OREANDA-NEWS. March 15, 2013. Given the close proximity between energy-hungry China and resource-rich Central Asia, it is only natural for the Asian giant to seek to do more business with its Western neighbors.

Since the fall of the Soviet Union, China and the former Soviet Republics have forged closer ties as Beijing seeks oil and gas and other mineral resources, and Central Asian states find a new partner eager to invest in their economies.

Russia has been successful in keeping Western powers out of Central Asia, but it has not been as successful at limiting China's influence in the region.

"Since the collapse of the Soviet Union, China and its Central Asian neighbors have developed a close relationship, initially economic but increasingly also political and security," said the International Crisis Group in a new report on China-CIS ties.

For the most part, China has limited its interests in the region to pure economics as it does not want to invoke Russia's ire, which remains the region's alpha male.

While Russia eyes the warm ties between its two allies warily, it also needs to be careful that it does not alienate Beijing which is a major new customer of Russia's oil and natural gas sector.

But there have been some disagreements between the two regional powers on how they perceive their respective roles in Central Asia.

While Beijing acknowledges that Central Asia is Moscow's "backyard," it has also occasionally chided the Kremlin for not taking good care of its neck of the woods.

"We understand [that Central Asia is Russia's backyard], a former Chinese official responsible for regional policy recently told a Chatham House conference. "But you're supposed after all to look after your own yard, water the flowers."

China, on the other hand, is showering the Central Asian frontier with investments, loans and economic benefits.

Oil and natural gas projects in Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan have received sizeable loans and investments from Beijing. A recently announced USD 10 billion economic fund aims to expand Chinese economic influence even further.

"Energy, precious metals, and other natural resources flow into China from the region. Investment flows the other way, as China builds pipelines, power lines and transport networks linking Central Asia to its north-western province, the Xinjiang Uighur Autonomous Region," notes the ICG.

More than a 1,000 Chinese companies operate in the region, and China-Central Asia trade has soared from USD 1 billion in 2000 to USD 30 billion in 2010.

Key examples of Chinese-led projects include the Turkmenistan-China gas pipeline from Saman-Depe on the right bank of the Amu-Darya River to Khorgas; the Kazakhstan-China oil pipeline from Atyrau to Alashankou; and the China-Kyrgyzstan-Uzbekistan highway that makes it possible to drive from Bukhara in Uzbekistan to Beijing via Kashgar, notes the ICG.

China's Afghanistan problem

But it is virtually impossible to separate economics from politics in Central Asia.

"China faces several security concerns emanating from the region, most importantly, Islamic radicalism and regional separatism," notes Oxford Analytica in a study.

"Beijing has been attempting to address these concerns via multilateral and bilateral cooperation with Central Asian states. The conflicts and tensions are likely to become more acute as NATO begins to withdraw from Afghanistan."

Indeed, Afghanistan is teeming with Central Asian nationals who are fighting United States and NATO forces. Analysts fear that the departure of Western forces from Afghanistan will also see CIS nationals heading back home where they may take up arms once again to fight some of the totalitarian and dictatorial regimes in Central Asia.

Chinese separatist organizations have also reportedly trained in Afghanistan and stability - or lack thereof - may have a direct bearing on Islamist insurgency in China's border areas.

"China is investing significantly to build highways, pipelines, railways and electricity grids to further the region's socio-economic development and ensure that friendly regimes stay in power," said the ICG. "At the same time, it seeks support for its One-China policy. However, Chinese analysts are increasingly aware of the backlash this economic investment is causing in the region; one asserted that China needs to work on changing the perception it is using Central Asia as a 'resource pit'."

Regional countries have responded with a few security cooperation measures, namely the Shanghai Cooperation Organization (SCO) which was founded with China, Russia, Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan way back in 2001.

While it has largely been an ineffective organization to date, analysts expect it to gain importance especially as security issues come to the forefront in the region.

Joint military exercises, intelligence sharing and counter-terrorism measures have helped the region come closer together and prepare for the challenges that lie ahead.

Central Asia warms up to China

Central Asian states like the attention from Beijing as it gives them some leverage in handling Russian heavy-handedness and also allows them to reactivate stalled projects.

China's technology, investment and influence are especially welcome in Kyrgyzstan and Tajikistan, while Uzbekistan is said to be forging closer ties with China at the expense of Moscow.

But Beijing will need to be careful that its investments are seen to benefit the wider population within each of the Central Asian states rather than just the ruling elite.

"If Chinese economic expansionism fails to deliver benefits to the working population and enriches only certain political families, this could become a liability," said the ICG. "Charges of corruption, elitism and colonialism would cause China's international reputation to suffer as well."

In addition, the SCO will need to be a more robust organization to tackle the new challenges of Islamic insurgency and terrorist organizations that are gunning for the Central Asian regimes and are suspicious of Russia and Chinese influence in their countries.

"Central Asia's international partners, including Russia and China, must be wary of attempts by the region's leaders to push their populations to the brink, be it through political repression, divisive nationalism or economic deprivation," the ICG notes. "To address these threats through the SCO, it will be necessary for Beijing and Moscow to view each other with less suspicion."