Foreign Correspondence

[Amaunet]

China should be cautious over Japan's moves in Central Asia

Interesting article in that it is from China’s perspective and shows how countries monitor what other countries are spending or investing or what projects are initiated in certain areas with an eye toward energy.

In Central Asia and the Caspian Sea the United States, Europe, Iran, Turkey, certainly Russia and other countries also vie for influence.

-Am

Expert: China should be cautious over Japan's moves in Central Asia
02.09.2004 10:28:00 GMT

Shanghai. September 2. INTERFAX-CHINA - China should remain cautious over Japan's recent steps into Central Asia, according to He Jun, an economist with the think tank Ambound Group, speaking to Interfax.

His comment was made after the Japanese Foreign Minister, Yoriko Kawaguchi, wrapped up her Central Asian tour, which some analysts say was meant to boost Japan's ties with the nations and increase its influence in the region.

During Kawaguchi's visit, a number of economic aid commitments were made by Japan.

Uzbekistan and Japan reached an agreement on a low-interest loan of USD 150 mln for a railway project in the south of the country. Japan exchanged notes with Tajikistan on a USD 450,000 grant for cultural development. It also pledged to offer USD 250,000 for the construction of five projects in Kyrgyzstan.

Additionally, Japan will accept more than 1,000 students from the five Central Asian countries over the next three years.

In return, the five Central Asian countries will give support to Japan's proposals for cooperation in a number of areas including energy resources.

"[China should watch Japan's move because] energy resources in Central Asia are definitely strategically crucial to China, against the backdrop of the currently high international oil price," stressed He.

"The US, having a larger say in the Middle East region, and Russia, which abandoned the Angarsk-Daqing pipeline project, are both forcing China to seek a breakthrough elsewhere in its oil supply strategy," he noted

China's need to diversify its oil supplies and reduce its reliance on Malacca Strait, through which 60% of China's oil import shipments pass, could require a stronger presence in Central Asia, he continued.

Some Central Asian countries abut the Caspian Sea, where the volume of oil resources is estimated to be second only to the Gulf Region. At the same time, Central Asian countries are trying to attract investors to develop their resources, giving China an opportunity.

"The currently ongoing construction of the pipeline linking China with Kazakhstan is a great success for China," said He.

As Interfax reported last week, construction on the cross-border section of the Sino-Kazakhstan pipeline project is set to start on September 28.

The 1,240 km-long Atasu-Alashankou section is the second phase in the Kazakhstan-China oil pipeline project. It is to run from the oil-loading railway rack in Atasu in the Karaganda region of central Kazakhstan to the Chinese border near the Druzhba-Alashankou railway terminal.

The construction of this stretch of the pipeline is estimated to cost USD 700 mln. In accordance with the feasibility studies, around USD 650 mln is to be put into the first phase of the Atasu-Alashankou line and USD 40 mln to increase the handling capacities

The construction was originally scheduled to be launched in the summer of 2004 and would have been completed in December of 2005.

The completion of the Sino-Kazakhstan pipeline, designed eventually to deliver 50.00 mln tons of crude per annum, will largely reduce China's dependence on sea oil imports, according to analysis by Ambound.

Furthermore, the pipeline between China and Kazakhstan will intersect a crude pipe from Russia to Turkmenistan, which is a part of Russia's Siberian oil pipe network. That means the completion of the Sino-Kazakhstan pipe might also bring China a larger volume of Russian oil.

"The success came after the establishment of the Shanghai Cooperation Organization (SCO), initiated by China," He noted.

On June 15, 2001, SCO was established in Shanghai by the heads of state of the six countries including China, Russia, Kazakhstan, Kyrgyzatan, Tadzhikistan and Uzbekistan.

Now, Japan is to pose a challenge to the organization. "Japan's determination to step into Central Asia was made in consideration of its oil security," He commented.

Japan, the world's third largest oil consumer, is also heavily dependent on oil imports.

"Japan is seeking exploration, production and other upstream oil industrial cooperation with Central Asian countries," he added.

"In fact, the country has been watching China's moves in the energy sphere closely, looking for opportunities of its own," He pointed out. The disputes over the Angarsk-Daqing Pipeline Project and the current territorial problems surrounding the development of the Chunxiao Gas Field in the East China Sea both indicate Japan's tougher attitude towards China.

As Interfax has previously reported, negotiations between China and Russia over the construction of a pipeline from Angarsk to Daqing appeared to have been settled in 2002, but Japan then intervened, promising more aid and more money for an alternative route from Angarsk to Nakhodka on the far eastern Russian coast. The pipeline will now be built from Taishet to Nakhodka, and the possibility remains that a branch line will be extended to Daqing, but it appears that priority is still being given to Japan.

Meanwhile, the problems concerning the gas resources in the East China Sea have intensified of late, with the Japanese side showing more aggression in the defense of its interests in the disputed area. China has already begun developing the Chunxiao field, but Japan has insisted that China provide detailed information about where construction will take place, expressing their concern that China's prospectors would stray into Japanese seas.

At the end of her visit to Central Asia, Minister Kawaguchi has proposed a meeting between the leaders of Japan and the five Central Asian countries, which is to be held in Tokyo in 2005, aiming to strength relationships with the region.

The expert was confident that Japan's attempt would not pose a threat to the SCO in a short term.

"First, both China and Central Asian countries have showed their sincerity regarding wide-ranging cooperation since the foundations were laid down by SCO," reasoned He.

Furthermore, the geographical proximity of China and its Central Asian neighbors gives China an edge over Japan in the competition for resources. "It is also apparent that the stability of China will help safeguard the back doors of the Central Asian countries," he added.


http://www.interfax.com/com?item=Chin&pg=0&id=5751957&req=