Foreign Policy Blogs

China, the United States and the Future of Central Asia

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On Wednesday night, the Foreign Policy Association hosted Dr. David Denoon, a professor of politics and economics at New York University, and director of the NYU Center on U.S.- China relations.  Professor Denoon’s remarks stem from his new book China, the United States and the Future of Central Asia, to which he brought his extensive insight before a packed crowd at the U.S. Trust Building in New York City. Denoon previously served in the federal government in three positions: as program economist for USAID in Jakarta, Vice President of the U.S. Export-Import Bank, and Deputy Assistant Secretary of Defense.

His remarks centered around the recent failing of U.S. administrations in fostering change and democracy in Afghanistan, and how that failure portends for an equally difficult scenario for similar attempts at changing Central Asia.  Given the amount of money already committed to supporting change in Afghanistan, Denoon argued that the effects of increased spending in the region would be limited and that the U.S. should withdraw from Central Asia, leaving China and Russia to battle over influence.

When a member of the audience queried Denoon as to which country the U.S. should back—either Russia or China—Denoon asked whether the U.S. necessarily needs to back either, and argued for non-interference in the region, given the U.S. has no current strategic interests in Central Asia. Denoon argued that since shale oil and gas is abundant in the U.S. and oil prices are historically low, the U.S. has limited economic interest in the region’s resources for now. Also, the U.S. would likely have limited political influence given the failures in Afghanistan, the region’s historic ties to Russia and their newfound economic ties to China. Beijing is in dire need of alternative energy sourcing routes, given potential bottlenecks of shipping oil through the Straits of Malacca.

Denoon noted that China has been particularly active in Central Asia, signing up most of the countries, bar Turkmenistan, to its $50-100 billion Asian Infrastructure Investment Bank (AIIB).  China is also promoting its “One Belt, One Road” (OBOR) project, intended to recreate historic economic ties between countries of the region. Given Russia’s current economic difficulties, notwithstanding China’s economic downturn, Denoon believes Russia will have limited clout in the region in comparison to China.  He also postulated that China may have some economic success in Central Asia depending on the type of project, despite some current project failings in Africa and a soft power pushback by some African governments and populations.

In Africa, some of the complaints from governments and locals concern the displacement of retailers and manufacturers by a flood of cheap Chinese goods and shops. China has also received criticism for constructing cheap buildings for housing, which often show weaknesses in construction, and soccer stadiums which are not true development projects, and other showcase buildings .  Should Beijing choose to support oil and gas pipelines and other infrastructure projects, the criticism may wane, although Beijing will be subject to the same concern of “resource grabbing” by governments and the local populations of Central Asia.  Beijing has already committed $6.3 billion in foreign direct investment to Kazakhstan,  $662 million to Kyrgystan, $476 million to Tajikistan, $288 million to Turkmenistan (which has the world’s third largest reserves of natural gas) and $146 million to Uzbekistan.

From what I gathered from Denoon’s remarks on Wednesday night, the future of Central Asia appears to be in the hands of a resource-diversifying Beijing, given the economic frailty and foreign policy distractions of Russia, and the waning economic and political interest of the U.S. Administration and the American population, who are tired of far-away foreign wars and more recently focused on domestic terrorism.  How successful Beijing will fare in this complicated region is anyone’s guess.

 

Author

Gary Sands
Gary Sands

Gary Sands is a Senior Analyst at Wikistrat, a crowdsourced consultancy, and a Director at Highway West Capital Advisors, a venture capital, project finance and political risk advisory. He has contributed a number of op-eds for Forbes, U.S. News and World Report, Newsweek, Washington Times, The Diplomat, The National Interest, International Policy Digest, Asia Times, EurasiaNet, Eurasia Review, Indo-Pacific Review, the South China Morning Post, and the Global Times. He was previously employed in lending and advisory roles at Shell Capital, ABB Structured Finance, and the U.S. Overseas Private Investment Corporation. He earned his Masters of Business Administration in International Business from the George Washington University in Washington, D.C. and a Bachelor of Science in Finance at the University of Connecticut in Storrs, Connecticut. He spent six years in Shanghai from 2006-2012, four years in Rio de Janeiro, and is currently based in Ho Chi Minh City, Vietnam. [email protected]

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