvantages. Connecting one part of the world to another and being transit corridor for exporting and importing goods are the priority of locating Central Asia between the East and West. Central Asia is the place which Silk Road crosses it, it is the place that Alexander Great died, where Marco Polo searched for silk routes to Venice, and where British and Russian Empire had a Great Game. In a fact, west for most Chinese scholars and politics was Central Asia, not the modern European West. From the period of Khan Dynasty, Central Asia was the strategic place and Chinese tried always to take have peaceful relation with the head of the Central Asian countries. These historical reasons are a reasonable scientific basis for abandoning the term "Silk Road" as a historical concept. The Silk Road was the only of shorter trade routes that connected the Chinese capital Xian with various trading centers in Central Asia, including, Samarkand and Bukhara. These centers related to other points like India, Iran, Middle East, and through them with Europe. Chinese “One Belt – One Road” project directly linked its initiative with the legacy of the ancient "Silk Road" and presented it as a project based on equality and mutual benefit, mutual open-mindedness and the sharing of knowledge culture and tradition from each other. But the goal of the “One Belt – One Road” initiative is not only the exchange of goods, services and ideas on equal terms. It is about creating new markets and routes for Chinese goods in Asia, in part because of a falling demand for them in Europe and the US. Beijing's influence is growing fast day by day in the region. China's desire to engage in active economic interaction, the willingness to invest impressive amounts of money in the implementation of projects which its vital necessary for Central Asian countries. After getting independence Central Asian countries in 1991 and appearing several independence states in the political map, China changed its geopolitical position. So, Central Asia was one the priority in the foreign policy of China. Countries in the region International Journal of Business and Economic Development, Vol. 6 Number 2 July 2018 www.ijbed.org A Journal of the Academy of Business and Retail Management (ABRM) 32 like Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan are rich in natural resources. The importance of the region as a strategic partner and market for the Chinese economy has been preserved till nowadays. A new factor in Beijing's policy towards Central Asia was the firm consolidation of the need to develop the western regions of the country on the agenda of China's domestic policy, as China's regional dynamics still show considerable imbalances. The western regions of China are more connected with Central Asia. Thus, almost one-third of the total trade of the Xinjiang Uygur Autonomous Region of China today is going to Central Asia. The actual issue for China is cooperating with the Central Asian states in fighting