China In Eurasia

A new agreement for Kazakhstan to join Chinese-led plans to build and operate a research base on the moon could set the stage for deepening cooperation between the two countries as Beijing makes strides toward becoming a leading power in space.

The July 3 agreement was signed on the sidelines of the Shanghai Cooperation Organization summit and admitted Kazakhstan as the 12th member of the International Lunar Research Station (ILRS), a Chinese-led initiative with Russia's Roskosmos for a lunar base that was announced in 2021 and includes Azerbaijan, Belarus, Egypt, Nicaragua, Serbia, Pakistan, South Africa, Thailand, and Venezuela.

The Chinese Foreign Ministry said in a joint statement that, as part of the deal, Beijing and Astana would "support exchanges and cooperation between the two countries' aerospace agencies…in the peaceful use of outer space" and to "promote mutually beneficial cooperation in the moon and deep space."

The Kazakh Digital Development, Innovation, and Aerospace Industry Ministry revealed new details of this cooperation on August 5, saying that Beijing and Astana would explore the commercial use of each other's spaceports and Kazakhstan would also be part of the development and launch of a lunar telescope project.

The addition of Kazakhstan bolsters China's lunar exploration plans and puts the Central Asian country on a trajectory to further integrate into China's booming space industry, which is part of a drive by Beijing that experts say is motivated by an ambition to rival the United States.

"China intends to equal and eventually surpass the United States as a space power," Bruce McClintock, a former defense attaché at the U.S. Embassy in Moscow and senior researcher on space policy at the RAND Corporation, told RFE/RL. "The recent return of a lunar sample mission from the moon demonstrates China's financial commitment to lunar exploration and their technical ability to achieve their long-term goals."

The return to Earth of China's Chang'e-6 lunar module in June was the latest accomplishment as Beijing aims to finish building the ILRS in the 2030s. The China National Space Administration also said it plans to send astronauts to the moon before 2030 and Beijing established the International Lunar Research Station Cooperation Organization (ILRSCO) in April, a Chinese-led body to coordinate lunar missions with member states.

The plans around the ILRS are seen as a response to NASA's Artemis Program, a U.S.-led initiative that aims to send a crewed mission to the moon by 2025, with a continuous presence by 2028. As part of its own diplomatic push for space, Washington has gotten more than 40 countries to sign the Artemis Accords, a set of principles for the exploration and use of outer space.

"The Chinese are trying to build their own duplicative organizations as a race develops to see who can get the most support for their programs," Eva Seiwert, an analyst at the Berlin-based Mercator Institute for China Studies (MERICS) think tank, told RFE/RL. "For Kazakhstan, it's clear that they see China as a future source of knowledge, training, and financing for their space industry."

Liftoff For China

Kazakhstan has been an integral part of the Soviet and Russian space programs for nearly 70 years.

Baikonur, an expansive complex located in southern Kazakhstan, has shot hundreds of rockets into space and holds a special position as a launching pad for some of space flight's most historic achievements, such as the 1957 Soviet launch of Sputnik, the world's first satellite, and cosmonaut Yuri Gagarin's first human journey to outer space in 1961.

After the collapse of the Soviet Union, Baikonur remained a launch site for Russia's Roskosmos, which maintained a dominant position within the space industry.

But both Russia and Baikonur's places have begun to shift.

The space complex has been at the center of a contract dispute between Russia and Kazakhstan for years, and Roskosmos is planning to move its space launches to Russian territory.

At the same time, Russia's space program has faced funding cuts, technical setbacks, and scandals. Western sanctions first brought against Russia in 2014 and expanded following its February 2022 full-scale invasion of Ukraine have further dimmed its space program as it has been cut off from some essential Western-made components.

These changes have taken place as China's own space program leapt forward in recent years, with billions of dollars being invested.

SEE ALSO:

Russia's Moon Crash 'Speaks Volumes': A Storied Space Program Falls Short. Again.

When the space partnership between Russia and China first gained traction in 2014 and gradually grew over the years, it culminated in joint projects like the ILRS.

"I don't think Russia has many other choices," Juliana Suess, a fellow for space security at the Royal United Services Institute, a London-based think tank, told RFE/RL. "Russia has a lot of legacy and expertise, but that's all very much behind it. When it comes to space, Russia looks more like the junior partner in the China-Russia relationship."

Beijing, meanwhile, has continued to broaden its outreach, even adding a space component to its multibillion-dollar Belt and Road Initiative (BRI) as it has looked to build up and link its space industry with other countries.

This has included deploying satellites, building ground stations, erecting data centers, and training foreign space personnel as part of the foundations of a Beijing-led space network.

"China is actively building up its status as a space power, and this lunar base that Kazakhstan has signed up to is just one piece of a constant effort for space soft power," Suess said.

A New Era In Space

While Kazakhstan signing on to the ILRS marks another step forward for China's space ambitions, Bleddyn Bowen, an associate professor specializing in space policy at the University of Leicester, says the other aspects of the agreement reached between Astana and Beijing may be more significant in the long run.

