Why Central Asian Turkic nations are crucial to China's energy needs

The Chinese economy has experienced a major breakthrough over the past forty years, catapulting it to the position of the world’s second-biggest economy.

This breakthrough is now reflected in the Asian giant’s foreign policy.

While China's global rise in the last four decades has manifested itself across diverse sectors, it has also brought forth various implications in Central Asia, with relations between China and Central Asian Turkic republics rising to a strategic level.

A closer examination reveals that Beijing’s energy diplomacy is crucial to the fundamentals of China’s foreign policy. This is mainly due to China ranking first in the world in energy consumption.

Energy diplomacy

China has developed various mega projects to meet this energy need and to achieve a sustainable energy supply.

The flagship of these mega projects is the Belt and Road Initiative, a pet scheme of Chinese President Xi Jinping. China has announced that it will invest $4 trillion in 900 projects in various parts of the world under the One Belt One Road Project, as it is officially known.

The second important dimension of Chinese foreign policy is the Shanghai Cooperation Organization. In terms of Chinese foreign policy, the purpose of the establishment of the Shanghai Cooperation Organization is to address China's security concerns in Central Asia in the first stage and to increase economic cooperation among member countries in the second stage.

Parallel to China's economic growth, its military expenditures have also increased annually.

According to the Stockholm International Peace Research Institute (SIPRI), China's military expenditures increased by 72 percent from 2012 to 2021, reaching $293 billion.

Parallelly, China has also invested heavily in increasing its soft power, which can be analysed from three different perspectives: cultural, economic, and political.

Culturally, China's most important sources of soft power are language, history, art, religion, and mass media.

Ancient Chinese history and Confucianism are China's most important cultural tools. Economically, China's rapid development, loans, and foreign investments have made it a compelling country worthy of emulation. Politically, China's most important source of soft power is based on a comprehensive development model called the Beijing Consensus.

China conducts active cultural diplomacy to actively enhance its soft power.

Since its establishment in 2004, the Confucius Institute has opened 548 branches in 154 countries and taught Chinese to 2.7 million people by 2020.

China and Central Asian Turkic republics

As a region with rich oil and natural gas reserves, Central Asia is strategically significant for China's energy diplomacy. In fact, Central Asia has nearly 19 percent of the world’s proven oil reserves and 45 percent of natural gas reserves.

An analysis of China's relations with the Turkic republics of Central Asia over the past 30 years reveals that most of China's engagement with these countries has been in the area of oil and natural gas imports, as well as the construction of pipelines for these imports.

For example, Turkmenistan, currently the largest natural gas supplier to China, sells approximately 40 billion cubic metres of natural gas annually through the Turkmenistan-Uzbekistan-Kazakhstan-China pipeline, which began operations in 2009.

The pipeline spans 185 kilometres in Turkmenistan, 529 kilometres in Uzbekistan, 1300 kilometres in Kazakhstan, and approximately five thousand kilometres within China's borders.

The 7,000-kilometre pipeline, known as the Central Asia-China Pipeline, comprises four pipelines: A, B, C, and D. Line A started operating in 2009, Line B in 2010, and Line C in 2013. These three lines operate as parallel pipelines and have a total capacity of 25 billion cubic metres of natural gas.

Of the 25 billion cubic metres, Turkmenistan, Uzbekistan, and Kazakhstan share 10 billion cubic metres, 10 billion cubic metres, and 5 billion cubic metres, respectively. These three pipelines begin in the Saman Tepe region of Turkmenistan and terminate in the Hergas region of China.

Over the last 30 years, China has also strengthened and elevated its relations with Kazakhstan in the energy sector to a strategic level. Today, China is the most important actor in Kazakhstan's oil and gas sector, and these relations are expected to deepen in the coming period.

For example, the China National Petroleum Corporation has acquired 100 percent of the shares in major Kazakh oil companies, the Petro Kazakhstan Company, 50 percent of the shares in Turgay Oil Company, and 8 percent of the shares in Kashagan Caspian Offshore Field Company, over the last 30 years.

Within the Central Asian countries, Uzbekistan's relations with China have steadily deepened, and China has become Tashkent’s most important trade partner.

In 2017, investment agreements worth $20 billion were signed between the two countries. Of this $20 billion, $5 billion will be invested in the petroleum and natural gas industries, and $3 billion will be invested in developing Uzbekistan's hydropower potential and modernising pumping stations.

China plays a significant role in Kazakhstan's integration into global trade. For example, the Northern Corridor Railway, inaugurated in 2013, connects the Chinese port of Liyanyungag to the Kazakh capital of Almaty.

After passing through Central Asian countries and European cities such as Warsaw and Hamburg, it connects to the London rail network and, spanning 12,000 km, links Chinese ports to London within less than three weeks.

China's engagement with Central Asia has gained momentum since 2006. The significant event that contributed to the strained relations between Turkmenistan and Russia and subsequently led to the development of relations between China and Turkmenistan was the explosion of the Central Asia-Central Gas Pipeline in 2009.

Turkmenistan blamed Russia's Gazprom for the explosion along the 487 km pipeline, while Russia cited technical reasons. As a result of this disagreement, Russia decided to reduce its natural gas purchases from Turkmenistan.

Additionally, Russia's non-payment of its debt to Turkmenistan prompted Turkmenistan to change its gas export strategy. Thus, Turkmenistan minimised its natural gas sales to Russia and maximised them to China, making China the largest customer of Turkmen natural gas.

During a period when Russia was defaulting on Turkmenistan's debt, China attempted to build trust in bilateral relations by extending a $4 billion loan to Turkmenistan as a goodwill gesture.

Turkmenistan, also as a gesture of goodwill, has granted Chinese companies the opportunity to become partners and invest in the South Yolotan Gas Field.

However, the most significant aspect of China-Turkmenistan relations is the China-Central Asia Pipeline Project, which spans more than 7,000 kilometres. Additionally, China Petroleum Corporation has been able to access and invest in the Galkynysh gas field located in southern Turkmenistan, one of the wealthiest natural gas fields in Central Asia, boasting reserves of 27.4 trillion cubic metres.

As a result, over the past four decades, China has experienced a consistent rise toward becoming a global power. Economic development lies at the core of this ascent.

China's global rise has been most prominent in economics, with the One Belt, One Road Project serving as its most visible aspect. Additionally, the Central Asian Turkic republics hold significant importance in China's global ascension.

Rich in oil and natural gas reserves, the Central Asian region has been pivotal for China's energy diplomacy. China has become the largest trading partner of these republics by embarking on various mega projects in the energy sector.

Consequently, it is anticipated that China will elevate to the status of a strategic partner of the Central Asian Turkic republics in the foreseeable future.