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point of view: china's imbalanced trade with central asia |
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Saturday, 5 December 2009The recently held Kyrgyz-Chinese economic forum in Bishkek has put an emphasis on the disproportion in the balance of payment in mutual trade between Kyrgyzstan and China in favour of the latter.
There is no doubt that China is a very important partner for Kyrgyzstan, but it is Kyrgyzstan that mainly buys while China keeps increasing its export, according to TCA.
Nowadays Kyrgyzstan is China's door to Central Asia for many goods - from electronics to building materials, furniture, textiles, and counterfeit consumer items.
Granted that many goods are re-exported to other Central Asian countries and Russia, very few Kyrgyz and Central Asia goods are exported to China. There is a sizable difference between the trade figures provided by the Chinese side and those provided by the Kyrgyz Ministry of Economic Regulation.
The fact that China is a net exporter and a very little importer of Central Asian products is obvious to everyone as well. If you exclude what China buys from the energy sector (where Kyrgyzstan has little to offer), in practical terms all Central Asian countries suffer a tremendous imbalance in their trade with China.
China claims that in Kyrgyzstan alone they have about 300 joint ventures, but if you dig deeper you will find out that the so-called joint ventures are made by Chinese entrepreneurs and local employees that offer their names just to get employment.
They also provide a legal base to the "foreign partners" that often do not even register themselves and are only interested in selling their goods. The process is understandable but it does not develop a mutually balanced cooperation.
China has a tremendous potential in terms of investment and market, and the situation should be modified in some way. It has been said that the quality of Central Asia products is unsatisfactory and uncompetitive for a Chinese market that produces goods of a much higher quality.
It has also been said that Central Asian bureaucracy and tax system place an unfair burden on the Chinese small entrepreneurs that venture to invest in Central Asia. Visa and tax problems create the shortcut of using local counterparts and making simple trade preferable to a long term investment.
In practical terms the Chinese come with their goods, rent some space in the numerous markets (very few establish a proper shop with the exclusion of restaurants) and hide behind the local Kyrgyz, or the Tajiks of the occasion.
In some markets, such as Uzbekistan, Turkmenistan and Kazakhstan, the Chinese entrepreneurs even do not attempt to do any business, leaving the task to large state owned corporations that get involved in counter-trade and high profile operation.
Chinese complain not only about the quality and uncompetitive prices but also the limited goods in offer and the small size of production. In actual fact they are right. Kyrgyzstan is often not competitive-- there are few manufacturing plants and the offer is limited.
Still there are sectors where Kyrgyzstan, given the necessary support and know how, can do well. We do not refer only to trade that seems already well developed or to energy and natural resources that can offer many opportunities but mainly to agriculture and tourism.
In agriculture Chinese can bring considerable advantages providing know how (take the greenhouses production) and equipment and buying back the products. Granted that this is a long term approach, they should start somewhere and a good neighbour should at least make an effort.
Another area where China can contribute immediately to the well-being of Central Asia is tourism. Although the Chinese policy toward tourism with Central Asia is not clear, some figures indicate that about 300 million Chinese travel every year, and if a small portion of this will be directed to Central Asia the economies of the poorest countries such as Tajikistan and Kyrgyzstan will change overnight.
China is often talking about the Great Silk Road that is passing through Central Asia that is bordering China. Many words have been said and many symposiums and conferences have taken place but very few Chinese tourists are visiting Central Asia.
Today we see thousands of small Chinese entrepreneurs and a flourishing trade but there are very few tourists. Flights from Xinjiang to Bishkek or Dushanbe or Tashkent or Almaty are always full of Chinese and Kyrgyz or Kazakh entrepreneurs, but they are all traders. The purpose is always the same - to buy goods from China and sell to Central Asia. No tourism, no investment.
From the historical vestige and unique culture of Uzbekistan to the beautiful nature of Tajikistan to the mountain and entertainment life of Kyrgyzstan, Central Asia is for China a place to be discovered. The region is certainly ready to receive hundreds of thousands Chinese tourists that for sure will be interested to see Central Asia.
Chinese travel agents and state organizations can certainly channel a new flow of people that will contribute to the economy of the region and lead the way to the discovery a revisited Silk Road.
Why do the Chinese authorities and their Kyrgyz, Tajik and Uzbek counterparts not commit to this direction remains unknown. Hotel accommodation is ready in Uzbekistan, Kyrgyzstan, and Tajikistan, local tour operators are well equipped to provide assistance, the system is geared to receive tourists not only from May to October but also in winter months - it seems that nothing is missing on the local side but Chinese tourists are not coming.
Central Asian countries should tackle the problem jointly or separately to bring in Chinese tourists, to develop a new approach, and to make Central Asia and the Great Silk Road a preferred destination for thousands of Chinese travellers that for sure will enjoy a visit to a neighbouring region where nature, history and culture have so much to offer at competitive prices. |
Saturday, 5 December 2009
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