Tajikistan, one of the world’s poorest countries, is counting on an influx of Chinese investment to cushion its economy from the reverberations of sanctions-hit Russia.

China is to invest at least $6bn in Tajikistan over the next three years, Jamoliddin Nuraliev, the country’s deputy finance minister, says in an interview with the Financial Times.

The planned investment, equivalent to two-thirds of Tajikistan’s 2013 gross domestic product and more than 40 times annual foreign direct investment, is the latest sign of China’s economic expansion into former-Soviet central Asia, as it seeks to secure natural resources and ensure stability in a region Chinese expats call Beijing’s “wild west”.

Speaking in the Tajikistan capital, Dushanbe, Mr Nuraliev, the son-in-law of Tajik president Emomali Rakhmon, acknowledges concerns that Tajikistan could become too dependent on China, but says the country needs the investment to offset the slowdown in Russia.

“We will draw the line, but not today,” he says, explaining that the money would go towards the construction of a gas pipeline, cement plants and a railway. “We have to balance one risk against another risk.”

Tajikistan, sandwiched precariously between China, Russia and Afghanistan, is feeling the impact of Moscow’s annexation of Crimea and support for separatists in Ukraine, which have provoked international sanctions.

Tajikistan map

With per-capita GDP of just $1,037, Tajikistan is the world’s most dependent country on money sent home by migrant workers abroad, almost all of them in Russia. Such remittances, which according to the World Bank represent about half of Tajikistan’s GDP, fell in the first quarter for the first time since 2009. Officials estimate that remittances from Russia are down by as much as a fifth since the summer.

With the Russian economy stalling, Tajik officials are braced for the worst. “We are very much concerned about things happening in the Russian economy. We hope it will find a way to stabilise over the next year,” Mr Nuraliev says.

Among government officials and diplomats, there are fears that a severe economic crisis in Russia could provoke an existential crisis for Tajikistan. According to official estimates, 1m Tajiks work in Russia – one-eighth of the country’s population and roughly half of its working-age men.

“If you had 1m young people here unemployed you could see a situation like we had in Egypt,” says a western diplomat in Dushanbe.

Economists believe the effect of the Russian slowdown will be felt in the coming months as workers return to Tajikistan for the winter and the Russian construction industry, a major employer of Tajik migrants, starts to feel the pinch.

Inflation is already picking up as imported Russian goods cost more, with consumer price inflation jumping to 5.4 per cent in the first eight months of 2014, from 2.5 per cent a year earlier.

“People will start being very economical,” says Zuhra Halimova, executive director at the Open Society Institute in Tajikistan. “When they had good remittances coming in, people were interested in investing in children to study, in buying houses and cars. As soon as this is slowing it is easy to go to any household in a village and see what is on their menu: not much meat.”

The promise of significant Chinese investment into Tajikistan mirrors Beijing’s strategy in other parts of central Asia. In Kazakhstan, about a quarter of annual oil production is now owned by Chinese companies, while in Turkmenistan, Chinese state energy companies have replaced Gazprom as the main buyers of natural gas.

Moscow, itself, has been seeking greater economic ties with Beijing as a result of the Ukraine crisis, even as many Russians harbour misgivings about Chinese expansion into Siberia and other mineral-rich regions.

In an attempt to diversify its sources of investment, the Tajik government is also courting western investors and last week held its debut investment conference.

But diplomats and executives say potential investors are being put off by widespread corruption, with Tajikistan ranking 154 out of 177 on Transparency International’s corruption perception index. Tax and customs rules are also inconsistently applied, while electricity supplies are unreliable.

Mr Nuraliev says the government is working to tackle corruption and other issues. But he also says that Chinese investment is in some ways more appealing for Tajikistan than money from western organisations, such as the World Bank, which comes with strings attached. Of Chinese investors, he says: “There is no bureaucratic procedure, they don’t take much time and there is no conditionality.”

Yet elsewhere in Tajikistan, the level of Chinese investment has raised eyebrows. One businessman in Dushanbe asks: “Will there be anything left after the Chinese have finished?”

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