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Kazakhstan-Chinese relations at the present stage

22 June 2014
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Diplomatic relations between the People’s Republic of Chinese and the Republic of Kazakhstan were established on 3 January 1992. In October 1993, took place the official visit of the President of the Republic of Kazakhstan Nursultan Nazarbayev to China, during the meeting there was signed the first official document determined the principles of bilateral relations — «The Joint Declaration on the Principles of friendly relations between the Republic of Kazakhstan and the People’s Republic of China." Within 20 years were formed principles and legal basis of mutual relations development. There were signed about 200 documents on bilateral cooperation in political, economic spheres, and also in the security and cultural cooperation field.

Economic presence and interest of China in Kazakhstan have considerably increased recently. In general, the main economic interests of China in Kazakhstan are:

1. Obtaining the access to oil and gas sources in order of ensuring China’s energy security. In recent years, the growth of Chinese economy has increased domestic energy demand, therefore, sharply increased the import volume of oil and petroleum products. Growing Chinese economy, in particular, its western areas demand new energy sources which can be imported from Kazakhstan on mutually advantageous conditions.
2. Use of transport-communication potential of Kazakhstan for promotion of the Chinese goods on the western markets.
3. Enhancement of bilateral trade, the development of Kazakhstan’s consumer market.

Shaping of the Kazakh-Chinese relations can be divided into four stages:

1. The first stage — since 1991 till April, 1996. The period is characterized by the development of bilateral relations. There were established relationships in the field of foreign policy, which were developed through the establishment of diplomatic relations and mutual visits at the high governmental levels; at that time economic, trade, security cooperation was steadily developing, have been achieved a mutual understanding in areas related to the prohibition of nuclear weapons use.
2. The second phase began with the signing by China, Russia, Kazakhstan, Tajikistan, Kyrgyzstan in Shanghai «Agreement on Confidence Building in the military field and the mutual reduction of armed forces in the border area» it were marked as an agreement of the Shanghai Five. Thus, the Kazakhstan-China relations have entered to a new period of bilateral and multilateral relations parallel development. Intergovernmental relations meant a granting guarantees for strengthening mutual cooperation.
3. The third stage. In 2005, Chinese President Hu Jintao and our President N. A. Nazarbayev signed a Declaration of strategic partnership between the two countries. The Chinese side reaffirmed that it will continue cooperation with Kazakhstan through the frameworks of the SCO and CICA.
4. The fourth phase. Since 2011, countries established relations of «comprehensive strategic partnership», expanded energy, transport and communication cooperation.

The border issue has possessed the main priority for both countries. In April 1994, Li Peng, Premier of the State Council, officially visited Almaty, during the visit was signed the agreement between Kazakhstan and China on the delimitation of the Kazakh-Chinese border. In the agreement the arrangement concerning all border has been achieved, except for two areas — the Sarychildy river and the Chagan-Obo pass. In May 2002, was signed the Protocol on the demarcation of the state border completed legal border registration between two countries. According to the Protocol and applied documents, total length of the Sino-Kazakh border is 1782 km, 1,215 km are land borders and 566 km — water. The boundary line is marked by 599 frontier marks. All boundary rivers between China and Kazakhstan are navigable.

The economic cooperation between China and Kazakhstan. Economic and trade relations between China and Kazakhstan are developing on a basis of advanced contractual base, which includes more than 30 documents. The great value for progress in this sphere has an activity of the Kazakh-Chinese intergovernmental commission on trade and economic cooperation. Furthermore, each visit of Kazakh and Chinese politicians to Astana and Beijing usually results to new arrangements in the sphere of trade.

Kazakhstan remains the second (after Russia) largest trading partner of China among the CIS and East Europe countries. Bilateral trade over the years to maintains a positive dynamics. In 2002, bilateral trade amounted to 1.955 billion dollars. For the six months of 2012 — $ 8,73 billion. Kazakhstan’s exports — $6,144 billion, while imports from China accounts $2,586 billion. The main Kazakhstan’s export positions to China is compounded by a raw products group: crude oil, copper and copper alloys, ferroalloys and non-ferrous metals, scrap metal, fertilizer, raw leather, cotton and wool. China exports to Kazakhstan computers and hardware,railway and tram cars, heavy technique, coke, chemicals, consumer goods and food products.

The huge share of Sino-Kazakh trade is compounded by the trade with PRC’s Xinjiang. Kazakhstan is main trading partner of XUAR. Xinjiang’s exports to Kazakhstan for the past 20 years, is a leader in foreign trade operations, occupying 70% of the total trade between China and Kazakhstan. The bilateral trade volume has grown from $ 30 million in 1992 up to $ 8,73 billion for the first six months of 2012. In the foreseeable future the importance of this region will grow, especially in the context of «strong center — strong province» strategy and the State program «XUAR-2015.»

In March 2006, on the China — East Kazakhstan region frontier opened border trade center «Maikapchagai — Zimunai» which operates on the basis of the Agreement on the trade development signed in 20 January 2006. The Center operates on the basis of a one-dayvisa-free entry for Kazakhstan’s citizens.

China has actively supports the creation of the World Trade Center «Horgos» on the Sino-Kazakh border. In order to stimulate the Chinese investment in Kazakhstan’s economy both sides regularly conduct various investment forums.

Chinese businessmen have invested in Kazakhstan more than $800 million, the CNPC contributed $500 million. Currently there accredited more than 40 Chinese companies, 670 joint ventures including 615 — with participation of the Chinese capital operating in spheres of oil and gas production, textile manufacturing,plastic and metal products.

