China may have been able to carve out quickly a large economic role for itself in Central Asia, but it will take a lot more than money for Beijing to solve some of its geopolitical dilemmas in the region, according to a report released today by the Brussels-based think tank International Crisis Group.

The ICG report, titled China’s Central Asia Problem, takes an in-depth look at the near-term challenges that Chinese officials are facing. It notes that China is now an economic force in Central Asia, with trade between Beijing and the five Central Asian states rising from $527 million per year in 1992 to $30 billion annually by 2010. Beijing sees the region as a source of raw materials and energy, as well as a market for its cheap consumer goods. China has also pumped hundreds of millions of dollars in aid and investment into Central Asia in the hopes that such lavish spending will promote stabilization in its western Xinjiang Autonomous Region.

“The core of its strategy seems to be creation of close ties between Xinjiang and Central Asia, with the aim of reinforcing both economic development and political stability,” the report states. “This in turn will, it is hoped, insulate Xinjiang and its neighbors from any negative consequences of NATO’s 2014 withdrawal from Afghanistan.”

Thanks to its massive trade surplus, China has lots of cash on hand, but officials are finding that simply throwing money at problems in Central Asia is unlikely to calm a region beset with corruption, weak governance.

At present, Beijing tends to coddle the region’s venal dictators, and its opaque investment schemes are seen as benefiting only a small elite. “Each Central Asian regime is brittle, corrupt and beset by socio-economic problems,” says the report. “The governments with which China cooperates are increasingly viewed as part of the problem, not a solution.”

Rather than simply dump investment into the region, Beijing needs to try “more active diplomatic and economic engagement to grapple with challenges that pose threats to its economic interests and regional stability.” That could include pushing for economic reforms that benefit the majority of Central Asia’s citizens.

China’s responsibilities in Central Asia are set to expand, in part because the influence of its two main geopolitical rivals – Russia and the United States – is waning. Russia is “financially dwarfed by China and increasingly lacks the military muscle to match its rhetoric,” though it is distrustful of Beijing’s intentions. Bruised and bloodied in Afghanistan, Washington is just looking for a way out.

Already Beijing’s current policies are fostering a backlash in the region, especially in Kyrgyzstan. In rural areas near mining projects, resource nationalism has helped focus negative sentiments toward Chinese workers, who are seen as polluting the landscape and stealing jobs while offering the Kyrgyz little in return. There are similar fears in Kazakhstan.

“Chinese economic expansionism – if it fails to deliver benefits to the working population and enriches only certain political families – could become a liability,” the report says. “China needs to work on changing the perception it is using Central Asia as a ‘resource pit,’” as one Chinese analyst told ICG.

Beijing has generally turned to the Shanghai Cooperation Organization – a group of six regional states including Russia and China – to manage its security interests in the region, but the SCO’s limited mandate and commitment to non-interference have shown the organization “limp.”

For ICG, it is not a question if Central Asia will experience political turmoil, but when. Whether it likes it or not, “Beijing’s cautious engagement on security matters will likely have to become more robust.”

Originally published by