China urges 'Brethren in Central Asia' to unite

Chinese President Xi Jinping has urged the “Brethren in Central Asia” to unite against attempts to divide them in the face of unprecedented turmoil and build themselves as the bridge connecting Asia and Europe.

“The world needs a harmonious Central Asia. Brotherhood is better than all wealth,” Xi said in a keynote speech delivered on the second day of the inaugural China-Central Asia Summit in Xian, attended by the leaders of five countries in the region.

“Ethnic conflicts, religious strife and cultural divisions are not the main theme of Central Asia. Unity, tolerance and harmony are what the people of Central Asia seek,” he said, adding, “No one has the right to create discord and confrontation in Central Asia, let alone seek political self-interest from it”.

“The sovereignty, security, independence and territorial integrity of Central Asian countries must be safeguarded, the development path chosen independently by the Central Asian people must be respected, and the efforts of the Central Asian region to work for peace, harmony and tranquility must be supported,” Xi said.

With its “unique geographical advantage”, Central Asia could “become an important interconnection hub in Asia and Europe”.

Xi pledged to expand trade and economic cooperation with Central Asia and said Beijing would deepen connectivity in the region and expand energy cooperation, among other things, according to state news agency Xinhua.

He said China hoped to speed up construction of the Line D natural gas pipeline and expand the scale of oil and gas trade with the region.

Xi also announced that China would provide US$3.7 billion in financial support for the development of Central Asian nations.

Xi said the summit – the first in-person meeting of its kind since Beijing established diplomatic relations with the five newly independent countries in 1992 – opened up new prospects for cooperation with Central Asia.

“The relations between China and Central Asian countries have profound historical origins, extensive practical needs, and a solid foundation of public opinion, and they are full of vigor and vitality in the new era,” he said.

Xi said China was willing to help Central Asian countries bolster their law enforcement security and defence capabilities to independently maintain regional security, adding that China would promote the peaceful reconstruction of Afghanistan.

Xi also called for joint efforts to boost strategic trust and strengthen security ties between China and Central Asia.

“We will resolutely oppose external forces interfering in the internal affairs of regional countries and staging ‘colour revolutions’, maintain zero tolerance for the three forces, and work to resolve the regional security dilemma,” he said, referring to terrorism, separatism and religious extremism.

The summit, in the northwestern province of Shaanxi, coincided with the Group of Seven meeting in Japan, where leaders from the advanced economies – including the US, Canada, Germany and France – are expected to discuss ways to counter China’s economic coercion.

The leaders agreed on Friday to set up a formal mechanism to hold a China-Central Asia meeting every two years, with Kazakhstan to host the next one in 2025.

Beijing views Central Asia as a critical frontier for expanding trade and energy security. The region is also regarded as crucial to maintaining stability in Xinjiang, where the treatment of Uygur Muslims has been among the most contentious issues between China and the West.

In recent months, efforts to strengthen ties with the region included Xi’s first trip abroad since the early days of the Covid-19 pandemic, with visits to Kazakhstan and Uzbekistan in September.

On Thursday, Xi held a series of one-on-one meetings with the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. All expressed support for greater Chinese engagement in the region, including under the flagship Belt and Road Initiative.

Yu Jun, deputy director general of the Chinese foreign ministry’s department of European-Central Asian affairs, flagged on Tuesday that the leaders of the six nations were expected to sign a slew of important political documents on areas including economy, trade and connectivity.

Trade between China and the five Central Asian countries has increased significantly since Beijing launched its belt and road plan in 2013. The combined volume reached US$70.2 billion last year, up 40%YoY, according to Chinese customs data.

 

China EAEU relations at stake

Western sanctions on Russia over its Ukraine invasion are forcing China to recalibrate ties with the Eurasian Economic Framework (EAEU), an economic union of post-Soviet states, with collaborations under the Belt and Road Initiative now at risk of secondary sanctions.

Beijing and Moscow signed a joint statement on cooperation between the EAEU and belt and road projects in 2015, a year after the union between Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan was established.

