Wednesday, 24 April 2013

Nazarbayev Visits China To Meet Its new Leadership

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by Georgiy Voloshin (04/17/2013 issue of the CACI Analyst)

On April 6, Kazakhstan’s President Nursultan Nazarbaev paid an official visit to the People’s Republic of China where he met with the new Chinese leader Xi Jinping to discuss the state of bilateral relations between Astana and Beijing. As Nazarbaev recalled during his interview for China Daily, the strengthening of the Kazakhstani-Chinese partnership remains one of the priorities of the “Kazakhstan-2050” strategy unveiled in late December 2012.

 According to official statistics, the bilateral trade turnover between Kazakhstan and China grew by more than 12 percent last year, reaching the level of US$ 24 billion. The same level of cross border trade was registered with regard to the Kazakhstani-Russian economic partnership, which proves Kazakhstan’s ambition to develop equally broad trade relations with both of its regional neighbors. While Kazakhstan, Russia and Belarus are preparing to launch the Eurasian Union on January 1, 2015, whose membership may further be extended to such former Soviet republics as Kyrgyzstan, Tajikistan, Ukraine and Armenia, the Kazakhstani-Chinese bilateral relationship will continue to enjoy special treatment.

During their recent meeting, Nazarbaev and Xi Jinping publicly pledged to increase the trade turnover between the two countries to over US$ 40 billion no later than 2015. For this purpose, Kazakhstan’s Sovereign Welfare Fund “Samruk-Kazyna” and the China International Trade Promotion Committee signed an agreement establishing the Kazakhstani-Chinese business council. At the same time, “Samruk-Kazyna” concluded a cooperation agreement and a roadmap for the strengthening of economic and investment relations with CITIC Group, a state-owned investment entity formerly known as the China International Trade and Investment Corporation. Finally, the two sides agreed on the expansion of Kazakhstani supplies of grain and flour eastwards in the direction of Xinjiang.

Another important area of cooperation, extensively discussed during Nazarbaev’s visit to Beijing, concerned the transit of China-bound goods across Kazakhstan’s territory. As President Nazarbaev noted in his speech, the effective launch of the Western Europe-Western China highway, currently scheduled for 2015 with the completion of the Kazakhstani segment, would allow bringing the total volume of goods transported by road between China and Kazakhstan to 33 million tons as of 2016. Last year, this figure amounted to only 12 million tons of merchandise.

As regards rail traffic, 16 million tons of cargo was delivered between China and Kazakhstan between during 2012. Kazakhstani authorities already reduced the distance from Xinjiang to Central Asian markets by 500 kilometers five months ago after the Altynkol-Khorgos rail crossing became operational. While its throughput is expected to grow to 4.5 million tons of transported goods by 2015, this passage may further be reinforced in order to allow for the transit of no less than 25 million tons every year.

When discussing China’s role in Kazakhstan’s lucrative energy sector, Nazarbaev said that the share of Chinese oil and gas companies in his country’s total hydrocarbon production was hovering above 25 percent. Following Nazarbaev’s visit to the Middle Kingdom, the energy cooperation between the two countries is likely to intensify. For instance, Kazakhstan’s national oil and gas company KazMunaiGas and China’s CNPC concluded an agreement providing for increased cooperation in the extension of the Kazakhstan-China oil pipeline.

Nazarbaev and his Chinese colleague also discussed a comprehensive cooperation program implying full access to raw materials in exchange for advanced processing technologies and infrastructure investments. Currently, CNPC owns 50 percent in the Atasu-Alashankou oil pipeline, whose transit capacity is still far from being fully used. In early November 2012, it was officially announced that this pipeline would send 43 percent more of Kazakhstani oil to China by 2014. Today, China and Kazakhstan are engaged in the implementation of four large-scale joint projects related to the transport of energy resources at a total cost of US$ 18 billion. In addition, another ten investment projects worth over US$ 5 billion in the oil and gas sector are currently being implemented on Kazakhstani soil.

Nazarbaev’s April 2013 visit to China is a new demonstration of the specific role the latter plays in Kazakhstan’s foreign policy. With Xi Jinping’s reciprocal visit to Kazakhstan being scheduled already for June, the two countries are clearly poised to deepen their bilateral relationship by exploring non-traditional sectors, including the processing industry and tourism, and making further progress in such strategic fields as oil, gas, mining and agriculture. At a time when European economies are increasingly strained by their debt crises, China has become an indispensable partner not only for Kazakhstan and its Central Asian neighbors, but also for Russia whose leader, Vladimir Putin, chose the Middle Kingdom as his first foreign destination following his renewed election to the presidency in March 2012.

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