Kazakhstan's President Nursultan Nazarbaev returned last week from a visit to
China that confirmed the prediction made in these pages seven years ago of an
emerging triangle in East Central Eurasian geo-economics among his country,
Russia, and China (see
Emerging triangles: Russia-Kazakhstan-China, Asia Times Online, January
15, 2004).
Since that time, Astana has continued to deepen its already strong relations
with Moscow. Now comes, during the three-day
state visit, a qualitatively new expansion of already deep economic ties with
Beijing.
According to Nazarbaev, trade between the two countries increased by a factor
of 13 over the past decade to nearly US$20 billion in 2010, recovering by
almost half from the 2008-09 decline. China is Kazakhstan's third-largest
export market and second-largest source of imports.
This is the fourth bilateral head-of-state summit in less than two years.
Nazarbaev last visited China in April 2009, and China's President Hu Jintao
visited Kazakhstan in December 2009 and then again in June 2010. The
"strategic" nature of the relationship was agreed between the two countries in
2005 with the establishment of a bilateral cooperation committee that has
shepherded ties and exchanges in culture, education, energy, science,
technology, trade and other fields.
Hu has now declared that the bilateral relations represent a "strategic
partnership of long-term stability, good-neighborly friendship and win-win
cooperation".
The energy sector dominated bilateral agreements that altogether promise
Kazakhstan $7 billion in loans from China for various projects. Not least
important is the creation of a 50-50 joint venture between the two national
champions KazMunaiGaz (KMG) and Chinese National Petroleum Corporation (CNPC)
to develop the Urikhtau field in western Kazakhstan.
The two countries at the end of last year began building a 1,164-kilometer
pipeline from Bozoi to Shymkent to feed southern Kazakhstan's increasing energy
hunger. It will later be extended another 310 km to Beyneu, and will be joined
up with the Turkmenistan-China gas pipeline that entered service last year.
Urikhtau is estimated to contain 40 billion cubic meters (bcm) of gas and 8
million tons of liquid hydrocarbons. It is located in Aqmola region not far
from the existing Alibemola, Kenkiyak, and Zhanazhol fields.
But natural gas is only part of it. Out of a $5 billion credit line for energy
cooperation, China's Export-Import Bank agreed on a $1 billion construction
plan for the Atyrau oil refinery, a major hub for the massive offshore Kashagan
deposit now under development. This falls into the profile of Kazakhstan's
program to modernize the country's three oil refineries at a cost of up to $4
billion. Chinese companies already produce 20% of all the oil produced in
Kazakhstan.
In addition, China's Guangdong Nuclear Power Group and Kazatomprom agreed on
sale to Beijing of up to 55,000 tons of uranium to supply almost half of
China's nuclear-power fuel requirements. Kazakhstan's premier phosphates
company, Kazfosfat, also signed a cooperation agreement with SinoChem for
construction of a petrochemical plant. The two countries expect also to build a
1,050-km double-track high-speed (350 km/hour peak speed) railway connecting
the central Asian cities of Astana and Almaty, with the project to be completed
by 2015.
Kazakhstan's National Wellbeing Fund Samruk-Kazyna is set to borrow up to $1.7
billion from the China Development Bank Corporation with the Chinese lender.
Kazakhstan's Eurasian Natural Resources Corporation will receive most of that
loan ($1.5 billion), plus a separate $400 million loan to another of its units,
for development of aluminum, ferrochrome, and iron ore deposits. Nazarbaev
expressed an interest also in exploring economic cooperation via a prospective
development bank that the Shanghai Cooperation Organization is trying to
establish with $8 billion capital.
Cooperation between the two countries has been deepening also with plans to
develop a Special Economic Zone (SEZ) on their border around Khorgos, which is
scheduled to become a point of entry for Chinese goods and raw materials into
the Belarus-Kazakhstan-Russia customs union later this year. Factories are
planned to convert Chinese raw materials into finished products for export and
delivery to the three countries.
As the Kazakhstan-Russia-China triangle imprints itself more deeply on East
Central Eurasian relations, it is evident that China continues to project its
political influence through economic means throughout the region.
Kyrgyzstan is already very much within a Chinese sphere of influence, and the
Turkmenistan-China natural gas pipeline as well as various energy projects in
Kazakhstan brings Beijing's reach to the Caspian sea.
President Hu was received by his Uzbekistani counterpart Islom Karimov last
year in Tashkent, where Beijing has been extending loans and promoting other
cooperation. However, Kazakhstan is clearly (after Xinjiang: see
Xinjiang: China's energy gateway, Asia Times Online, July 10, 2009)
China's second springboard for influence Despite a population of about 28
million in comparison with Kazakhstan's 16 million, Uzbekistan's trade turnover
with China is only about one-tenth of the latter's.
Dr Robert M Cutler (http://www.robertcutler.org),
educated at the Massachusetts Institute of Technology and The University of
Michigan, has researched and taught at universities in the United States,
Canada, France, Switzerland, and Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian Studies, Carleton University,
Canada, he also consults privately in a variety of fields.
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