"The moon is for scientific or research projects," Bowen, also a fellow at RUSI, told RFE/RL. "Whereas a launch service agreement would mean putting more satellites into the Earth's orbit, which matters because it provides the daily infrastructure that we rely on and is central to the space economy."

For Beijing, a crucial area for enhancing its capacity for competition in space with the United States is the Beidou Satellite Navigation System (BDS), which is China's answer to the American GPS, Russian GLONASS, or the European Galileo navigation systems.

Widespread adoption of either system carries immense commercial value and China wants BDS to be used for aircraft, auto, and ship navigation, as well as humanitarian and disaster assistance, agricultural improvement, and weather forecasts. As a report by the U.S. Air Force's China Aerospace Studies Institute noted, all 30 BDS global networking satellites have been in place since 2020, and more than 120 countries have begun using BDS.

For Kazakhstan, the drift toward Beijing began in 2013 when Chinese and Kazakh private space companies began cooperating. The collaboration has accelerated as Russia's space program has failed to keep pace with China's.

"China is much more attractive now as an investor with money to spend," Bowen said. "China is also a massive market where anything that Kazakhstan's space industry produces is likely to find a use."

Using Kazakh territory for space launches is also important as Russia looks to divest from the Baikonur complex.

While Russia has a lease on the facility until 2050, China is currently working to boost launch-pad access around the world for commercial space providers and Kazakhstan, which shares a long border with China, also hosts the Sary Shagan anti-ballistic missile test site.

"Kazakhstan needs to diversify and bring in new countries to pay for what Russia used to provide," said Bowen. "Partnering more with the Chinese is part of that plan for the future."

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia. Subscribe here.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

An Evolving Fight On Sanctions

Chinese banks have tightened their restrictions on payments from Russia out of fear of triggering U.S. secondary sanctions.

Will this make an impact in choking off Russia’s war machine?

Finding Perspective: The latest batch of information on this comes from the Russian newspaper Kommersant, which reported at the end of July that trade between Russia and China is getting ever more difficult, with some payments between partners taking up to six months to be processed.

About 80 percent of bank transfers made in the Chinese yuan are also getting bounced back with no explanation after being stalled for weeks while banks decide whether they can go ahead, the newspaper reported, citing anonymous sources.

This follows a report from July 17 by Bloomberg in which several major Russian commodity exporters said that trade with China had become increasingly difficult due to direct payments made in the Chinese yuan getting stuck indefinitely or delayed.

In June, the Russian division of the Bank of China stopped processing yuan payments with Russian banks that had been sanctioned by the U.S. Treasury Department.

The Industrial and Commercial Bank of China (ICBC), China CITIC Bank, and most other large Chinese lenders have made similar moves.

How Did We Get Here? Beijing has emerged as a top partner for Russia since its full-scale invasion of Ukraine, with analyses of Chinese customs data showing that in 2023 90 percent of dual-use goods deemed “high priority” and used to make Russian weapons came from China.

The United States and its allies have been intensifying restrictions in recent months after multiple senior U.S. officials said that the supply of dual-use goods by China has had a substantial impact for Russian forces on the battlefield.

This latest round of pressure originated back in December 2023 when the United States authorized secondary sanctions targeting financial institutions involved in trade linked to Russia's military industry.

This prompted global banks from China to the United Arab Emirates, Turkey, and Austria to reduce transactions with Russia to avoid getting in the crosshairs.

The payment issues were also exacerbated in June when the U.S. Treasury rolled out a new package of expansive sanctions against Russia for its full-scale invasion of Ukraine, forcing the Moscow Exchange to halt dollar and euro trade.

Why It Matters: Sanctions and finding ways around them is a constant game of cat and mouse.

In early July, a top Russian banker said the sanctions-evading methods should be made a “state secret” because they kept getting shut down so fast.

Andrei Kostin, the head of Russia’s second largest lender VTB and the banker who made those comments, called for a greater use of cryptocurrencies and other digital assets to facilitate payments, something that Bloomberg reported is increasingly being done in Hong Kong via Central Asia-based intermediaries at a growing frequency.

Worried about being targeted by U.S. secondary sanctions, China’s big banks have limited their cross-border transactions involving Russia and Russian firms of late, with Chinese companies that trade with Russia instead moving to smaller banks or underground financing channels that are difficult to track and have less exposure to the international financial system.

Tom Keatinge, director of the Center for Financial Crime and Security Studies at the Royal United Services Institute, told me that this makes up a “burner bank strategy.”

This is where China’s trade with Russia becomes concentrated increasingly into institutions that are unlikely to have a contagion effect on the country’s economy and that also are set up with no need for access to the international banking system and thereby limit the reach of U.S. sanctions.

Three More Stories From Eurasia

1. Brazil, China, And The Ukraine War

Beijing announced that a joint Brazilian-Chinese plan to end Russia's war against Ukraine has received a “positive response” from more than 110 countries.

The Details: The August 1 statement came following a visit to Brazil by Li Hui, China’s special envoy for Eurasian affairs, where he met with multiple high-ranking Brazilian officials.