One of the most important elements of the Kazakh-Chinese dialogue is cooperation in the energy sphere. In the Kazakhstan’s hydrocarbons market China is represented by the largest power companies: CNPC, Sinopec, CITIC. The oil volume which is produced in the Republic of Kazakhstan with the participation of Chinese companies constitutes about 45 million tons, more than 50% of the total annual oil production. Currently there continuing construction/reconstruction of Atyrau refinery (with participation Sinopec), Shymkent refinery (with participation of the CNPC), Aktau plastics plant and Moinak hydro-power station. In Aktau bitumen plant is constructing with the share of Chinese capital, the factory will satisfy the growing demand during building the transport corridor «Western China — Western Europe».

Oil and gas pipeline infrastructure is rapidly developing. In December 2010, started construction of the second section of the gas pipeline «Beineu — Bozoy — Shymkent» length is 1475 km. Technical substantiations under the project and negotiations about creation of the joint company for construction and commercial operation of the gas pepiline are completed.

China relies on long-term major projects in gas and oil production in Kazakhstan. In June 1997, China National Petroleum Corporation (CNPC) acquired for $ 4.32 billion 60% of the production association «Aktyubinskmunay» in western Kazakhstan, the potential reserves of oil fields are estimated at 140 million tons. In August of that year, CNPC for $ 1.3 billion has bought 60% stake in the Uzen, it reserves is about 200–250 million tonnes.

In 1997 started operation the oil route Kazakhstan — Xinjiang on which oil is delivered to China in railway tanks. September 24, 1997, during the official visit of Li Peng to Kazakhstan was signed an intergovernmental agreement on cooperation in oil and gas field. Beijing and Astana agreed to build a 3,000 km oil pipeline from Atyrau to Alashankou (Xinjiang Province). Further there were signed several agreements, according to it China pledged to fund three major facilities in the oil and gas sector in Kazakhstan: development of the Uzen field ($4 billion), oil production in Aktobe ($1.1 billion), and others. In May, 2004, during the visit of President N. A. Nazarbaev to the PRC, heads of companies «KazMunaiGas» and the Chinese national petroleum corporation (CNPC) have signed the frame agreement on main principles of Atasu — Alashankou oil pipeline construction. Due to the growing demand of Chinese economy, pipeline «Western Kazakhstan — Western China» has become an important export route of Kazakh oil, it will serve not only to the extensive Chinese market, but also the Asian — Pacific region through the Chinese reloading.

China, alongside with leading economic powers, has managed to become an active participant in the development of Kazakhstan’s mineral resources. On terms of mutual benefit Chinese investments have launched large-scale oil and gas development activities of the RK.

Both parties support a more complete use of transport and communication potential of China and Kazakhstan. Thus, in July 2005, during the visit of President Hu Jintao to Kazakhstan were signed an agreement on joint construction of trans-Kazakhstan railway, its length is 3083 km, the project will cost about $2.5 billion. The railway will connect the countries of the Southeast Asia to Europe on route Dostyk — Aktogai — Zhezkazgan — Beineu — Aktau. Further the railway will pass through Turkmenistan, Iran, Turkey and Europe.

An important area of bilateral cooperation in the foreseeable future is cooperation in the nuclear field. In the context of China’s intentions to build on its territory 23 nuclear reactors, the unprecedented contract on supplying 25 thousand tons of uranium from the RK to the PRC has obtained a particularly importance.

China has played a significant role in the modernization of the Kazakh steel industry (new generation Aktobe metallurgical plant, plant for production of primary aluminum in the Pavlodar region, etc.).

The investment credit line provided by the China Development Bank to the fund «Samruk-Kazyna», initiated the development of Bozshakol copper deposit.

China can play a significant role in strengthening the role of Kazakhstan as an influential player in the global food market. In particular, Kazakhstan is interested in the usage of transit and transport potential of China for the suppling of agricultural products to China and other Asia-Pacific countries.

Thus, China and Kazakhstan share common interests in the economics and politics field. Kazakhstan supplies hydrocarbons so necessary for China and it is ready to become the trade bridge between China and the Western Europe. It is necessary to note, that in the context of the global financial crisis, China has become the largest creditor and the investor for Kazakhstan, bypassing both Russia and the countries of the West. At the same time the part of Kazakhstan’s elite, which has been not connected to oil-and-gas sector, they suspecting the PRC in latent intensions concerning Kazakhstan’s resources (including land). The Chinese migration to Kazakhstan is a subject of special concern for Kazakhstan’s experts.

Moreover, Beijing is concerning that public opinion in Kazakhstan perceives China as a source of threat to its national security. According to estimates of the two leaders, the almost complete understanding was reached in ensuring regional security. Through the Shanghai Cooperation Organization (SCO), China has played a leading role in addressing these issues. Between Kazakhstan and China there is an agreement on cooperation in the fight against terrorism, separatism and extremism, signed on 23 December 2002 in Beijing. The police and security services are actively contacting. There was established Kazakh-Chinese Subcommittee for Security Cooperation.

Kazakh political analysts believe that it is necessary to use «Chinese presence in favor of Kazakhstan’s socio-economic development. The first and main rule — in cooperation with any foreign partner it is necessary to put national interests in the center. Second, all agreements with foreign investors should be open. Thirdly, taking into account the difference of incomparable economy scales of China, Russia with the economies of the Central Asia states it is necessary to develop other forms of integration. The Customs Union of Belarus, Kazakhstan and Russia is one of the options. Fourthly, the priority areas of cooperation should, on the one hand, meet industrial-innovative development of Kazakhstan, and from the other hand, provide competitive advantages for our country.

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