China and the EAEU agreed on greater economic coordination in 13 areas, including customs, trade, intellectual property rights, e-commerce and government procurement.

The enhanced coordination meant countries would not have to choose between Russia and China, said a commentary by the China Institute of International studies.

But with Russia now subject to sweeping Western sanctions after invading Ukraine, China’s economic relations with its northern neighbour and other EAEU countries is increasingly tricky.

“Collaboration between EAEU and Belt and Road Initiative is affected because sanctions from America and Europe increased the risk of secondary sanctions for Chinese companies,” said Zhao Long, a researcher at the Shanghai Institute for International studies.

Contractors and investors involved in EAEU and belt and road joint projects could run afoul of restrictions if they seek financing or conduct other business with companies that have been targeted by Western sanctions, he said.

The risk of these secondary sanctions has prompted hundreds of businesses and multilateral institutions to suspend ties with Russia.

The Asian Infrastructure Investment Bank and Bank of China have curtailed Russian access to capital markets, according to a database compiled by Yale University’s School of Management.

Chinese tech giant Huawei has also halted new orders and furloughed some staff in Russia, the database showed.

Oil and gas behemoth Sinopec has suspended talks with Russia for a gas chemical plant worth up to US$500 million, and at least five Chinese companies stopped work on Russia’s Arctic LNG 2 project in northern Siberia at the end of May this year.

“The war in Ukraine is impacting bilateral developments between Russia and China, and the coordination within the Eurasian union,” said Paul Stronski, senior fellow at Carnegie’s Russia and Eurasia Program.

China says ‘no limits’ in cooperation with Russia

“On sanctions, we are seeing Beijing being quite supportive of Moscow in this war, which is surprising given China’s normal approach to condemn separatism and interference in the internal affairs of another country. That is essentially what Russia is doing.”

But beyond diplomatic support and motivation to buy cheap energy, many Chinese companies have been wary of running afoul of US or EU sanctions because both economies are far more important export and trade markets for companies in China, Stronski said.

The impact of sanctions imposed on Russia will be felt across the EAEU because the design of the union ties them to Russia’s own fate, according to Kataryna Wolczuk, an associate fellow at Chatham House’s Russia and Eurasia programme, and Rilka Dragneva, professor at the University of Birmingham’s school of law.

Kazakhstan and Kyrgyzstan, for example, are likely to see negative impacts on their currencies and remittances, while restrictions will affect the trade of key commodities, they wrote on the think-tank’s website last month.

Katarzyna Czerewacz-Filipowicz, an Associate Professor at Bialystok University of Technology’s faculty of engineering management in Poland, said firms like Cargotor, Maersk and Mediterranean Shipping Company have suspended rail freight services through Russia as a sign of solidarity with Ukraine.

“Sanctions have also been applied to Russian railways, and this is probably why the uncertainty about the Belt and Road Initiative arises,” she said. “However, it is worth emphasizing that the sanctions include access to financial markets and transactions in securities. Thus, they do not cover cargo transit contracts via Russia.”

A rail line from the Chinese border through Kazakhstan, Russia, Belarus and into the European Union, which was heavily subsidized by the Chinese side and seen as vital to get goods from China to Europe through the EAEU, is now dead, said Stronski.

“European suppliers now are wary about putting their goods on a train via Russia given the reputational risks, or fears that Russia will hold up these goods,” he said. “Chinese producers have grown wary of using the route, given all the same reasons.”

Increasingly alert to external uncertainty, China is prioritizing risk control and prevention for its belt and road push this year, according to a report released in early March by the National Development and Reform Commission.

And Chinese companies have already begun scaling back international investment under the initiative.

Some 194 belt and road projects valued at US$13.66 billion were announced last year, down from 399 projects valued at US$80.51 billion in 2020, according to a report by financial data provider Refinitiv released in December last year.

As for Russia, international isolation will hasten its pivot to the East by building the friend-shoring alliances, said Zhao at the Shanghai Institute for International studies.

