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13.11.2015 | Japan Joins China in Central Asia investment push

Japan has launched a big economic drive in Central Asia, just as China forges ahead with its ambitious Silk Road Economic Belt project that will see huge investment in the former Soviet republics. Could Tokyo’s move be an attempt to counter Beijing’s deepening involvement in the region?

In a whirlwind tour of Mongolia and Central Asia in late October, Japan’s Prime Minister Shinzo Abe accompanied by an entourage of Japanese business leaders secured billions of dollars-worth of deals.  Abe’s visit, the first by a Japanese premier to all five of Central Asian states, signals a determined effort to establish strong commercial links with the energy-rich region, as he strives to boost his country’s economy.

Prior to setting off on his trip, Abe outlined the role Japan could play in the region.  He said that for a long time Central Asian countries have been relying on the export of natural resources, but were now focusing on building high-quality infrastructure  in order to facilitate the growth of high valued-added industries. The implicit message, it seemed, was that Japan, with its sophisticated technology, was just the partner these countries needed.

In Turkmenistan, which has the fourth-largest reserves of natural gas in the world, Abe agreed deals valued at around $18 billion, including chemical industry projects and the construction of electricity-generating plants.  The focus of cooperation in Kazakhstan was in providing support for the building of nuclear power plants.  In Uzbekistan, Abe struck agreements valued at $8.5 billion for that country’s energy, transport and communications sectors.  And he pledged aid packages of $112 million and $7.4 million to Kyrgyzstan and Tajikistan respectively, two of the region’s poorest countries.

Japan’s interest in Central Asia comes amid China’s emergence as the region’s leading trading partner, eclipsing Russia, the traditional ally of the stans.  On a visit to Kazakhstan two years ago, Chinese president Xi Jinping launched his plan for the Silk Road Economic Belt, an attempt to revive the ancient trading route with Europe through huge investments in Central Asian infrastructure.  Last month alone, more than $20 billion worth of Chinese-Kazakh agreements were signed in Beijing during a visit by Kazakh President Nursultan Nazarbaev.  China is also increasing its financial clout in the region through the Beijing-led Asian Infrastructure Investment Bank, which Japan has declined to join.

So could Japan be trying to check China's march across Central Asia?  Possibly, although some commentators say it may struggle to keep pace given Beijing's far greater financial clout and China’s increasing ability to provide the highly advanced technological know-how that Japan is offering.  Further, Japan's interest in Central Asia appears to be broadly economic, while Russia and China view it also as a regional security bloc.  But it could well be that Japan is simply keen not to miss out on opportunities to bolster its economy and secure energy supplies.