China In Eurasia

Welcome to the first China In Eurasia briefing, an RFE/RL newsletter tracking China’s resurgent influence from Eastern Europe to Central Asia. I’m RFE/RL correspondent Reid Standish and here’s what I’m following this month:

The Cold Shoulder

China’s ambitions in Central and Eastern Europe took a hit when Beijing received a chilly reception from the region’s leaders at the 17+1 summit, with the meeting receiving its lowest-level representation ever, despite the forum being chaired for the first time by Chinese leader Xi Jinping.

Finding Perspective: The February 9 virtual summit came after more than a year of delays and reconvening the 17 European countries -- 12 of which are European Union members -- was all about optics for Beijing, as I explored here in my article.

China tried to build off the momentum of signing an investment deal with the EU at the end of 2020 and was eager to show that the 17+1 format still had life in it, but instead the meeting highlighted the growing frustration in the region with Beijing.

Six countries -- Bulgaria, Estonia, Latvia, Lithuania, Romania, and Slovenia -- all sent ministers instead of a prime minister or president to meet with Xi, and the Lithuanian parliament is now considering leaving the format all together.

The 17+1 has been a forum for lofty promises of investment into the region from Beijing, but expectations have not been met for most members.

“The summit showed that ‘promise fatigue’ is perhaps stronger in [Central and Eastern Europe] than in Western Europe,” Martin Hala, the director of Sinopsis, a project that tracks China in Europe, told me. “There is a growing sense that the region has been played by Beijing.”

Why It Matters: What Europe’s role will be amid tensions between China and the United States is currently a focal point of policy discussions in both Beijing and Washington.

The 17+1 meeting showcased the growing skepticism that Beijing faces in Central and Eastern Europe, but issues about the EU’s position toward China are far from resolved. Instead, they are just more focused on how France and Germany will decide to navigate the U.S.-China rivalry.

Read More:

-- Serbia is a notable exception to growing skepticism over China in the region. As my colleagues Iva Martinovic and Nemanja Stevanovic reported for RFE/RL’s Balkan Service, Belgrade and Beijing continue to grow closer when it comes to tech cooperation.

-- Germany is following its own middle path on China, as The New York Times reported recently.

-- France is also charting its own course for China. During a February 26 phone call with French President Emmanuel Macron, Xi pitched that Paris should find ways to work with Beijing on Central and Eastern European issues.

Expert Corner: Coming Soon

Do you have a question about China’s growing footprint in Eurasia?

Tell me the burning questions on your mind -- from foreign policy to the spread of Chinese cinema -- and each month I’ll ask leading experts and policymakers to explain it.

Send your questions to StandishR@rferl.org or tweet at me. Looking forward to hearing from you!

Three More Stories From Eurasia

1. Kyrgyzstan’s Swelling Debt

Kyrgyzstan’s state debt is nearing $5 billion and approximately $1.8 billion is owed to the Export-Import Bank of China for a series of infrastructure projects over the last decade completed under the Belt and Road Initiative, the centerpiece of Chinese foreign policy.

I dug into this topic for RFE/RL (also available in Russian), looking at how the country has few avenues for debt relief and is considering some drastic steps. Providing mining concessions to Chinese companies or relinquishing management rights of infrastructure projects have all been floated by Kyrgyz lawmakers as possible (though maybe not probable) solutions.

The Big Picture: In the past, Beijing has not shown a willingness to write off debt.

How Kyrgyzstan resolves its debt impasse with China will be watched closely around the world as other countries facing the economic crunch of the pandemic deal with their own Chinese-owed debts.

2. Beijing’s Balkan Win

China’s “vaccine diplomacy” scored a big win in the Balkans, as I reported, providing Serbia with some 1.5 million doses of its Sinopharm injection and helping Belgrade secure the second-best vaccination rate in Europe (trailing only the United Kingdom).

Prestige And Diplomacy: Beijing is focused on building global influence by sending its injections to poorer countries -- filling a vacuum left by Western nations who have bought most of the available doses and are facing production delays for their homegrown vaccines.

It’s The Geopolitics, Stupid!: Vucic hasn’t just relied on Chinese vaccines. Serbia is also using Russia’s Sputnik V, the U.K.’s AstraZeneca, and the U.S.-German Pfizer-BioNTech injection.

For Belgrade, turning to Chinese vaccines isn’t just about relying on Beijing in a time of need, it’s also a tactic to leverage and provoke the EU to do more to help the region. Vucic already successfully used this playbook in the early days of the pandemic during a global shortage of medical equipment.

3. The Window To Xinjiang

As my colleagues at RFE/RL’s Kazakh Service reported, February saw small but sustained protests outside the Chinese Consulate in Almaty, Kazakhstan’s largest city, over the detention of Muslims in China’s neighboring Xinjiang Province.

Estimates vary, but rights groups believe that more than 1 million Uyghurs -- as well as ethnic Kazakhs, Kyrgyz, and other groups -- have been held in camps in western China. Beijing has denied such claims, saying the camps are "vocational education and training centers.”