“Members of the EAEU will hasten the free flow of trade, services, capital, labour and the progress of local settlements in the region before 2025,” he said. “They’ll also strengthen security initiatives with their allies in order to broaden the post-Soviet space of influence.”

 

Iran’s growing trade with ECO member countries

Iran’s trade with the members of the Economic Cooperation Organization (ECO) exceeded US$10.447 billion in the first eight months of the current Iranian calendar year (March 21-November 22) to register a 44% increase year on year (YoY), the spokesman of the Islamic Republic of Iran Customs Administration (IRICA) said.

According to Ruhollah Latifi, the volume of trade with the mentioned countries also increased by 34 percent in comparison to the previous year’s same eight months, IRNA reported.

As reported, during the mentioned period Iran traded over 21,778,387 tons of commodities worth US$10.447 billion with ECO member countries including Turkey, Afghanistan, the Republic of Azerbaijan, Kyrgyzstan, Kazakhstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

Iran exported 18.631 million tons of commodities worth over US$6.823 billion to the said nations in the mentioned period.

He said major export destinations of the Iranian goods in the said union were Turkey with about US$3.767 billion of imports, Afghanistan with US$1.27 billion, Pakistan with US$764.389 million, and Azerbaijan with US$335.843 million.

As reported, the Islamic Republic’s export to ECO members increased by 46% and 54% as compared to the figures for the previous year in terms of weight and value, respectively.

Meanwhile, the country imported 3,147,332 tons of goods valued at over US$3.623 billion from the ECO member countries, with Turkey, Pakistan, Uzbekistan, Kazakhstan, Azerbaijan, Turkmenistan, Afghanistan, Tajikistan, and Kyrgyzstan being the top sources of imported goods.

The value of Iranian imports from the ECO union also increased by 28% as compared to the previous year’s same time span, the official said.

According to Latifi, more than 23.723 million tons of goods worth US$11.71 billion were traded between Iran and the ECO member countries during the previous Iranian calendar year (ended on March 20), of which the share of exports was 18.419 million tons of goods worth US$6.890 billion and the share of imports from these countries was 5.312 million tons worth US$4.819 billion.

The value of Iran’s non-oil trade during the first eight months of the current year stood at about US$33 billion, Latifi had previously announced.

The Economic Cooperation Organization or ECO is an Asian political and economic intergovernmental organization that was founded in 1985 in Tehran by the leaders of Iran, Pakistan, and Turkey.

 

Iran keen in developing links with neighbors

Deputy Foreign Minister of Iran for Economic Diplomacy Mehdi Safari has said it is a priority to expand economic and trade cooperation with neighbors, saying the Economic Cooperation Organization (ECO) can help achieve this goal.

Safari made the remarks at a meeting with ECO Secretary-General Khosrow Nazeri on the eve of the ECO summit in Turkmenistan, Mehr reported on Wednesday.

ECO includes Iran, Turkey, Afghanistan, the Republic of Azerbaijan, Kyrgyzstan, Kazakhstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

At the meeting, the ECO chief presented a report on the process to prepare for the summit in Ashgabat and hailed Iran for its assistance in this regard.

Safari said expansion of economic and trade cooperation with neighbors is a priority of the new Iranian administration and stressed the role of ECO in achieving the goals of member countries.

The top diplomat said a plan by Iran to send a high-level team to the forthcoming summit signifies the prominent position of ECO.

Safari said Iran is ready help ECO members to implement important decisions at the ECO summit in Ashgabat.

Iranian Transport and Urban Development Minister Rostam Qasemi said that positive agreements have been reached with neighboring countries, for expansion of transportation cooperation, especially in the aviation sector, IRNA reported.

Speaking at the ceremony on introducing the new head of Civil Aviation Organization (CAO), Qasemi said, “We recently reached agreements with Turkmenistan and Kyrgyzstan, part of which is related to the development of aviation.”

