Silk Road Monthly: January 2025
Delays, Uncertainty, and Hesitation Challenge Regional Ambitions
It’s 2025. Don’t Wait Up for TAPI
As years goes by, Turkmenistan continues to search for ways to diversify its gas exports. The vast majority of Turkmen gas exports are destined for China through the China-Central Asia pipeline. Turkmenistan has pushed for the ambitious Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline for decades, and yet, it seems as if there is never enough progress in negotiations to remain optimistic. Security risks, a lack of political cooperation, and the mammoth price tag (approximately $8 billion) keep investors hesitant from committing to the project. If constructed, the project would see the assembly of an 1,800 km pipeline, connecting Turkmenistan’s Galkynysh gas field with Fazilka in eastern India. In the most recent meeting this past September, TAPI announced the inauguration of the first section of construction from Serhatabat, Turkmenistan to Herat, Afghanistan. However, representatives from India and Pakistan were absent from the inauguration ceremony, opting instead to wait for tangible progress before formally committing.
A New Infectious Disease From China Arises, Doctors Downplay Concerns
Human metapneumovirus (HMPV), a common respiratory virus, has spread around Asia from China, into India, Malaysia and Kazakhstan. In mid-December, health agencies in China reported a spike in respiratory infections. Despite the recent surge, health experts note that HMPV has been around for over 60 years. Kazakh President Kassym-Jomart Tokaev downplayed concerns after two children under 14 were diagnosed with HMPV in western Kazakhstan at the beginning of January. By mid-January, China reported that infection rates of HMPV had already declined, however international health experts are calling for more transparency from China.
Despite Inauguration, CKU Already Delayed
The long-awaited China-Kyrgyzstan-Uzbekistan railway project was finally inaugurated and the investment agreement was signed last year. Once completed, the railroad will connect Kashgar in Xinjiang to Andijan in eastern Uzbekistan through Kyrgyzstan. This will be the first westward railroad from China outside of Kazakhstan, showing a significant interest from the Chinese to diversify potential trading routes, particularly after Western sanctions disrupted Chinese trade through Russia. Despite getting the go-ahead, construction has now been delayed until July and is slated to last for approximately six years.
AIIB Investing in Tajik Hydro
The Asian Infrastructure Investment Bank (AIIB) has approved financing of $500 million, starting with a $270 million loan, to fund the Rogun Hydropower Plant in Tajikistan. On January 6, AIIB officially announced the funding plan, following the project’s approval in December, and will help develop the 3,780 MW plant on the Vakhsh River. The plant will feature a 335-meter dam and a 170-square-kilometer reservoir. The project aims to alleviate Tajikistan’s winter power shortages by improving electricity access to around 10 million people. As Central Asia’s energy demand is set to triple by 2050, the project is expected to enhance regional energy security and decarbonize power grids. Tajikistan, despite ranking eighth in global hydropower potential, currently utilizes only 4% of its capacity.
Gwadar Struggling to Gain Traction
Gwadar Port, the $250 million Chinese Belt and Road Initiative (BRI) project, is struggling to attract commercial activity. The deep-sea port was constructed in 2007 and integrated into a special economic zone (SEZ) with the aim of turning Gwadar into a major coastal trading hub. As a key node in the China-Pakistan Economic Corridor (CPEC), Gwadar was built as a means to bypass both the Malacca Strait and India to reach Europe. However, Gwadar, situated in Pakistan’s desolate Balochistan province, has faced disruptive protests and threats of insurgency ever since its unveiling. Balochistan faces chronic underfunding, as Gwadar residents have long been deprived of proper drinking water, health, and education facilities, paving the way for retaliation. Balochis have displayed their frustration, arguing that the Gwadar port provides minimal opportunities or direct economic development for locals. Consistent attacks on Chinese workers and project sites in Balochistan have raised concerns over the viability for investment, threatening Gwadar’s future.
Distancing From Russia?