The View Next Door: Kazakhstan emerged as an unlikely spot of activism against the camps in Xinjiang, in large part because the country is home to ethnic Kazakhs who immigrated from China and many others who still have family links on both sides of the border.

The Kazakh government has clamped down hard on Xinjiang activism of late, with even small pickets being broken up by police, as RFE/RL’s Kazakh Service reported.

Across The Supercontinent

Think Local: Zoya Simbirskaya, my colleague with RFE/RL’s Tatar-Bashkir Service, reported that a Chinese company in Russia’s Chuvashia Republic wants a local official fired because he publicized their plans to bring in foreign workers and supplies without paying customs duties.

The Chuvash authorities denied to RFE/RL’s Tatar-Bashkir Service that this qualifies as interference in local politics.

New Man In Minsk: Xie Xiaoyong, China’s new ambassador to Belarus, was sworn in at the beginning of February. He comes to Minsk at a time of upheaval, but Xie boasts an impressive resume as a Chinese diplomat in the former Soviet Union, working in Ukraine during the Orange Revolution and in Russia during its annexation of Crimea.

Pushing For Answers: Serbian activists are fighting for answers about the environmental impact of a Chinese tire plant north of Belgrade as ecological concerns over the factory continue, Zoran Glavonjic from RFE/RL’s Balkan Service reported.

Borderlands: RFE/RL’s Tajik Service noted that Tajik Foreign Minister Sirojiddin Aslov has once again sent a diplomatic note to his counterparts in Beijing over “provocative” articles in Chinese media about the country having territorial claims on its small Central Asian neighbor. Similar episodes happened in Kazakhstan and Tajikistan last year and also sparked a backlash.

An Eye On China: A Russian man pleaded guilty to spying for China and was sentenced to eight years in prison on February 25. For many years, Russia’s FSB didn’t publicize espionage cases involving China, but that policy appears to have changed, with the Russian news agency TASS quoting a “law enforcement source” in its article.

Roll Up And Rollout: Hungarian Prime Minister Viktor Orban posed for a photo on February 28 as he took China’s Sinopharm vaccine, RFE/RL’s Hungarian Service reported. Hungary is the only EU country to approve the Chinese injection.

One Thing To Watch

China’s “two sessions” -- the annual meeting of its parliament -- will begin on March 5 and this year will coincide with the 100th anniversary of the Chinese Communist Party, slated for July. Expect a display of strength as Beijing prepares to flex its economic muscles abroad in a pandemic-ravaged world.

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Faced with a struggling economy and few financial lifelines, Kyrgyzstan is feeling the weight of its swelling state debt -- a significant proportion of which is owed to China -- and considering some drastic measures to meet its obligations.

Kyrgyzstan’s foreign debt is reportedly as much as $5 billion and more than 40 percent of that ($1.8 billion) is owed to the Export-Import Bank of China for a series of infrastructure projects over the last decade under the guise of the Belt and Road Initiative (BRI), Chinese leader Xi Jinping's signature foreign-policy project.

Bishkek, however, is grappling with a contracting economy whose gross domestic product dropped 8.6 percent in 2020, prompting fears the country will be unable to pay off its loans or even meet interest payments, especially on the Central Asian country’s commitments owed to Beijing.

With deadlines approaching, there has been discussion by Kyrgyz officials of potentially forfeiting assets as a form of repayment.

"If we do not pay some of [the debt] on time we will lose many of our properties," new Kyrgyz President Sadyr Japarov told the state Kabar news agency during an interview on February 13. "Agreements with such conditions were signed by [President Almazbek] Atambaev. But, God willing, we will get rid of all debts in time. There are plans."

What exactly those plans are remains to be seen.

While Japarov's comments refrained from mentioning China directly, the national conversation has since shifted to how the country of 6.4 million people can repay its loans to Beijing, its largest creditor and a major political force in Central Asia.

This debt impasse highlights the difficult bind that many countries -- including Kazakhstan, Tajikistan, and Pakistan -- have with Chinese-owed debts from large BRI infrastructure projects as they deal with the economic crunch caused by the COVID-19 pandemic.

Beijing has so far shown a willingness to defer some loans, but not offer outright relief, pointing toward a difficult negotiating environment for countries like Kyrgyzstan that are under such difficult financial strain.

"China has shown many times in Latin America and Africa that it is not a charity and that it is a very pragmatic partner in terms of getting back its debts," Temur Umarov, an expert on China-Central Asia relations at the Carnegie Moscow Center, told RFE/RL. "For Kyrgyzstan, it's a challenging situation with no clear way out."

Kyrgyzstan has been considering options for the development of its Jetim-Too iron-ore mine in recent months, and some government critics have raised the prospect that the authorities might sell off or surrender mining rights to the lucrative deposit to pay off its loans to Beijing.

As a presidential candidate, Japarov himself floated the idea of using Jetim-Too to pay down state debt owed to China, although Kyrgyzstan's National Bank has said the government planned to retain ownership.

Beyond mineral and mining concessions, some lawmakers have also mentioned the possibility of the government surrendering partial management of the country’s energy sector.

