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Updated Monday, May 25, 2009 11:12 am TWN, By Matt Siegel, AFP

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Big Central Asia spending despite crisis

ALMATY -- While the rest of the world reels from the global economic crisis, China is using its deep pockets to bolster its position in strategically vital Central Asia, analysts say.

In recent months Beijing has been on a spending spree among the Central Asian states to its west, handing over a US$10 billion (7.34 billion euro) loan to cash-strapped Kazakhstan in April and stepping up construction projects and investment from Ashgabat to Bishkek.

Although experts say the recent Chinese splurge is part of a long-term strategy for the region, few question the fact that Beijing's hand has never been stronger, something it is well aware of.

“It's one of the richest countries in the world, and of course in light of the crisis they're going to play the game,” said Konstantin Syroezhkin, a senior research fellow at the Kazakhstan Institute for Strategic Studies.

“Everyone else is in such a sorry economic state and China has money to invest.”

A China expert at Almaty's Institute for Economic Strategies, Adil Kaukenov, revealingly recalls a conversation with a Chinese counterpart who told him: “We're walking all over the world with suitcases stuffed full of money, because we have to spend it.”

China's investment pattern in Central Asia fits with a broader strategy that has seen Beijing snap up assets across the world in a drive to convert its massive foreign currency reserves into concrete holdings.

But for nearly two decades since the 1991 Soviet collapse, Beijing has also shown special interest in using its pocketbook to secure stability along its Central Asian border, funding infrastructure projects and investing in key sectors.

Of primary concern for Beijing is the long, porous border between Kazakhstan and China's restive Xinjiang province, says Kaukenov.

Xinjiang is home to a Muslim Uighur ethnic group feared by Beijing for its supposed separatist views — a tension critics say has resulted in human rights abuses by the region's authorities.

“China has always, since the collapse of the Soviet Union, been extremely worried that terrorists from Xinjiang would find support from the governments of Central Asia,” Kaukenov said.

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