ANALYZING CHINESE TRADERS IN KYRGYZ MARKETS

UNCLAS SECTION 01 OF 02 BISHKEK 001209

SENSITIVE
SIPDIS

DEPT FOR SCA/CEN (GORKOWSKI)

E.O. 12958: N/A
TAGS: ETRD ECON PREL SOCI KG
SUBJECT: ANALYZING CHINESE TRADERS IN KYRGYZ MARKETS

BISHKEK 00001209 001.2 OF 002



1. (SBU) Summary: A university survey of traders at two
Chinese-dominated markets identified a "lack of market
competition" as a main reason for Chinese "migration" to the
Kyrgyz Republic. Despite large increases in visa and work
permit costs, Chinese entrepreneurs continue to trade in
bazaars from which Chinese-made goods are dispersed to other
Central Asian countries. While dismissing estimates that
30,000 Chinese reside in Bishkek, the Kyrgyz official charged
with migration issues confirmed that 4,500 of 10,000
available work permits have been issued to Chinese nationals.
The official added that the return of Kyrgyz labor migrants
from Russia and Kazakhstan will likely force a cut in
available work permits. Among Kyrgyz public officials and
private citizens there is a uniform concern about Chinese
influence in the Kyrgyz Republic. End summary.

A Tale of Two Markets
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2. (SBU) Student researchers under an American University of
Central Asia faculty-supervised project presented findings
November 21 of their investigation into Chinese migration
patterns among traders at two Kyrgyz markets. The research
team, which included one ethnic Kyrgyz student from China,
surveyed about 50 traders at the large outdoor Dordoi market
in Bishkek's northern outskirts and the enclosed Taatan
market located in eastern Bishkek. (Note: There is a large
shuttle trade of Chinese goods from the Dordoi market and the
Kara-Suu market near the southern Kyrgyz city of Osh to
neighboring countries. End note.) According to the
researchers, ownership of the Taatan market is split between
Chinese and Kyrgyz entrepreneurs even though 70% of the
traders working there are Chinese. Embassy understands that
Ak Jol parliamentarian Askar Salymbekov still controls a
majority stake in the Dordoi market, which hosts an estimated
1,000 Chinese workers who toil amongst thousands of shipping
containers full of Chinese goods.

Preliminary Conclusions
--------------


3. (SBU) The researchers concluded that a "lack of market
competition," combined with Chinese and Kyrgyz membership in
the World Trade Organization and the Shanghai Cooperation
Organization, drew entrepreneurial Chinese migrants to the
Kyrgyz Republic. Traders identified visas, work permits and
corruption as significant barriers to entry. Chinese traders
at Taatan said the cost of Kyrgyz visas had jumped from $300
to $1300. Their Dordoi counterparts claimed visas cost
$700-$800. Chinese traders reported that work permits have
increased in price from $50 to $1300 since 2004. (Note:
Embassy consular personnel report that Kyrgyz visa costs
range from $200 to $600. End note.) The Dordoi traders also
cited ethnic competition for a series of fires that destroyed
Chinese-owned stalls at the market.


4. (SBU) While acknowledging the absence of any baseline
data for their study, the researchers questioned how an
estimated 30,000 Chinese can be in Bishkek legally when the
Kyrgyz Republic caps the number of work permits for
foreigners at 10,000. (Note: There are no reliable data on
the number of Chinese in the Kyrgyz Republic. However,
official adherence to the 10,000 work permit maximum is
questionable. End note.)

Government Official Weighs In
--------------


5. (SBU) Aigul Ryskulova, Chair of the Kyrgyz State
Committee for Migration and Employment Issues, attended the
presentation and provided more insights into the issue.
While dismissing the "myth" of massive Chinese migration into
the country, Ryskulova said that most Chinese in the Kyrgyz

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Republic are entrepreneurs who only remain until they can
sell the contents of their shipping containers. She praised
the economic and trade benefits of the Chinese presence, but
noted that there are moves in parliament to implement
positive discrimination for local Kyrgyz traders vis-a-vis
foreign (Chinese) traders. Both Ryskulova and the
researchers discussed Chinese traders marrying Kyrgyz
nationals -- a trend which would ease conditions on the
Chinese partner to conduct business in the Kyrgyz Republic.


6. (SBU) While confirming rate increases for work permits
and the revenues these permits generate for the government,
Ryskulova claimed that the 10,000 foreign work permit quota
would need to be cut to enable Kyrgyz laborers returning from
Russia and Kazakhstan, where the job market has been
deteriorating, to find work in the Kyrgyz Republic. She
disputed the 30,000 estimate for Chinese in Bishkek, but
verified that 4,500 work permits have been issued to Chinese
nationals.

Comment
--------------


7. (SBU) Kyrgyz officials and citizens routinely express
concerns about the impact of their large eastern neighbor,
China. With disputes about China having sparked previous
discord within the Kyrgyz Republic, most notably over border
demarcation concessions, Kyrgyz authorities remain sensitive
to Chinese influence in the country. The construction of a
large, multi-story Chinese embassy (within eyesight of the
U.S. embassy) is a reminder of China's interest in its
western neighbor, which the Chinese view as a source for
minerals and hydroelectric power.
LITZENBERGER