China and Brazil jointly published a “six-point consensus” meant to bring about a lasting political solution to the war.

At the beginning of May, Li made a series of visits to countries across the Global South, as did Brazilian officials, as they crafted this new set of proposals.

China’s previous attempt to mediate between Russia and Ukraine, with a 12-point plan it put forward in February 2023, was quickly dismissed by European leaders.

Brazilian President Luiz Inacio Lula da Silva has strong working ties with China and looked for his country to play a role in pushing for a peace process to end the war in Ukraine.

The six-point plan is a fairly bland diplomatic outline that calls for cooling down fighting on the battlefield and a recognition that dialogue and negotiations are the only way to end the war.

During a July visit to China by Ukrainian Foreign Minister Dmytro Kuleba, he praised China “as a global force for peace” and said that Kyiv was open to peace talks.

But Kuleba also made clear that Ukraine attached conditions to such negotiations, saying it would only engage Russia when Moscow was “ready to negotiate in good faith,” and added that “no such readiness is currently observed on the Russian side.”

2. Boots On The Ground?

As China’s investments in Central Asia have grown over the last two decades, Chinese companies have also faced a growing list of new security challenges.

Odil Gafarov, writing for the Carnegie Russia Eurasia Center, looks at the rise of Chinese private security companies (PSCs) in the region.

What You Need To Know: This phenomenon is not unique to Central Asia and has already grown in unison with China’s expanding economic footprint in places like Africa and Southeast Asia.

The expansion of PSCs operating in Central Asia have gone hand-in-hand with incidents like clashes between Chinese and local personnel at oil refineries and gold mines in Kyrgyzstan in 2014 and 2019, the 2016 suicide bombing at the Chinese embassy in Bishkek, and numerous anti-China protests in Kyrgyzstan and Kazakhstan over the years.

As Gafarov notes, these companies offer “both armed and unarmed site protection, security consulting, safety training, insurance provision, and logistical support.”

The report notes that most of the companies do not fit the connotation of private security personnel operating in tactical gear and instead says that many of the Chinese PSCs prefer to keep their presence less visible.

The number of PSCs operating is also set to grow in the coming years and line up with other aspects of Chinese foreign policy in Central Asia.

“It aligns with China’s modern security diplomacy, police/paramilitary cooperation, and recently adopted Global Security Initiative. From this perspective, these entities potentially present an attractive instrument for advancing Beijing’s geopolitical agenda,” the report stated.

3. Drone Clampdown

The Chinese Commerce Ministry announced that it will ban the export of all drones that can be used for military purposes starting September 1, RFE/RL’s Ukrainian Service reported.

What It Means: Small and affordable consumer drones, many of which can even be bought online or off the shelf, have become a staple of the war in Ukraine for both Kyiv and Moscow for reconnaissance and targeted attacks.

This has led to both sides burning through the products at a high rate and constantly needing to replenish their stocks. China is the largest manufacturer of consumer unmanned aerial vehicles.

While the latest announcement points to the added scrutiny from the West against Chinese companies over the flow of dual-use equipment to the battlefield in Ukraine, it’s unclear if this move will make a significant impact.

DJI -- the preeminent Chinese drone maker -- first said it would stop doing business in Russia and Ukraine nearly two years ago, yet the flow of its products continues. The Chinese Commerce Ministry has also enacted multiple measures to limit the flow of drones, but both Kyiv and Moscow have managed to secure a continued flow to their forces.

Across The Supercontinent

Previewing Kallas: Former Estonian Prime Minister Kaja Kallas will be taking over as the European Union's new foreign policy chief, but what does her past record tell us about how she'd deal with China?

The South China Morning Post’s Finbarr Bermingham takes a look here.

Scooting Forward: With a $10 million investment, the Uzbek-Chinese company Ecomoto is scheduled to begin manufacturing electric scooters in Uzbekistan.

Beijing’s New Man In Berlin: Deng Hongbo, a seasoned Chinese diplomat with decades of experience in the United States, is slated to be Beijing’s next ambassador to Germany, the South China Morning Post reports.

One Trillion Dollars?: Chinese authorities have rejected a $ 1 trillion proposal made by the International Monetary Fund to use central government funds to complete unfinished housing in China, Bloomberg reports.

One Thing To Watch

U.S. Vice President Kamala Harris has chosen Minnesota Governor Tim Walz as her running mate on the Democratic ticket.

Walz doesn’t bring a great deal of foreign policy experience, but he did live and work in China as an English teacher in 1989. Since then, he says he has visited the country at least 30 times and even speaks some Mandarin. Walz also honeymooned in China with his wife and organized summer educational trips to China for U.S. students.

The Minnesota governor also became an outspoken advocate for human rights in the country, meeting with the Dalai Lama. While teaching, he also visited the Tiananmen Square protests under way in 1989 before the massacre that year.

Walz and his wife also got married on June 4, the anniversary of the Tiananmen massacre of student protesters. When asked why that date was chosen, his wife said it was because Walz “wanted to have a date he’ll always remember.”

That’s all from me for now. Don’t forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

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