Talant Sultanov

(Director, Kyrgyzstan's Institute for Strategic Studies)

Author

Talant Sultanov was graduated from Columbia University with a master's degree in international finance and awarded the Edmund S. Muskie Graduate Fellowship. Currently, he is the Director of Kyrgyzstan's Institute for Strategic Studies, and a member of the Committee of the Society Observers at the Ministry of Finance of the Kyrgyz Republic. He used to be the VP of Finance at the American University of Central Asia (AUCA), and head of the Project Financing Department of Kazkommertsbank (KKB) in Almaty, Kazakhstan. He worked at the headquarters of the World Bank in Washington as advisor in the Vice-President's office for Europe and Central Asia, a specialist in communications at the WB Office for Central Asia in Almaty, Communication Director in the project of USAID and KARANA Corporation for Small and Medium Business Development in Central Asia.

Abstract

"Silk Road" in history and KyrgyzstanGeographically, Kyrgyzstan is located in the heart of the Silk Road – it stands at the first cross-border road, and is a junction of myriad routes and civilizations. Thousands of years ago, the road connected the East and the West. This traffic artery was the scene of many ups and downs – securing the material needs of the country and region while also creating a path to untold suffering.Historians have discerned at least two major routes within Kyrgyzstan's borders – the North Route and the South Route, along which merchants travelled in groups. Traces of the ancient traders' voyages can still be found today, hidden in the campsites where food and water were once prepared. In trekking these epic distances, they became close to nature and to the hospitable locals who offered companionship along the road. For the natives of Kyrgyzstan, travelers were treated as guests of honor.Reviving the Silk RoadChinese President Xi Jinping posed the Silk Road Economic Belt concept in a speech given at Nazarbayev University in Astana in September 2013 before the SCO Bishkek Summit. The initiative became a major focus of discussion during President Xi's state visit to Kyrgyzstan in September that year, and the initiative has since then been further elucidated in many follow-up occasions.The Silk Road Economic Belt initiative envisioned by the Chinese leaders will guide Asia in its pursuit of internationalization and will in turn be enriched throughout the process. Kyrgyzstan is keen on the initiative as it will bring about enormous advantages, particularly in terms of economic benefits.Kyrgyzstan's economic situationLandlocked and mountainous, Kyrgyzstan has a population of about 6 million. Our country underwent several bouts of political unrest after winning independence, which undermined our nation's economic development. Despite the brief period of challenges, our country has been politically stable since 2010 thanks to democratic reform and structural transformation, which have provided strong momentum for rapid economic growth. Last year, the GDP growth rate of Kyrgyzstan ranked first among all Commonwealth of Independent States, reaching 10.5 percent – the biggest economic achievement it had ever made in 20 strong years of development after winning independence.The Republic of Kyrgyzstan has made great strides in the internationally recognized indexes and index systems. Last year, Kyrgyzstan took the lead in the following areas: investor protection index (seventh of 185); foreign investment performance indicators (36th); and the Doing Business index (68th). From 2010-2013, the Republic of Kyrgyzstan strongly lifted its Corruption Perceptions Index (up 10 percentage points), cross-border trade index (up by 5 percentage points), and social sustainability index (up five percentage points). In other words, the international community, represented by independent rating agencies, thinks highly of the correct paths Kyrgyzstan has taken in its economic and political transformation. Our country has set ambitious goals. Kyrgyzstan created and passed a national strategy for sustainable development in 2013. According to the strategy, our per capita GDP in 2017 will double. To achieve this goal, the annual GDP growth rate must be no less than 7.5 percent. At the meantime, we must cut the poverty rate to 25 percent. We plan to complete 80 projects worth $10.8 billion in order to achieve these strategic goals. Some of the projects are under way thanks to Chinese loans. The Silk Road Economic Belt initiative will help us achieve our strategic goals of sustainable development.China-Kyrgyzstan relationsAs China's Ambassador to Kyrgyzstan Mr. Qi Dayu said in his article, the friendship between China and Kyrgyzstan has persisted for more than 2,000 years. In 138 B.C., Chinese emperor Hanwu sent an envoy to Kyrgyzstan, blazing a trail between China and Central Asia and straightening out trade relations between the nations.A friendly relationship with China conforms to the fundamental interests of the Kyrgyz people. The two countries have strengthened their economic ties in recent years and heightened their mission to a strategic partnership in September 2013. Chinese President Xi Jinping visited Kyrgyzstan in September 2013 and Kyrgyz President Atambayev visited China in May 2014.After the two countries established a strategic partnership, they have reached a number of agreements pertaining to political, economic and cultural fields. China is becoming one of the biggest investors in Kyrgyzstan, with plans to invest $3 billion in its economy. In the past few months, Chinese government offered loans worth millions of dollars to Kyrgyzstan, including projects such as building a high-voltage transformer substation, a power transmission line, revamping the Bishkek central thermal power plant, building a "North-South" road, as well as constructing and operating "Kyrgyz-China" natural gas pipelines. Some of these projects have already been implemented and the rest will be carried out in 2014-15.China is also one of Kyrgyzstan's biggest trade partners. In 2013, China was the second largest importer to Kyrgyzstan with imports $1.4 billion in total, up 20 percent year-on-year. However, China only ranks the eighth in terms of Kyrgyzstan's exports value, totaling $36 million in 2013 or just 58 percent of what it was in 2012. The two sides still have work to do in this field. For instance, a Kyrgyz delegation visited China not long ago and signed a number of agreements to boost Kyrgyz exports to China, especially in Kyrgyz industrial and agricultural products and power.Areas of cooperationA large number of cooperative projects between China and Kyrgyzstan are under way that will promote the development of the Silk Road Economic Belt, such as:

– Infrastructure: roads, railways, and air routes

– Energy: Kyrgyz-China natural gas pipelines, and a hydropower station

– Trade: building an FTA

– Mining: gold and rare earth minerals

– Telecommunications: optical fiber communication lines

– Others: investment, finance, culture, education and tourism

I'd like to conclude with a brief summary. Kyrgyzstan and China have a history of solid relations dating back thousands of years. More recently, we have signed a large number of friendly cooperation and mutually beneficial agreements in the past few years.We have every reason to strengthen these cooperation initiatives, and the conditions are right to seek common benefits for both people. As for international challenges and problems as well as their solutions, Kyrgyzstan shares the same view with China: we must intensify our cooperation in economy, humanity and culture. China has greatly assisted Kyrgyzstan in its economic development as well as in other areas. Therefore, it is my belief that the Silk Road Economic Belt initiative will receive a positive response from Kyrgyz communities. It is also my belief that Kyrgyzstan will make due contributions to this initiative: safeguarding a decent life for all Asian residents, strengthening benefits, and utilizing local resources so as to attain our shared aspirations.