KABUL: Chinese cement companies are scouring Central Asia for new opportunities as profits dry up at home, writes Dirk van der Kley. In the space of three years, Chinese investors have transformed Tajikistan’s cement industry. A handful of new, large Chinese-funded cement plants increased Tajik production of the material fivefold between 2013 and 2015, amid huge overcapacity in the Chinese market.
Chinese cement companies are facing a tougher time at home, as profits fall and less efficient, more polluting plants are forced to shut down or pay the costs of environmental damage in the wake of new laws and a crackdown on pollution. Cement is one of the world’s most polluting industries and a major source of carbon dioxide and smog that is causing a health crisis in China.
Chinese producers are now scouring the world for locations where cement prices are high and local competition weak. Tajikistan fits the bill for a small number of Chinese investors. However the country’s tiny domestic market, rampant corruption and increasing competition from Chinese cement plants across Central Asia has limited opportunities for further expansion.
Tajikistan is the poorest of the former Soviet states. Mountainous and landlocked, it borders China to the east and Afghanistan to the south. After the collapse of the Soviet Union in 1991, the country struggled to support itself as a newly independent state. Living standards deteriorated and by 2000 GDP per capita dropped to just US$139 (927 yuan). Large numbers of Tajiks left to work in Russia’s booming economy and send money home. As a result, the Tajikistan economy grew at over 6% per annum between 2000 and 2014. But the country remains poor with limited industry. Currently remittances comprise as much as 50% of GDP, though estimates vary. Beyond this, cotton and aluminum exports are major sources of revenue.
