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Chinese Economy And Central Asia Celal Bayari The University of Sydney. Australia ABSTRACT Chinese economic growth has accompanied the rise and development of the Chinese economic model with its own types of multinational enterprises, and state owned enterprises. Major stock market plunges in 2015 have taken away the focus from the model and the manufacturing base that upholds it. Analyses of the system of the Chinese state, its enterprises and the private sector need to continue to understand the future of this economy and its implications for the rest of the world. Central Asian energy markets, which China has entered a decade ago, are important in this context, as their future behaviour will have consequences for the EU, North American and Australian markets. The Chinese state is the owner of the largest banks and sovereign wealth funds in the world. When China lost its energy independence in 1993, it began to rely on Central Asian energy markets and increasingly placed more emphasis on the region as a hub for its economic expansion, and as a strategic location and export market. The region, neighboring Xinjiang Uyghur Autonomous Region, is one of the foci of organizations such as the Shanghai Cooperation Organisation (SCO), and projects such as the Silk Road Economic Belt (SREB). Chinese trade and foreign direct investment (FDI) in the region involve plans to build economic and other links from Xinjiang Uyghur Autonomous Region across Central Asia. This paper argues that Central Asia faces some challenges due to its landlocked status, and industrial structure and markets, despite its energy and mineral resources, some of which is yet to be developed. Keywords:China, Central Asia, natural gas, crude oil, trade and FDI INTRODUCTION Contemporary international trade and FDI order is primarily reliant upon the co-operation of individual participants, or their coalitions, and the existence of stabilizing hegemonic powers in international politics, as per numerous theoretic constructions (Ikenberry et al., 1988; Kindleberger, 1973; McKeown, 1983; Snidal, 1985). International trade and FDI environment is built on international economic power structures that are not always stable (Lake, 1988; Waltz, 1979). There is divergence of opinion on whether the co-operation of individual countries or their conflicts shape the international order (Grieco, 1993; Keohane, 1984; Krasner, 1991). John H. Dunning’s ‘eclectic paradigm’ of ‘ownership, locational, internalization, [OLI] advantages’ has been instrumental in defining and evaluating trade and FDI activities of multinational enterprises (MNEs) (Dunning, 1988, 1993, 1995, 1997, 2006). According to Dunning, the ‘international trade’ perspectives (such as Aliber, 1993; Kojima, 1982) that are inspired by neo-classical framework downplay the significance of the advantages that MNEs possess and utilize (Dunning, 2000). Such perspectives implicitly assume that in trade all good are exchanged between independent buyers and sellers across national borders while in fact, as theories that simultaneously cover international trade and international production (i.e. the