China’s Business in Central Asia: Power and Anxiety

This research examined the scale and scope of Chinese multinational firms’ expansion across Central Asia, their effects on the local economies and societies and their competitive advantages over Russian and Western firms. The study is based on new research at the industry and firm level with fieldwork interviews and extensive secondary data analysis. The focus is on those strategic industries where the Chinese are primarily investing: energy, mining and infrastructure.

Issues arising from Chinese business practices
i) Lack of Transparency and Debt Trap: The lack of transparency and concealment in Chinese business practices lead to speculation and rumours. But, it is not easy to verify many of these as business owners and managers move around and often avoid the public gaze. The real danger seems to be the increasing corruption around debt with the growing flow of money from China. Chinese investments show variety with highly evasive business practices.

ii) Environmental Concerns: There are growing claims about industrial accidents and mining pollution. In rural Kyrgyzstan mining pollutes the rivers as Chinese firms, among them many small operatives, do not follow any rules and are not being regulated properly or guided according to any standards. They are careless and pollute the water. Villages in the past have protested about this. The recent massive fire in Kalamkas oil field in Mangistau Kazakhstan is a good example of inefficiencies and corruption. After the accident the government first argued that they will take the license away from the Chinese company responsible for oil refinery but later issued a ridiculously small fine (996.7 USD) and the issue was covered up despite the claims about out dated technology and poor business standards in the site.

iii) Social and Civilizational Insecurities: A vast majority of Kazakh and Kyrgyz respondents irrespective of their professional position or educational background expressed concern about the future cultural sustainability of their country and talked about the dangers of increasing Chinese political, economic and demographic influence.