Uzbek President Shavkat Mirziyoyev signed a decree to order the development of alternative transport routes. Uzbek exports intend to avoid “problem countries,” described as countries in which transportation is experiencing difficulties, or in other words, sanctions. In order to improve trade efficiency, the decree notes that Uzbekistan must reduce its dependency on Russia as a logistical trade route. The Uzbek Ministry of Transport aims to improve the country’s position in the Logistics Performance Index from 88 to 55 by 2030.
Russia’s Evolving Relationship with Central Asia
Analysts suggest that Russia's full-scale invasion of Ukraine in February 2022 has significantly altered Eurasian geopolitics, impacting Moscow's standing in Central Asia. Central Asian nations have maintained a neutral stance on the war, refraining from supporting Russia's actions. This neutrality is interpreted as a cautious distancing from Moscow's policies and reflects a decline in trust among Central Asian states. In response to Russia's preoccupation with Ukraine, these nations are actively seeking stronger relationships with other global powers such as China, Türkiye, and the West. The shift in alliances is perceived to diminish Moscow's traditional role as the dominant power in the region, leading to a potential realignment of geopolitical influences. China was particularly active in 2024 with big investments along the middle corridor in Afghanistan, the CKU railroad, and in Georgia’s deep sea port in Anaklia. China also continued as the region’s largest trading partner, seeing almost $95 billion of goods exported to Central Asia.
This, however, does not indicate that Russia is no longer a significant player in the region. Trade between Central Asian states and Russia has increased considerably since the start of the war, with Central Asian countries often positioning themselves as re-export hubs for Russia to bypass sanctions. However, from a cultural standpoint, an increasing number of Central Asian students are now opting to study in China, while simultaneously Russia has seen a decline in popularity in the Russian language and culture in the region. Central Asian states are exhibiting greater autonomy, however, their dependence on Russia and China continues to influence local decision-making.
Chinese Drones Coming to Kazakhstan
Yesil Technology Company, a subsidiary of China's Shaanxi Kaizhuo Electronic Technology Company plans to establish a $12 million industrial drone production facility in Almaty. Construction is set to commence in March 2025, encompassing a 50,000-square-meter area dedicated to manufacturing, research, and testing. This initiative aims to create 500 new jobs and will focus on integrating advanced UAV technologies across various sectors, including agriculture, environmental protection, and emergency rescue operations.
In a parallel development, Kazakh Invest has signed a memorandum of understanding with China's Polyking New Horizons Technology Industry Co., Ltd. to establish an industrial park in Kazakhstan. This $200 million project will integrate drone technologies, smart city solutions, and advanced manufacturing systems, with an expectation to create 1,000 new jobs. These collaborations underscore Kazakhstan's commitment to becoming a regional leader in high-tech industries and capitalizing on the burgeoning global market for low-altitude technologies and intelligent manufacturing.
Winter Is Here, and so Is the Air Pollution
This Winter, Bishkek has experienced insufferable levels of smog, ranking third-worst in the world in December, after Hanoi and Delhi. In an attempt to provide a long-term solution, Bishkek city hall decided to remove its trolleybus network, replacing it with Chinese Ankai battery-electric buses. Bishkek’s mayor claimed the trolleybuses were unprofitable, ugly, and lacked flexibility. The decision was widely unpopular, seeing opposition party leaders arrested before municipal elections, and the leader of the Social Democrats, Temirlan Sultanbekov going on hunger strike for over two months. Activists claim China’s Ankai buses will provide little to no benefit for the city compared to the trolleybuses.
Transportation in Bishkek is the second highest contributor of emissions after residential heating. However, a new experiment developed by China’s QIngdao State University may help. The Chinese university will test out catalytic converters as a means to reduce vehicle emissions. The devices will convert hazardous compounds into less hazardous ones. Only around 15% of vehicles in Bishkek currently use catalytic converters; with the success of this experiment and proper implementation, Bishkek could see this as a potential short-term solution to its smog problem.