This outcome to resolve the country's debts was raised by parliament deputy Akyl Japarov (no relation to the president) on February 22, if Kyrgyzstan could not meet its interest payments on the controversial, Chinese-financed reconstruction of Bishkek's main power plant, the cost of which was grossly inflated before breaking down and continues to have shortfalls in production.

"Kyrgyzstan has no leverage and few ways to manage this crisis," Niva Yau, a researcher at the OSCE Academy in Bishkek, told RFE/RL. "A lot will depend if Japarov is able to follow through on his reforms for the economy and bring in anti-corruption measures."

In Search Of Goodwill

Japarov and Xi had their first phone call on February 22, during which the Kyrgyz president voiced support for more Chinese projects in the country and praised Xi's handling of a range of international issues.

The phone call comes after strained relations between Bishkek and Beijing around the events that brought Japarov to power and plunged Kyrgyzstan into a political crisis in October.

The nationalist Japarov rode into power on protests triggered over parliamentary elections that toppled the government and saw the resignation of President Sooronbai Jeenbekov.

But in the wake of those events, Chinese businesses and citizens in Kyrgyzstan reportedly faced attacks and shakedowns, which led to Kyrgyz Ambassador to China Kanayym Baktygulova being summoned in Beijing as Chinese officials expressed their displeasure and concern for the safety of its citizens.

WATCH: Countries On China's 'New Silk Road' Face Coronavirus Fears

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"Beijing has lots of concerns over a populist leader like Japarov," Yau said. "China has been waiting for the domestic political situation to stabilize and there is still lots of hesitancy."

Anti-China protests have grown across Central Asia in recent years, with many such demonstrations taking place in Kyrgyzstan and Kazakhstan.

Concerns about land ownership, state debt, Chinese labor practices, and the internment camps in the neighboring Chinese province of Xinjiang -- which have also held ethnic Kyrgyz and Kazakhs in addition to Uyghurs -- have been rallying calls in the country. Vandalism and several attacks on Chinese workers have also occurred in recent years in Kyrgyzstan and Kazakhstan.

Japarov -- whose parents lived for many years in China -- must now persuade Beijing that he can be a reliable partner without alienating himself from the nationalist, anti-corruption rhetoric that helped bring him to power.

On both fronts, the Kyrgyz leader faces tremendous obstacles.

Popular anger over corruption remains high in Kyrgyzstan and many details over past loan contracts signed with Chinese entities are unknown, sparking further speculation among the public about how the government will settle its debt with Beijing.

Moreover, Japarov is also dealing with the fallout of revelations around Raimbek Matraimov, the former deputy customs chief and influential power broker who was arrested for a second time on February 18 over suspicion of money-laundering following public backlash over a lenient fine. The allegations against Matraimov were first revealed by a joint RFE/RL investigation.

SEE ALSO:

Plunder And Patronage In The Heart Of Central Asia

With limited international experience, Japarov is also looking to shore up Russian support to help navigate his problems, with a visit to Moscow for talks with President Vladimir Putin and other top officials taking place on February 24-25.

Playing The Long Game

Even before the political upheaval that brought Japarov into office, Bishkek had been asking China for debt forgiveness.

Prior to the pandemic, Kyrgyzstan was making progress in paying down its outstanding loans, but the financial problems caused by COVID-19 broke down the country's economy, which remains reliant on cross-border shuttle trade with China, and derailed Bishkek's schedule.

In November 2020, some relief did come from Beijing in the form of debt deferment, allowing $35 million owed for that year to be delayed until 2022-24, at 2 percent interest.

Kyrgyzstan also secured help from international creditors through a Paris Club agreement in June, suspending $11 million worth of debt until the end of the year. Bishkek collectively owes more than $300 million to Denmark, France, Germany, Japan, and South Korea.

But those deals only offer temporary relief and do not address wider structural issues over Kyrgyzstan's inability to service its debt obligations. With Bishkek exploring various drastic options to repay its Chinese loans, what sort of concessions Beijing is willing to offer could be the deciding factor.

"The pattern is that China is willing to defer debt, but only in a handful of cases has it actually written it down," Jonathan Hillman, the director of the Reconnecting Asia Project at the Center for Strategic and International Studies, told RFE/RL. "Examples of asset seizures have been extremely rare."

China holds many of the cards in debt talks, with contracts signed with Kyrgyzstan stipulating that any disputes over repayment are to be settled in Chinese arbitration courts, rather than international ones, and could contain other clauses to Beijing's advantage.

"A lot of the issues facing Kyrgyzstan stem from a lack of due diligence and mismanagement from Kyrgyz officials over the years," Hillman said. "But I think this is a lesson on the risks of doing business with China. This is what happens when you have a lack of transparency around lending."

Still, China remains concerned about its reputation in Kyrgyzstan, and the wider region as a whole, and will likely be mindful of the optics and sensitivities in taking control of any assets in the Central Asian country.

"Taking an asset is not a good political move," Hillman said. "It will confirm everyone's worst fears about China and Belt and Road."