According to the official, the expansion of transportation cooperation with other countries will lead to the expansion of trade ties and eventually will increase the country’s revenues.

“We have made plans for upgrading our transportation fleet. However, we need effective measures to be taken for the development of the aviation industry,” he stressed.

He further stated that the most important factor in the development of the aviation industry is the use of specialists to promote it, adding: “In order to empower the aviation industry to meet the needs of the country, we need more work to be done, and this capability exists inside the country.”

Elsewhere in his remarks, Qasemi mentioned the needs of other transportation sectors including road, maritime, and rail, and said, “The transport sector needs to modernize its fleet, and we have not yet achieved the goals of the program in the rail, sea, and land sectors.”

Ghasemi pointed to the existing problems in the railway fleet and also the incompleteness of the country’s railway corridors and said, "Conditions in the railway sector are not favorable, the average life of the road transportation fleet is high and in the sea sector, despite high capacities, the capacity of the country’s ports has not been used well."

 

Trade between Iran and SCO members exceeds US$23 billion

The value of trade between Iran and the members of Shanghai Cooperation Organization (SCO) rose to US$23.165 billion during the first 11 months of the current Iranian calendar year. This was disclosed by Ruhollah Latifi, spokesman of the Islamic Republic of Iran Customs Administration (IRICA) announced.

Iran has cross-border trade with 11 key member states and observer states of the Shanghai Cooperation Organization that include China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Mongolia, Pakistan, India, Afghanistan and Belarus. Among these the largest volume of trade was with China amounting to US$15.518 billion, the IRICA spokesman stated.

He put Iran’s export to the SCO members at 33.339 million tons valued at US$11.173 billion during the period under review. Out of this the highest amount of export has been to China, amounting to US$6.724 billion and the lowest was to Mongolia, amounting to US$412,809.

Iran’s imports from the member countries weighing 8.408 million tons was worth US$11.991 billion Latifi said, adding the highest amount of imports was from China (US$8.793 billion), and the lowest was from Mongolia (US$2.448 million).

The Shanghai Cooperation Organization (SCO) is a Eurasian political, economic and security alliance. Its creation was announced on 15th June 2001 in Shanghai, China by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. The SCO Charter was signed in June 2002 and became effective on 19th September 2003.

Iran-Eurasian Economic Union trade reported at US$1.4 billion in 8 months

The value of non-oil trade between Iran and members of the Eurasian Economic Union (EAEU) were US$1.4 billion during the first eight months of the current Iranian calendar year (March-November 2020) as per data released by Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA). Trade with Eurasia accounted for 2.8% of the country’s total non-oil trade in the mentioned period.

According to details, Iran exported 1.8 million tons of commodities worth US$639 million to the EAEU members in the period under review, registering a 20% fall in terms of weight and a 6% decline in terms of value. The country’s trade with its Eurasian partners declined 11% as compared to the previous year’s same eight-month period.

During this time span, Iran's exports to Russia and Belarus increased significantly in terms of weight and value, while exports to three other countries, namely Armenia, Kyrgyzstan, and Kazakhstan, decreased.

Eurasian destinations accounted for only 2.4 percent of Iran’s total exports in the first eight months of the current year, according to the said data.

Among Eurasian trade partners, Russia was Iran's top export destination with US$285 million, followed by Armenia with US$233 million worth of imports from the Islamic Republic, while most of Iran's imports also came from Russia (US$727 million).

Iran and Eurasian Economic Union reached a free trade agreement in October 2018 based on which about 862 commodity items were subjected to preferential tariffs. The interim agreement enabling the formation of a free trade area between Iran and the EAEU was signed on May 17, 2018, and officially came into force on October 27, 2019.

Iran is a very important market in the region and the development of ties with this country is of high significance for the EAEU members (Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan).

The free trade agreement between Iran and the Union has laid the ground for the expansion of trade ties between the two sides.

The agreement with the bloc has increased Iran’s exports to the EAEU member states significantly, which is a turning point for the Islamic Republic's plans for boosting non-oil exports during the US sanctions.