Mon, May 25, 2009 page5

• FEATURE : Chinese traders withdraw from Kyrgyzstan market

  • AFP
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  Bright bolts of fabric, toys and construction materials still crowd the shelves of Central Asia’s largest bazaar but its once ubiquitous Chinese traders are beginning to dwindle in number.

  Tucked away from the crush of bargain hunters in the courtyard of a crumbling Soviet-era apartment block, a sign dangling ominously in a window captures the mood here at Kyrgyzstan’s Kara-Suu market.

  The hand-written poster announces simply, in Russian and Chinese: “Apartment for Rent.”

  Once a destination for thousands of Chinese traders, the financial crisis has turned this outdoor market in the volatile Fergana Valley into the site of an exodus that has traders and the government very nervous.

  As the financial crisis bites deep into the region’s coffers, Kyrgyzstan and some other Central Asian states are succumbing to protectionism, possibly at the expense of booming trade and ties with China fostered over a decade.

  “As other governments have lowered their taxes and given out incentives, Kyrgyzstan has done the opposite for us,” said Yan Tsoupin, head of the Association of Chinese Entrepreneurs in Southern Kyrgyzstan, a lobbying group. “Little by little, gradually and quietly like water, our Chinese people have begun to flow away from here.”

  A major conduit for Chinese goods and influence into what was Russia’s backyard, Kara-Suu has now become a test of the viability of Beijing’s plans to expand its presence into neighboring Central Asia.

  Since last year, thousands of Chinese traders have left Kyrgyzstan in reaction to protectionist economic measures taken by local officials, who are themselves panicked by the country’s worsening economic situation.

  The moves by the local government in Osh Province, where the bazaar is located, illustrate the delicate balancing act that has come to define the “special relationship” that has developed between the poorer states of Central Asia and an ascendant China.

  The earnings of Chinese business people were already taxed at a higher rate than their local counterparts, but last year these taxes were raised an astonishing 500 percent.

  At the same time, the number of business licenses granted to Chinese citizens was slashed, a move defended by the head of Osh’s Migration and Employment Committee, Daniyar Tolonov.

  “No one can compete with ­Chinese traders today, because they have direct supplies from China and their goods are cheaper,” he said. “Today, we are protecting jobs for our citizens.”

  A politically unstable state bordering China, Kyrgyzstan has been battered by falling remittances from its own migrant labor force in Russia and Kazakhstan.

  Taxes levied on Chinese traders and entrepreneurs dwarf those paid by locals, Tolonov said, providing a key source of revenue for the state without which it would simply be unable to meet citizens’ basic needs.

  As Yan said: “If you want the eggs, you can’t kill the chicken.”

  But at the same time officials must monitor the political temperature among locals who are angry at what they see as the unfair business practices of the Chinese.

  Competing with the Chinese, who have a distinct advantage because of their native language fluency and personal relationships with wholesalers in China, has proved a daunting task for many in the market.

  “We have no problems with the Chinese. They don’t bother anyone at all. They’re very honest and trustworthy people. But they’re ruining our business,” 49-year-old trader Zulfiya Khaidarova said.

  However that particular complaint may soon be a thing of the past — if the authorities choose to ignore the concerns of Chinese representatives like Yan.

  More than half of the nearly 5,000 Chinese traders — both official and unofficial — have already left for neighboring Tajikistan and Uzbekistan, said Yan, who herself came here more than a decade ago.

  While both neighboring states have their drawbacks — Uzbekistan’s legal system is draconian and Tajikistan is poor and unstable — Yan said anything would be an improvement on Kyrgyzstan’s heavy-handed economic policy.

  Only one of the dozens of Chinese traders approached by reporters was willing to speak, and then only on condition that her real name not be used.

  The one who did speak asked to be called Tanya, a nickname she picked up while working in Russia before she moved to Kara-Suu.

  She said that despite problems, she wouldn’t be leaving and explained that the hazards associated with living across the border in tense Uzbekistan could be even greater.

  “The route is not good. When you cross the border, border officials take your money, ask for bribes,” she said.

  Uzbek police “are very bad. There, they are worse than in Kyrgyzstan,” she said.

  Also See: FEATURE : China spending big to secure foothold in Central Asia
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