According to experts, China is primed to become Tajikistan’s primary economic partner, driving away other potential investors through its unparalleled investments. Tough investments in Tajikistan have shown to be high risk, with a less than optimum probability of full loan repayment, Chinese investors continue pursuing economic goals. Some experts are concerned over China’s active loan agenda in Tajikistan, while some others have taken a more benevolent view of it.
Thus, Tajikistan’s parliament complex is being completed with a US$250 million grant from China. Another US$120 million in handouts have been given by China to build a new city hall.
Eurasianet notes that in theory, this all comes without strings attached, but analysts are not convinced.
“This all feels very disturbing,” Tajik political scientist Parviz Mullojanov told Eurasianet. “This is a very dangerous trend, especially as there are also large debts. Amassing Chinese debt is playing with fire. At any moment now, this could serve as a pretext for political and geopolitical expansion.”
Of the $3.3 billion that Tajikistan owed to international creditors at the start of 2022, 60 percent – $1.98 billion – is owed to the state-run Export-Import Bank of China, better known as Eximbank.
The bulk of Tajikistan’s annual debt repayments are, unsurprisingly, earmarked for China, but the rate at which money is being paid back will be far from reassuring for the country’s bean-counters.
Of the US$131.9 million repaid by Tajikistan in 2021, US$65.2 million went to China in one form or another, Eurasianet says, noting that almost $22 million of the money paid to China was interest accrued.
Chinese debt has usually been extended for the purposes of building or overhauling transport infrastructure or energy projects. Work is more often than not implemented by Chinese companies themselves.
Mullojanov argued that this approach was part of a well-understood strategy.
“China has a standard policy for all countries: They need to employ their own workforce, so they send their own people and industrial resources to do all the projects. China needs a market for its industry,” Mullojanov said in an interview with Eurasianet.
Other analysts have reportedly taken a more benevolent view of Beijing’s loan agenda, however.
According to Eurasianet, Marina Rudyak, a scholar at Heidelberg University’s Institute of Chinese Studies, said that her analysis of Chinese official and academic discourse shows that Beijing believes debt will in the final analysis lead to economic growth and, accordingly, less debt.
“It is, you could argue, a more need- and want-centered than a risk-centered perspective,” Rudyak wrote in emailed remarks. “For Tajikistan in particular, I think we have to consider the role China ascribes to it in particular in the Afghanistan context. It needs a stable Tajikistan and will probably pour as much money as it believes it takes to keep it stable, even with prospects of loan defaults, because the alternative of Tajikistan collapsing into a new civil war or similar is much more costly.”
In the short-term, however, the burden of the debt is forcing Tajikistan to give away the family gold, to be more accurate, Eurasianet said.
In 2016, Xinjiang-based company TBEA put the final touches to work on a 400-megawatt power plant in Dushanbe known as Dushanbe-2 combined heat and power (CHP) plant. The Tajik government only contributed US$17.4 million to the US$349 million project. The rest came from TBEA itself. Three years later, to pay off that debt, Tajikistan simply gave TBEA the concession to develop its Upper Kumarg and Eastern Duoba gold mines, both located in the northern Ayni district. China-based news website Securities Times at the time cited TBEA chairman Zhang Xin as saying that if the mines did not contain sufficient gold to cover their costs, Tajikistan would grant a development license to yet another deposit.
Warming to this approach, Tajik parliament later that same year reportedly voted to exempt another Chinese company, Kashgar Xinyu Dadi Mining Investment, from all types of taxes and customs duties for a period of seven years. The miner was also granted development rights over a silver deposit in the high-altitude Pamir region, according to Eurasianet.
Eurasianet further noted that it is not known for certain what Kashgar Xinyu Dadi Mining Investment did to earn such generous treatment, but the whispered speculation is that it was in return for the Chinese government underwriting the parliament and Dushanbe city hall projects.
