Tag Archives: Kazakhstan

China Tilts Kazakhstan Away From Russia

china-kazakhstan-li-keqiang-karim-massimov at the Great Hall of the People in Beijing, China, March 27, 2015.

Prime Minister Li Keqiang (R) greets Kazakh Prime Minister Karim Massimov at the Great Hall of the People, Beijing, March 27, 2015. (Photo credit: Xinhua/Zhang Duo)

CHINA HAS NOW signed $40 billion-worth of deals with Kazakhstan in the course of barely four months. The latest tranche ($23.6 billion) was agreed during last week’s visit by Kazakhstan Prime Minister Karim Massimov, reciprocating his counterpart Li Keqiang’s trip to Astana in December. On that occasion, $18 billion in joint ventures was inked.

The two men also met at the World Economic Forum in Davos in Switzerland in January. Despite being a member of the Russia-led Eurasian Economic Union, Kazakhstan is intent on deepening its strategic relations with China, if nothing else as a counterbalance to Russia, the region’s longstanding power, and to the West, which has become more of a presence in Central Asia since the collapse of the Soviet Union.

For its part, Beijing will welcome the security of a trade-tied neighbour on its at times troubled far western marches as much as it does Kazakhstan’s exports of oil, natural gas and uranium. The Central Asian country also offers a prospective market for China’s growing defense industry while being a key leg of the new Silk Road westward overland trade corridor Beijing wants to develop, and which was so prominently touted at the annual Boao conference just concluded.

Kazakhstan is already the largest recipient of Chinese foreign direct investment among the post-Soviet Central Asia republics. Loans-for-oil-deals between the two countries date back to 2009. Beijing will use the investment funds it makes available via the Silk Road Fund, the Shanghai Cooperation Organization, and its proposed Asian Infrastructure Investment Bank to cement that position.

Kazakhstan has its own ‘Bright Road’ project to boost economic development through infrastructure projects. The spillover from Russia’s sanctions-slowed economy has made that need more urgent. The European Bank for Reconstruction and Development downgraded its forecast for Kazakhstan’s GDP growth this year to 1.5% from the 5.1% it forecast as recently as last September. 2014’s estimated GDP growth was 4.3% down from 6% in 2013.

One-fifth of Kazakhstan’s $84 billion–year of exports now goes to China, twice the share that goes to Russia. The relative positions reverse on the import account: Russia being the source of 36% of Kazakhstan’s $44 billion a year of imports; China of 18%. That gap looks set to narrow. A regular goods rail service between Lianyungang and Almaty, Kazakhstan’s largest city, started last month with the first westbound load carrying Chinese cars, electronics and household goods.

Beijing has the trade and investment clout to exploit Russia’s moment of vulnerability and so expand its influence and market power across the region at Moscow — and the West’s — expense.

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Hu Adds Heft To China-Central Asia Pipeline Opening

We’ve noted before China’s expanding reach into energy-rich Central Asia. A sign of how strategically important that is to Beijing is President Hu Jintao’s presence (again) in the Kazakhstan capital Astanta on Saturday to open the Kazakh leg of the new 1,800 kilometer pipeline connecting China and Turkmenistan.

Hu will be going onto Ashgabat, the capital of Turkmenistan, for the official opening on Tuesday of the whole pipeline, which runs from a CNPC-operated gas field there back to Xinjiang, itself a reminder of the delicate balance Beijing has to strike between its handling of its Muslim minorities and its Muslim Central Asian neighbors whose oil and gas it is extracting.

Another sign of the shifting sands in the region is that while in Turkmenistan Hu will attend a summit of Central Asian leaders. They rarely gather except at meetings organized by Russia.

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The Kazakhstan Dimension To Unrest In Urumqi

My thanks to my correspondent (as always e-mails welcome, but please also share with all via comments) who pointed out that Tuesday’s post, Uighurs, Repression, Assimilation And The Han Islanders, gave too little weight to the question of regional instability on China’s western borders and beyond. And in particular, in Kazakhstan.

Tibet, Inner Mongolia and Manchuria are buffer zones beyond which lie India, Russia and Korea and Japan respectively; and all geopolitically impassable. However, Xinjiang has become more of a gateway to Central Asia with its energy resources and trade routes to points further west. Chinese firms, including state owned enterprises, have steadily expanded their activity in Kazakhstan (see: Loan-For-Oil Deal Struck With Kazakhstan). Beijing is also improving transport links so oil can flow east and goods west.

In doing so China is moving into what has traditionally been a Russian buffer state against China. Indeed, Kazakhstan was formerly part of the Soviet Union. Moscow has been wary of this. If Chinese economic activity turns into political influence, for which read expansionism, wariness would turn to concern, or more. Uighur unrest spreading west from Urumqi to Central Asia’s other Muslim areas would offer opportunists in Moscow an excuse to reestablish Russian domination — yet one more reason for Beijing to come down hard and fast in Urumqi.

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Russia’s Medvedev Heads To Beijing, By Way Of Astana

Russia’s new president, Dmitry Medvedev, arrives Friday. Notable as it is that he is making China the destination for his first official trip abroad, the route he is taking is even more so.

He will arrive via Kazakhstan, the energy rich former Soviet republic that is both playing an increasingly pivotal role in Central Asia and looking to lessen its trade dependence on Russia by selling more to China. China, for its part, is becoming a big financier of Kazakhstan’s energy and infrastructure projects.  Medvedev will be looking to shore up Moscow’s traditional economic links with Astana.

Trade will also be a focus of the Beijing leg of the trip, with Russia wanting China to buy more than just its raw materials. A bevy of businessmen from the engineering and electronics industries will accompany Medvedev. Bilateral trade grew five-fold to $48 billion a year during President Putin’s time, reflecting the closer political relationship between the two countries who find common ground in seeking counterweights to the U.S.’s global power.

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