Authors: Marlene Laruelle and Sebastien Peyrouse
Publisher: Columbia University Press
Book Review by: Paiso Jamakar
This book is on a subject that has been almost neglected by scholars and even casual observers of international affairs: the growing relationships in the last two decades between China and five Central Asian states that were formerly part of the Soviet Union: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. It is particularly about China’s acquisition of commodities, trade and other economic needs but it also touches upon politics.
The authors – Marlene Laruelle and Sebastien Payrouse – have spent five years in Central Asia, so they write from a first-hand perspective, having a ‘been there, done that’ background. As such, this work is based on information gathered from primary sources and interpretation and analysis of material based on actual observation. This ‘getting a feel for the place’ type of insight is sorely lacking in books on international relations.
Before we review the authors’ discussions and conclusions on those relationships between China and the five former Soviet states, let us take you to their statements on China when viewed from a global standpoint. Why? Because there are common threads running in China’s relationships with those five Central Asian states on the one hand and its relationships with countries in Africa and Latin America, as two examples.
One of those common threads is that China, with its 1.3 billion inhabitants, has a great and growing need for basic commodities such as: agricultural land (to grow food), oil, minerals (particularly precious metals), natural gas, and other assets. It already has established relationships with countries in the two continents, is benefiting from those relationships, and is looking for partnership with other nations worldwide.
In regards to precious metals, China recently surpassed India as the largest purchaser of gold. Whether it stays in that position is hard to predict, with the government’s push for its people to buy gold for themselves. It not only imports gold but also produces it within its borders. The government of China encourages individuals and families to purchase gold as a form of savings and security.
(It is ironic that the U.S. government does nothing to encourage such prudence and thrift. On the contrary, the Obama administration – by printing trillions of dollars and keeping interest rates at near-zero through the Federal Reserve – has spurred inflation and caused the price of gold to skyrocket. Borrowing trillions more without a debt repayment plan can lead to a serious economic catastrophe, as many economists have warned).
The rising price of gold has led to an opposite situation. Americans are selling their gold to thousands of shops nationwide with “We Buy Gold” signs, whereas the Chinese are buying gold to increase their wealth. Chinese are confident gold prices will continue to rise on a long-term basis. They look at gold as a form of savings and building their net worth. Americans on the contrary are cashing in and unless they’re investing that cash elsewhere for a guaranteed higher return, they are decreasing their net worth. Cash automatically erodes in value with inflation.
With its growing wealth – through the acquisition worldwide of various hard assets and production of gold in its country by its government, combined purchase of gold by its people – China has become an economic power to reckon with.
Laruelle and Peyrouse point out importantly that these and other wise moves by its government have given the Chinese people tremendous clout in global finance. China has trillions of U.S. dollars in foreign exchange reserves. The authors point out that China, having become a financial power, has made it “potentially capable of one day bringing United States to its knees.”
One other set of moves that I am aware of to increase its wealth and influence is that China has been establishing relationships with banks in Asia, particularly in the Far East, to enable them to accept the Chinese currency – the Yuan – as a form of payment for the goods and services for goods it sells to companies in the region. The banks China has relationships with, enable payments for goods purchased by these companies through outgoing money transfers, buyers’ letters of credit, etc.
It has also called on member countries of the International Monetary Fund to replace the U.S. dollar with gold and a set of other currencies backed up with gold. But that is a move that I believe will take a long time to work out to the benefit of trading countries.
The five states of Central Asia represent a relatively small market to China. Their total population is only 65 million. And with a combined gross domestic product of around U.S. $270 billion, it was just around 3 percent of China’s GDP of $8.25 trillion in 2012.
So why has China pursued relations with these now-independent countries? Because they are a ‘central link in the conquest of the Russian market of 140 million people, and those with Turkey and Iran of about 75 million people each,’ seen as gateways to the Persian Gulf,’ the authors explain.
This is a valuable book that provides knowledge about the relatively new and developing relationships between China and five states in Central Asia. Two of the features that add more value to the book are its Notes and Bibliography sections. The two authors have graciously provided a long section (40+pages) of Notes for the reader to get explanations and details on particular topics of study. They have also provided a helpful 15-page Bibliography with many references for further study and understanding. I urge you to obtain a copy and read it.
